Not Enough Money for Low-Income DC Residents, But Tax Cut for Wealthy Unchanged

By Guest Contributor, on May 31st, 2016

Cross-posted from Poverty & Policy Written by Kathryn Baer

As you local readers probably know, the DC Council passed a budget for the upcoming fiscal year last week. Some changes in what the Mayor had proposed for programs that serve low-income residents.

The DC Fiscal Policy Institute’s overview of the budget confirms what I’d expected. Mostly, a bit more here, a bit more there. No more for some critical priorities. And less for at least one. (The one large, new investment it cites — for new family shelters — isn’t part of the budget proper.)

I suppose we’ll be told that the Council did its best with what it had to work with. I don’t know because I don’t know nearly enough about the funding needs and prospective impacts of every program and service the budget covers.

But I do know that the Council could have had more revenues to work with. It had only to postpone — or better yet, repeal — the tax cuts prior legislation has made automatic whenever revenues rise above the estimate used for the latest budget.

The triggers have already reduced otherwise available revenues by many millions of dollars — dollars the Council could have used to shore up under-funded programs.

So much water under the bridge. And as the Chairman, who likes those triggers says, the revenues lost from cuts not yet triggered couldn’t have been used for the new budget. But the Council could have had them to spend as early as next fiscal year — and thereafter.

All tax cuts are not created equal, of course. Some on the pending list will benefit residents who’ve got enough income to owe taxes, but not a lot.

The second cut on that list, however, is a higher threshold for the estate tax. The most recent revenue forecast indicates that it will lock in soon, DCFPI’s latest account of the trigger impacts says.

So henceforth, no assets a deceased resident leaves to heirs will be taxable until they’re worth $2 million — twice the current minimum.

As things stand now, this will be the first of two estate tax cuts. The second — and considerably larger — will raise the threshold to the same minimum as applies to the federal estate tax, currently $5.45 million.

Why the District should embrace a regressive measure gained in a crisis by Congressional Republicans who could never be elected here baffles me.

True, the Tax Revision Commission recommended parity with the federal threshold, including the ongoing upward adjustments for inflation. But the Council could have taken a pass, just as it has on the revenue-raisers in the Commission’s package.

The District will forfeit $18.8 million next fiscal year alone, according to DCFPI’s estimate. And for what?

Not so that more money can pass to charities tax free. Bequests to them are already exempt. Not so that surviving spouses will have more to live on, since what passes directly to them will also still reduce the value of what counts toward the threshold.

Not even necessarily what other heirs wind up with, since a will-maker can give them as much as $14,000* each or the equivalent every year while still alive — again reducing the value of what’s potentially taxable afterwards.

The estate tax giveaway won’t just make larger investments in programs that reduce hardships for poor and near-poor residents unnecessarily difficult. It will increase income inequality in the District by giving the rich more, as well as denying the poor supports and services that help close the income gap from the bottom.

And the gap will grow from one generation to the next in part because of the way the taxable value of assets is determined. Essentially, it’s set at their value when the person bequeathing them dies.

So heirs pay capital gains taxes when they sell the assets for more, but no tax on how much the assets’ value increased between the time they were purchased and the time inherited.

And, of course, heirs don’t have to sell them. They can pass them along to their heirs, compounding the revenue loss — and wealth at the top of the income scale.

The estate tax then is a way of partly recouping the loss and, at the same time, averting a rollback to the inordinate wealth concentration of the Robber Baron days.

The higher the threshold, the less an already-shaky control on income inequality can do. And the gap between the richest and poorest District households is already . . . → Read More: Not Enough Money for Low-Income DC Residents, But Tax Cut for Wealthy Unchanged

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No Shortage of Ideas for Better, More Affordable Child Care

By Guest Contributor, on May 9th, 2016

The cost of un-subsidized child care is extraordinarily high, raising sometimes insurmountable barriers to low-income parents who want to work. The community-based child care centers that many low-income families rely on are reimbursed at ridiculously low rates. But there are answers. We need only the will to implement and pay for them. . . . → Read More: No Shortage of Ideas for Better, More Affordable Child Care

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Mayor’s Budget Shortchanges Under-Educated DC Adults … and Their Kids

By Grassroots DC, on May 16th, 2014

Cross-posted from Poverty & Policy

Written by Kathryn Baer

Adult Educators and Adult Learners Lobby at the Wilson Building

“We have jobs and we have people,” says DC Appleseed’s Deputy Director. “But the education people have doesn’t fit the jobs available.” The real problem, however, as she goes on to suggest, is the education that many people don’t have.

This isn’t a rerun of the oft-debunked skills gap myth — at least so far as the District of Columbia is concerned. The extraordinarily high high unemployment rates in the poorer parts of the city apparently reflect a lack of minimal education credentials — and skills they’re supposed to indicate.

About 60,000 residents 18 years and older lack a high school diploma or the equivalent. An even larger number “likely lack the basic … skills needed to succeed in training, postsecondary education and the workforce,” according to a new DC Appleseed report.

Of the deplorably few adults in programs supported by funds the Office of the State Superintendent of Education administers, more than half who weren’t learning English as a second language have consistently tested below 6th grade level.

This means they’re ineligible for any of the programs the Department of Employment Services makes available through an Individual Training Account and also for most of the programs offered by our local community college.

Even residents who test higher often fail the GED exams. Their pass rate in 2012 was 55.2% — the third lowest in the country. And the exams got tougher this year.

Yet more than three-quarters of all jobs in the District will require some postsecondary education by 2020, according to the latest projections by experts at Georgetown University.

In short, as things stand now, we’re looking at a very large number of working-age residents whose chances of full-time, living-wage jobs are dismal.

And as if that weren’t enough, we’ve research indicating links between parents’ education (or lack of same) and their children’s success in school. On the downside, children whose parents are functionally illiterate are twice as likely to be illiterate themselves.

This isn’t only because poverty rates are highest among adults without a high school diploma or GED — well over 33% in the District for those 25 and older. But all the daily impacts of poverty, e.g., hunger, homelessness, stress, obviously play a part.

Plowing more money into the rest of the education system, as the Mayor proposes, won’t deliver the hoped-for bang for the buck if the basic education needs of parents are neglected, as DC Learns warned several years ago.

DC Appleseed’s report identifies a range of problems in the District’s approach to adult education — including, but not limited to inadequate funding.

It outlines steps toward a long-range solution — essentially, an integrated system that connects basic skills development to career pathways. The DC Council could lay the groundwork with the initial $2.5 million the report recommends.

But the Council should also increase funding for the adult education programs we have now — both to serve more residents and to support better results.

I wish I could tell you what the Mayor’s budget proposes. But it’s characteristically opaque — partly, but not entirely because of the fragmentation DC Appleseed documents.

This much I’ve been able to parse.

The handful of charter schools that provide adult education would get more per pupil, as would the two regular public schools that do.

They’d still get less per pupil than what schools would get for any other type of student. And the new extra weight that’s supposed to boost funds for schools with students who’ve been designated “at risk” won’t apply, though some of the adults surely meet the same criteria, e.g., eligibility for SNAP (food stamp) benefits.

OSSE would get less for the adult education grants it provides. The proposed budget indicates a cut of about $3.8 million. This apparently reflects the fact that the Department of Employment Services won’t be transferring funds, as it did this fiscal year.

The Fair Budget Coalition had recommended that the baseline budget for adult education, i.e., the estimated costs of preserving current services, include these funds — a $5.5 million addition, according to FBC.

Hard to believe that the Mayor and his people couldn’t have found the money. They’ve instead put $3 million for adult literacy on the list of items to be funded if revenues prove higher than projected.

Let’s just say this is a mere gesture, since it would take $59.8 million to fund . . . → Read More: Mayor’s Budget Shortchanges Under-Educated DC Adults … and Their Kids

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