For the past two weeks, a group of wellness, health and fitness advocates have organized ourselves into a coalition known as #DontTaxWellness. While many of the small business owners in our coalition might compete for clients on a day-to-day basis, they have all come together to push back against a common threat that would make it more expensive for District residents to get healthy and stay fit: a tax on wellness activities and services.
Two years ago, we had this debate at a time of great strain on our local budget. Even then, it was determined to be bad policy. Now, our local government is in the best financial position ever. In a budget presented 18 hours before the initial vote, Chairman Phil Mendelson proposed levying the new tax without any public hearing or input. Accordingly, those who care about the health and well-being of District residents have been forced to mobilize and fight an uphill battle to ensure tax policy in DC doesn't penalize those citizens trying to lead healthy lifestyles.
As our momentum has grown with grassroots lobbying efforts, social media activity and a common sense proposal by Council Member David Catania and a growing consensus among DC Council Members to remove the wellness tax from the budget, opposition has sprung up offering super wonky and often misleading reasons to tax wellness services. Even Chairman Mendelson seems to offer a different rationale from day to day, making the intellectual underpinning of the tax a moving target of uncertainty.
Chairman Mendelson says he relied heavily on the recommendations of the Tax Revision Commission when determining what previously untaxed services should now be subject to the 5.75 percent sales tax. The Tax Revision Commission's charge was to improve the progressivity and regional competitiveness of the District's tax policy. But even the Tax Revision Commission's own report readily admits that DC already has a broader sales tax base than most other states. In fact, out of 183 possible services to tax, DC already taxes 74 of them. The Commission notes that is "far more" than Maryland, with 49 taxed, and Virginia, with 29 taxed.
The Commission further addresses its decision not to recommend taxing legal, accounting and dental services, stating "there are questions about whether taxing them would harm economic activity in the District". Its rationale was that Virginia and Maryland do not tax these activities, so DC shouldn't either. Given the number of people that live or work in DC that live or work in MD/VA, they can choose to buy a membership in the jurisdiction where it is cheaper because of no tax on it. This subjects health, wellness and fitness businesses to the same economic harm the Tax Commission warned about.
Some have suggested that the #DontTaxWellness Coalition is on a pathway to destroy tax relief for middle class families. That is wholly inaccurate and intentionally dishonest. In fact, the only solution on the table -- as proposed by Councilmember David Catania -- maintains the personal and business income tax relief recommended by the Tax Revision and Commission and at the same time maintains funding to important District programs.
Council Member Catania's simple solution would phase in the total rate reduction on the business franchise tax over six years instead of five. Businesses would still see tax relief in year one and every year after. With the Mendelson budget in disarray, the final solution may differ from the original amendment proposed. But Catania and Council Member Jack Evans are committed to working with their colleagues to find a solution that works under the circumstances and that can earn a majority support from Council.
The #DontTaxWellness Coalition, at its core, seeks a tax policy that reflects the values of our city. We spend money on bike lanes and running paths to encourage healthy behavior. Taxing wellness activities is counter to efforts that have made DC America's fittest city.
Despite the claim to being America's fittest city, the District still has major health problems to address like our obesity rate and health disparities across social and economic groups. One thing is for sure, however. Taxing wellness isn't a good place to start in finding a solution to these big challenges. Once we dispense with this ill-advised tax, then we can start looking for solutions to these bigger challenges.
To join the effort to defeat the proposed wellness tax, you can contact DC Council Members at this link.
You can also copy and past this tweet: Contact your DC Council Members & ask them to join a growing consensus for solution to #DontTaxWellness.