The District of Columbia has changed a lot in 15 years. Many things have gone up — Gallery Place and Yards Park, the average price of a one-bedroom apartment and the average price of a home. Given these factors, you might be surprised to hear about one thing that has gone down over that time: DC taxes, when measured as a share of the DC economy.
This difference was noted in our inaugural Tax Commission Tuesday, but you might have glossed over it — DC’s total tax collections as a percent of personal income have dropped, from 15.4 percent in 1998 to 14.2 percent in 2012. Personal income is a common measure of the size of state and local economies, especially in analyses of government finances.
This means that taxes are taking a smaller bite out of our pocketbooks than 15 years ago.
It is one of those facts that people find hard to believe, along with the fact that DC taxes remain lowest in the region.
In fact, the drop works out to more than $480 million in lower taxes paid when you adjust for inflation. To put that in perspective, that’s $750 LESS for every DC resident.
Here are some other surprising tax differences between 1998 and 2012:
Property Tax Rate for Homeowners Has Dropped Sharply
- 1998: 96 cents per $100
- 2012: 85 cents per $100, the lowest in the DC metropolitan region
Rental Property Tax Rate Has Declined
- 1998: $1.54 per $100 of assessed value
- 2012: 85 cents per $100 of assessed value
Commercial Property Tax Rate Has Been Cut
- 1998: $2.15 per $100 of assessed value
- 2012: $1.85 per $100 of assessed value (with the first $3 million of any property taxed at $1.65 per $100 of assessed value)
General Sales Tax Rate Has Recently Lowered
- 1998: 5.75 percent for goods and services
- 2012: 6 percent, though the Council voted to decrease back to 5.75 percent beginning Oct. 1, 2013
Income Tax Rates Have Fallen Across the Board
· Even with creation of a new tax bracket for households with incomes over $350,000, current income tax rates are lower than in 1998
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Changes in DC’s Income Tax Brackets & Rates |
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1998 |
2012 |
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Up to $10,000 |
6% |
Up to $10,000 |
4% |
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$10,000 to $20,000 |
8% |
$10,000 to $40,000 |
6% |
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$20,000 and above |
9.5% |
$40,000 to $350,000 |
8.5% |
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Over $350,000* |
8.95% |
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Source: DC Tax Facts, 2012 |
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