Washington D.C.’s Tax System

Government of the District of Columbia Office of the Chief Financial Officer Office of Revenue Analysis

Washington D.C.'s Tax System

A Visual Guide

2019

Muriel Bowser Mayor

Phil Mendelson, Chairman Council of the District of Columbia

Jeffrey DeWitt Chief Financial Officer

Table of Contents

Subject

Acknowledgments

Introduction

Overview of the District's Local Revenues

Chapter 1: Income Taxes -Individual Income Tax -Corporate and Unincorporated Franchise Taxes

Chapter 2: Property Taxes -General Property Tax -Assessment Cap -Personal Property Tax -Public Space Rental Tax -Deed Recordation and Transfer Taxes

Chapter 3: Sales and Excise Taxes -General Sales Tax -Use Tax -Excise Taxes

Chapter 4: Gross Receipts Tax and Other Taxes -Insurance Premiums Tax -Public Utilities Tax -Baseball Gross Receipts Tax -Estate Tax

Chapter 5: Demographic Information

Works Cited

Office Locations and Telephone Numbers

Page Number

iii

4

5

6 8 14

18 19 22 27 28 29

30 32 33 37

41 43 44 45 46

47

51

52

ii

Acknowledgments

This report was prepared by Kevin Hundelt and Charlotte Otabor, with assistance from Betty Alleyne, Lori Metcalf, Peter Johansson, Norton Francis, Sharain Ward, Farhad Niami, Brian Kirrane, Seble Tibebu, Nate Cruz, Bob Zuraski, and Daniel Muhammad. This report was modeled after a similar report from the State of California's Legislative Analyst's Office on visualizing state tax revenues. Questions regarding this report should be directed to: Kevin Hundelt, Capital City Fellow, Office of the Chief Financial Officer, Office of Revenue Analysis, 1101 4th Street, SW, Suite W770, Washington, DC 20024. Telephone: (202) 442-6810. Or Charlotte Otabor, Fiscal Analyst, OCFO, ORA, 1101 4th Street, SW, Suite W770, Washington, DC 20024. Telephone: (202) 727-4054.

Fitzroy Lee, Ph. D. Deputy Chief Financial Officer and Chief Economist

Office of Revenue Analysis

iii

Introduction

The District of Columbia's government relies on three main taxes. The individual income tax is the District's main revenue source at 23.1 percent. The property tax, specifically taxes on commercial properties, is the second largest source with 18.7 percent. And the District's sales, use, and excise tax is the third with 17.9 percent. In addition, there are many smaller taxes that raise revenue for the operation of the District. In fiscal year 2018, the District raised a total of $8.9 billion in taxes--equal to over 6 percent of the District's economy. The chart on the next page summarizes this tax system including non-tax revenues. The inner part of the pie chart shows the major types of taxes with their percentages of the total amount collected on the outside. The outer part of the pie chart breaks down each major tax and non-tax by source with percentages of how each source contributes to the total revenue collected on the outside. For example, the biggest source of income tax revenue is individual income withholding, meaning income earned at a business that holds a portion of your wage or salary to pay your income taxes for you. In addition to taxes, the District government relies on federal funds, fees, fines, and other sources of non-tax revenue to fund government operations. This publication, however, focuses on taxes levied in the District of Columbia.

4

Overview of the District of Columbia's Local Revenues

FY 2018

0.6% Lottery Transfer

Economic Interests

Estate

6.9%

Total Revenue (Gross): $8.9 Billion

PrRoespiedrteyntial

9.7%

1S.(6pO%e-1cT%iyapl ePC)huMaRrFrgipsieensocvefeosserlelSnaae/nunrOvdieecteFohsouersfreitures13%

1.8%

1.1%

0.6%

Baseball

Gross

Receipts

Health

2.9%

Related

Taxes Toll

1.3%

Telecommunications 1.6%

1.3%

3.5%

In2.s2u%HPrDauonebtcleeiecdlsPURDrteieelimteciLedoiicuserTnmdsreaasstnainosdfnPeerrmi4ts.1%5.7T%GaxroOstshRerecTeaixpetss

0.9%

Parking

Restaurants

17.9%

SEaxlecsiseanTdax

4.6%

Alcohol

0.8%

Retail

6.9%

FrUannicnhciosreporateEdxcise

FrCaorncphoirsatee

1.2%

1.5% 4.9%

Motor Fuel

Motor Vehicle

Cigarette

Alcohol

2.8%

INnodinviwidtuhahloIlndicnogme

NRone-vTeanxue

Income Tax

29.6%

IndWivitidhuhaolldInincgome

29.8%

Property Tax

CPomrompeerrtcyial

20.3%

18.7% PPuVebarlciscaonSntap/BlaPlcigerohRpteeednrttyParlo0p0.e8.r4%ty%0.2%

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