DCFPI supports the living wage bill, known as the Large Retailer Accountability Act, and we hope Mayor Gray will sign it into law soon.
There are good reasons to start with large retailers. Studies have shown that large retailers have the ability to pay above poverty-level wages without a negative impact on employment or consumer prices. The fact that large retailers can dominate a market, including impacting the wages paid by smaller competitors, is another reason to set a wage with large retailers first. It is a good first step to raising wages for workers in one of our lowest paying, but important and growing, industries.
One of the next steps would be to raise the minimum wage to help DC’s workers in smaller retailers as well as in other industries, a goal DCFPI also supports. DCFPI’s research has found that raising wages to $12 an hour would lift more than two-thirds of the city’s working families out of poverty.
One councilmember has recently announced intentions to introduce a bill to raise DC’s minimum wage as well as implement other policies to help working families and their employers. Councilmember Tommy Wells (D-Ward 6) says that he is proposing this package as an alternative to the large retailer bill, which Wells says he does not support.
The legislative package Wells has announced would:
- Increase the minimum wage to $10.25 over the next two years and then tie regular increases to the cost of inflation
- Increase the standard deduction for personal income taxes
- Increase the DC Employee Tax Credit for businesses with 150 employees or fewer
- Lower the commercial property tax rate on small businesses
- Require large employers who do not offer health care to pay into a health care fund
As mentioned above, DCFPI supports an increase in the minimum wage. In his State of the Union Address earlier this year, President Obama said he supported a $9 minimum wage. The boost makes sense not only for helping families, but helping local businesses too. That’s because low-wage workers put their earnings right back into the local economy through the purchase of goods and services. Research shows that minimum wage increases do not have a discernible impact on employment.
Recently, DCFPI released a report calling for an increase in the personal exemption and standard deduction, two provisions in the income tax code that help lower taxpayers’ income tax liability. DC’s income tax should be doing a better job of limiting the taxes owed by low- and moderate-income residents and raising these two provisions can help. In fact, DC’s standard deduction and personal exemption are much smaller than similar federal income tax deductions and deductions in most states, including Maryland.
Our analysis found that these two provisions are especially critical to low- and moderate-income households. Over 75 percent of DC households with incomes below $75,000, for example, claim the standard deduction, because they do not have enough deductions to itemize. Together, the standard deduction and the personal exemption (an exemption amount per person) can greatly reduce, or even wipe out, a family’s taxable income.
This is not an either/or option. Mayor Gray, Councilmember Wells and his colleagues can and should do both. The Large Retailer Accountability Act has the support of residents, researchers, religious leaders and has been passed twice by the council. Mayor Gray and the council should approve the Act and, this fall, move on to serious consideration of the Wells package. We look forward to passage of the Large Retailer Act and working with the council on these exciting proposals to help workers and businesses grow our economy.
To print a copy of today’s blog, click here.
