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Report: DC Residents Pay Lowest Taxes In The Region

by Mark Wellborn

Greater Greater Washington recently analyzed a report from the DC Fiscal Policy Institute that found that DC residents (and Virginians without cars) pay some of the lowest taxes in the region.

The report totaled the income, property and car taxes for three separate (and hypothetical) groups — renters earning $50,000 a year, homeowners with $100,000 in annual income and homeowners earning $200,000 a year. (The study analyzed singles and married couples with no children and with two children.) The study did not, however, include sales or income tax in its methodology.

From GGW:

In almost all scenarios, DC’s tax burden is the lowest. The major exception is single households without or with children, where taxes are lower in Virginia. For married couples, Virginia’s taxes rise above DC’s mostly due to the car tax. A separate DC CFO analysis also studied homeowners earning $50,000, and also found lower taxes in DC than in Maryland and Virginia.

DC also fared well when property taxes alone were considered. The study (which has sparked some criticism in the comments section of the Greater Greater Washington post) compared property taxes for $500,000 and $700,000 residences in DC and the close in Maryland and Virginia counties for households earning $100,000 and $200,000 a year. As the table below indicates, DC residents come out paying the least in property taxes (although that is fairly common knowledge in the area).

Report: DC Residents Pay Lowest Taxes In The Region: Figure 1
Table from DCFPI

To read the full study (and decide for yourself how accurate its methodology is), click here.

See other articles related to: taxes, greater greater washington

This article originally published at http://dc.urbanturf.com/articles/blog/report_dc_taxes_arent_that_bad/3040

11 Comments

  1. ken rub said at 6:46 am on Wednesday February 23, 2011:
    As a real estate agent who focuses on DC condos, there is a huge mis-perception that DC taxes are much higher than Virginia and Maryland. It is good to see some data that we compare favorably to the surrounding jurisdictions!
  1. anon said at 3:16 pm on Wednesday February 23, 2011:
    this is not accurate. We have to conisder all form of taxation. Including sales and alcohol taxes.
  1. Jess H said at 3:43 pm on Wednesday February 23, 2011:
    While all taxes should be considered, the difference in $8K in PG and $2K in DC will not be met in other taxes. That's a $6K spread! Wow. You'd need to lose a lot in sales tax (DC has 5.75% on goods and exempts groceries from sales tax) to spend more than $6K a year more in DC. (http://www.bankrate.com/brm/itax/edit/state/profiles/state_tax_DC.asp)
  1. Kim said at 4:01 pm on Wednesday February 23, 2011:
    Considering sales tax is also inaccurate because most people don't shop exclusively within the jurisdiction in which they live. When I lived in Northern Virginia I shopped in Georgetown sometimes. Now that I live in D.C. I sometimes shop at Pentagon City. I'm sure I'm not the only one.
  1. L said at 4:45 pm on Wednesday February 23, 2011:
    On the other hand, if you live in PG County you probably don't have a $500,000 house. Or if you do, it's MUCH nicer than a $500,000 house in the District. So your higher taxes are offset by lower mortgage payments.
  1. Mike said at 5:46 pm on Wednesday February 23, 2011:
    This study is pretty brutal. They started with a study comparing tax burdens, yet differing home values. It's fundamental to start a comparison study with the same baseline. But obviously, home values in the area vary widely. This study would have been more useful if it compared 50k, 100k, 200k renters, and then 50k, 100k, 200k homeowners using the same home values. And I've run the DC vs. VA for my situation before, and know I save thousands by living in VA.
  1. adam said at 8:42 pm on Wednesday February 23, 2011:
    How the DC 'private education tax'? That is, after forking over tens of thousands in property and income taxes to fund public schools, I can't actually send my kids there because they are so horrible. Instead, I have fork over tens of thousands more to pay tuition. Sorry, but any discussion of tax burden also has to include a discussion of what you get in return. In DC, that's pretty much nothing.
  1. Marc said at 8:46 pm on Wednesday February 23, 2011:
    What is up with that chart at the end of the article? Why are they not comparing the same value homes in each area for someone making $100,000 or $200,000? Why is PG county shown with a house worth $500,000 for both $100K and $200K earners, while DC has a $500K house for $100K earner and $700K for $200K earner. And why does Arlington have a $600K house while all the other areas have $500K houses for $100K earners? The way the chart is shown does not allow for meaningful interpretation.
  1. VA resident said at 11:15 pm on Wednesday February 23, 2011:
    They've tried to make this argument over at the Greater Greater Washington blog for a long time, but it is fundamentally flawed. They compare the jurisdictions using different assumptions and produce one result, but the realty is that there is a massive difference between the DC and VA income taxes. High-income earners will pay significantly less in taxes by living in VA.
  1. DC Resident said at 4:28 am on Wednesday February 23, 2011:
    Two things: In order for an accurate comparison, one should consider income taxes and sales taxes (not to mention the unofficial parking-ticket taxes we endure). On the bright side, I believe DC's tax incentives for DC home ownership has been a hugely successful part of DC's redevelopment to date. Let's keep up the good work!
  1. DCster said at 7:43 pm on Friday February 25, 2011:
    This study did actually include income taxes: "It includes the major taxes that households pay based on where they live – income and property taxes, including the annual tax on cars in Virginia." As for sales tax, it would be difficult to compare due to the varying types of sales taxes (clothes vs. restaurants vs. groceries).

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