Tax Hike Moves Forward

Late last week, the full DC Council passed a measure on first reading to increase recordation and transfer taxes on both commercial and residential properties in the District from 1.1% to 1.35%. The measure must pass the Council on a second reading, expected in the next two weeks, and be signed by the Mayor to become laws. If passed by the full Council, residential and commercial buyers and sellers will each pay 1.35% of the purchase price of a property. This increase in recordation and transfer taxes is expected to generate $76.6 million in additional revenue for the District. Advocates of this proposal claim this money will be used for "affordable housing," but this proposal designates only $3 million for workforce housing. But where the city government taketh away, the feds give back. President Bush signed into law on Wednesday an extension of the 15% rate on capital gains, applying to the sale of most property, which was to increase next year when the last law expires.