As a district resident with meaningful cap gains income, the reality is that it might make sense to raise the cap gains tax than the top income bracket rate. You have the same issue of relative disadvantage vs Md/Va, but the all-in marginal rate would be lower, whereas the top income rate is already breaking 50% including federal. The problem might be that capital income is more mobile. Ultimately the answer here, beyond containing spending, is probably to broaden and possibly increase the sales tax. One can complain that sales taxes are regressive, but essentially every other industrialized country has a VAT that creates a stable tax base for generous benefit programs. It would be better to do all of this at the national level, but absent that, if one wants to provide generous low-income benefits, taxing 1% of the population is not going to get you there, because they will no longer be there to tax.
I write this having just discussed with my spouse (before reading this) whether we should move 5 minutes away from NW DC to McLean or Bethesda to beat the coming DC fiscal death spiral. I raised it in the context of AI job displacement of the paper-pushing DC economy (which I am a part of). There is a good chance it makes little difference to DC population growth, but I highly doubt it will be helpful.
The issue you mention about the “income from wages/income from wealth” distinction feels symptomatic of the broader inability to differentiate between what’s going on in the District versus what’s going on at the national level.
As a district resident with meaningful cap gains income, the reality is that it might make sense to raise the cap gains tax than the top income bracket rate. You have the same issue of relative disadvantage vs Md/Va, but the all-in marginal rate would be lower, whereas the top income rate is already breaking 50% including federal. The problem might be that capital income is more mobile. Ultimately the answer here, beyond containing spending, is probably to broaden and possibly increase the sales tax. One can complain that sales taxes are regressive, but essentially every other industrialized country has a VAT that creates a stable tax base for generous benefit programs. It would be better to do all of this at the national level, but absent that, if one wants to provide generous low-income benefits, taxing 1% of the population is not going to get you there, because they will no longer be there to tax.
I write this having just discussed with my spouse (before reading this) whether we should move 5 minutes away from NW DC to McLean or Bethesda to beat the coming DC fiscal death spiral. I raised it in the context of AI job displacement of the paper-pushing DC economy (which I am a part of). There is a good chance it makes little difference to DC population growth, but I highly doubt it will be helpful.
The issue you mention about the “income from wages/income from wealth” distinction feels symptomatic of the broader inability to differentiate between what’s going on in the District versus what’s going on at the national level.
Absolutely. It’s just true that you can successfully do different policy at the federal level than in a city of 700,000 people.