On April 5, 2018, Councilmember Charles Allen sent the following letter to his colleagues on the Council to consider his proposal to decouple the District's estate tax threshold from the federal governments:
April 5, 2018
Members of the Council of the District of Columbia
John A. Wilson Building
1350 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
On February 6, I was joined by Chairman Mendelson and Councilmembers Bonds, Cheh, Gray, Grosso, McDuffie, Nadeau, Silverman, and Robert White in introducing the “Estate Tax Clarification Amendment Act of 2018”, which would decouple the District’s estate tax threshold from the federal threshold. As you know, the District’s estate tax threshold would have been $5.6 million in 2018, but through its December federal tax overhaul, Congress effectively amended our tax law to match the new federal threshold of $11.2 million. According to the CFO’s February revenue estimate, this change will cost the District $6.5 million in the budget we are currently considering, with that number rising to $7.2 million by FY2022. This lost revenue will benefit only a very small number of our very wealthiest residents.
Last spring, we debated whether to follow the Tax Revision Commission recommendations previously put in place to increase our estate tax threshold from $2 million to match the then-federal level. That was a healthy debate, but ultimately a majority of the Council decided to follow the recommendations. But the Commission’s own report said that “[u]nder the Commission’s recommendation, the District’s estate tax threshold would increase to $5.25 million, with annual adjustments” beginning in 2014 and thereafter.
There is nothing in the report that suggests we should substitute the judgement of this Congress for our own, or that $11.2 million is a reasonable estate tax threshold. Tax law is complex, but I believe this is an easy call. I will propose moving forward with decoupling our law from the federal tax code through the Budget Support Act at the Committee of the Whole and ask for your support. I will also propose reinvesting the new recurring funds into the following priorities:
- $2.5 million for housing for domestic violence survivors – this additional funding supports emergency and transitional housing for survivors and their families escaping violence.
- $1.5 million for tenant-based vouchers for the Local Rent Supplement Program – this additional funding would move 75 families off the waiting list and into stable housing.
- $1.25 million for out-of-school time grants for youth programming to focus on closing the achievement gap with vulnerable students and youth.
- $500,000 for Produce Plus, a farmer’s market nutrition incentive program that connects low-income communities – especially TANF, SNAP, WIC and Senior Plus recipients – with access to healthy food.
- $500,000 for expanding the Community Schools initiative – a program that provides grants to place service coordinators inside partner public and public charter schools to focus on community engagement strategies to improve student outcomes and attendance.
- $250,000 for community-based violence prevention and intervention grants at the Office of Neighborhood Safety and Engagement.
While these investments do not represent the total amount of funding needed for these and other important programs, they are a significant increase in resources directed toward vulnerable communities in the District. I look forward to your partnership and ask for your support in funding these critical programs.
Charles Allen, Ward 6 Councilmember
Chairperson, Committee on the Judiciary and Public Safety