How did Arlington County get to $167 million in local income tax refunds?

Because of growing demand for housing, DC, Arlington and Arlington County are paying off amounts of money that aren’t spent; they’re earning revenues that should have been invested in infrastructure.

This is called “local income taxes.” The annual distribution of these monies through the city’s finance department is above the local income tax rate (0.03 percent) and about one-fourth of the rate at which the fiscal year starts (0.025 percent). The numbers speak for themselves: A suburban Maryland resident faces a tax of 4.4 percent. A DC resident faces a tax of 2.1 percent. Arlington’s rate is 1.15 percent.

The local income tax doesn’t meet the test set by the Supreme Court of the District of Columbia to make it “a complete source of revenue to fund the day-to-day operations of the city.” But it’s apparently a lot more substantial than a tax on real estate transfers, with which the District’s local income tax is closely related.

D.C. has a larger portion of its budget left to spend by virtue of its one-third share of the total local income tax (not to mention a federal commitment to pay up to 20 percent of the annual average utility tax the city collects for buildings in the District). Arlington’s revenue consists largely of state and federal taxes. Arlington collects a utility tax that is also the second highest in the District. Arlington’s one-third share of the local income tax relative to its annual (some two-thirds) share of utilities tax is smaller.

To read more, go to D.C. Agenda

To read more, go to Arlington Statement

Leave a Comment