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AFP Supports DC City Council Tax Reform Effort

June 18, 2014 J

Dear Council Members of the District of Columbia:

On behalf of more than two million Americans for Prosperity activists in all 50 states, I write first to applaud your efforts to make DC more competitive via comprehensive tax reform. I urge you to support the overall package and oppose efforts to exempt certain services from sales tax.

Special interests in the fitness and wellness industry have been vocal in their opposition to expanding DC’s 5.75 percent sales tax to include formerly untaxed services such as yoga classes. Their opposition misses the forest for the trees: The sales tax expansion is part of a large package that will provide DC businesses and families with $158 million in tax relief over five years.

Expanding the sales tax to include services is an effort to broaden and lower the overall tax base, not a directed attempt to tax or punish a particular service. If enacted, sales taxes on on gym memberships and fitness services will be the same sales tax that is applied to all other goods and services. Furthermore, other fitness and wellness items are currently subject to sales taxation, such as workout videos and gym shoes.

The income tax cuts included in the overall package will stimulate the local economy and mean that DC taxpayers will be able to keep a greater percentage of their earnings, according to research from the Tax Foundation. Middle-income families would see a savings of about $400 annually, according to the Cato Institute.

We see repeated evidence across the country that states that shift their tax burden away from income and toward consumption routinely see higher levels of economic growth, job creation, and domestic migration. DC would be wise to follow suit. Americans for Prosperity urges you to support the overall tax reform package, and to reject exempting certain services from sales tax.

Sincerely,

Christine Harbin Hanson
National Issue Campaign Manager
Americans for Prosperity

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