Norton Gets House to Extend DC Tax Credits at Time of Unusual Economic Need (12/9/09)

Norton Gets House to Extend D.C. Tax Credits at Time of Unusual Economic Need

December 9, 2009

WASHINGTON, DC - With an unusually high D.C. unemployment rate and an anemic economy, Congresswoman Eleanor Holmes Norton (D-DC) today cheered House passage of the Tax Extenders Act of 2009, which included a one-year extension of Norton's tax incentives for the District of Columbia, set to expire on December 31, 2009. The D.C. tax provisions include the popular homebuyer tax credit and a number of vital business tax incentives, including a $3,000 wage credit for each D.C. resident hired by most D.C. businesses.

The D.C. tax incentives have been an essential ingredient in reinvigorating and stabilizing the economy of the District following near its collapse in the late 1990's. Norton got these District-only tax incentives also to buttress local taxpayer revenues for D.C., which has no state revenue source and, in addition, is severely limited in its taxing authority because of the large tax exempt federal presence here. Until the D.C. homebuyer tax credit was enacted in 1997, the city's tax base was rapidly dissipating, is only now recovering and, Norton says, "could be set back 10 years, wiping out all that we have accomplished if the D.C. tax incentives expired in the midst of ‘the Great Recession'."

Experts widely agree that the D.C. tax incentives have been a significant factor in stemming residential flight and in stimulating economic development in the city. Norton said that the business tax incentives, in particular, have been notably successful in helping the District to strengthen its small business tax base here. "In today's economic environment," Norton said, "the business tax incentives are nothing short of essential, because banks are still refusing to lend."

Even with the existence of a national homebuyer tax credit, modeled in part on the D.C. homebuyer tax credit, there are a number of differences between the national and D.C. homebuyer tax credits, including the expiration of the national homebuyer tax credit, come April 2010. Norton said that, in addition, "it is impossible to overemphasize what the business tax incentives have done for D.C." She said that these incentives have been a "critical factor in downtown and neighborhood groundbreakings since their enactment."

However, Norton believes that perhaps the most valuable tax credit in a city with a chronically high unemployment rate, is the unique $3000 wage credit widely available to businesses which hire D.C. residents. "Even well qualified D.C. residents often face overwhelming competition from suburban residents, who flood the city's employment opportunities base because of the huge population in the region which is free to compete," Norton said. "Today, more than ever, the wage credit is essential because it gives employers a bonus to look more closely at D.C. residents for openings."