Maryland might be catching up to D.C.’s higher tax rates, but one city legislator says the District still is the least friendly jurisdiction in the region for businesses.
D.C. Councilman Jack Evans noted Thursday that the District’s corporate income tax rate, the second-highest in the nation, was just one of a slew of taxes he believes are driving money out of the city.
“If you could pay 6 percent in Virginia, why would you pay 9.95 percent in the District?” asked Evans, chairman of the Committee on Finance and Revenue, during a budget hearing. “We don’t collect all that much money for our corporate taxes for obvious reasons.”
Though he said Maryland, “thank God,” had raised its corporate tax rate to 8.25 percent, the Old Line State and Virginia still beat D.C.’s unincorporated income tax rate of 9.95 percent. Maryland and Virginia do not have a unincorporated income tax, he said.
“We make it difficult if not impossible for businesses that fall in that category to locate in the District,” Evans said. “We just lose people.”
On top of the businesses, Evans said the city’s sales tax of 6 percent was supposed to be lowered back to 5.75 percent, and lawmakers have delayed that move.
“It just does us no good,” he said. “If you go to CVS, it’s one thing. If you’re buying a big-ticket item, Virginia’s the place to go.”
Northern Virginia counties collect 5 percent sales tax.
Evans’ comments came as he outlined his suggestions to a newly formed tax review commission headed up by former Mayor Anthony Williams. The commission, which has not yet met, is tasked with recommending changes to the city’s tax code to help boost revenue without creating a burden for city residents.
