The BAT would be a value-added tax on the business activity of for-profit firms with economic presence in the District. This memorandum explains the proposal in more detail, including revenue implications and how it might affect some hypothetical firms.
Business franchise taxes include a tax on corporations’ profits, based largely on the federal corporate income tax, and a separate tax on unincorporated businesses. These two taxes are the city's fifth and sixth largest tax revenue sources. The business franchise tax has been an increasing source of tax revenue.
The individual income tax (IIT, sometimes known as personal income tax) is the city's largest single revenue source. It is also the fastest-growing and most progressive major revenue source.
Since the last DC Tax Revision Commission in 2012-2013, the District has enacted significant tax changes. Here is an overview of what changed in our tax system.
The two main components of the property tax—the real commercial property tax and real residential property tax—are the city's second and fourth largest single revenue sources. Revenue from both taxes have been stable or rising for most of the last two decades as a share of total DC taxes, but have declined as a share of total tax revenue in recent years.
The sales tax is one of the city's three most important tax revenue sources, but its relative importance as a revenue source has declined somewhat. Among DC residents, it affects lowest-income households the most. A significant share of the tax is also paid by visitors to the District.
By Darien Shanske
By Bradley Hardy
By Adam Langley
Namita Mody, Director, DC Council Office of Racial Equity
By Dr. Tracy Hadden Loh, Fellow at Brookings Institution
Dr. Santiago Pinto, Senior Economist and Policy Advisor, Federal Reserve Bank of Richmond
For 2022, we find no evidence that high-income residents left the District in response to the tax changes.
Discussion Draft for TRC Reports and/or Presentations
Draft of the TRC's running list of tax reform ideas
Prepared for the 2013 DC Tax Revision Commission
TRC research and policy development process to date and staff recommendations
How the NH Business Enterprise Tax experience could inform a DC Business Activity Tax
This is the first draft of TRC recommendations, or the "Chairman's Mark"
Produced by the District's Chief Financial Officer
Each month, the OCFO publishes a report of cash collections by the District government
Comparison of tax Rates and tax burdens between DC and the rest of the country