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Modest D.C. tax revision plan only a small remedy

Will D.C. Council and Mayor Gray fail to embrace tax reform, relief?

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money, tax revision, gay news, Washington Blade
money, tax revision, gay news, Washington Blade

A first step in reducing D.C. business and personal tax rates is long overdue, if inadequate, and is deserving of support – and does offer enterprise a modicum of relief. (Photo by iStock)

Following nearly a year-and-a-half of deliberations and almost 30 public hearings, the D.C. Tax Revision Commission last week issued preliminarily detailed city revenue reform recommendations unanimously adopted for approval by D.C. Council members and Mayor Gray. A full report is scheduled for early January.

While disappointing in its modest magnitude — particularly in mitigating the negative business taxation environment and D.C. anti-enterprise reputation — the proposed reforms offer some improvement.

The compromise plan represents a mere $48.8 million in net revenue reductions out of local tax collections in excess of $6 billion. Mayor Gray’s initiative earlier this year, approved by the Council, setting aside $18 million in the current budget toward underwriting tax revisions slashes the bottom-line cost to $30.8 million, less upwardly revised tax collections.

In fact, outgoing District CFO Natwar Gandhi issued his final projections last week indicating $19.8 million in additional revenue this fiscal year and an estimated $42.7 million surplus the next.

Any tax modifications would be incorporated in the District’s FY2015 budget, effective beginning next October. The narrowed list of proposals, whittled down due to lack of agreement among commissioners, are designed to “provide for fairness in apportionment of taxes, broaden the tax base, make the District’s tax policy more competitive with surrounding jurisdictions, encourage business growth and job creation, and modernize, simplify, and increase transparency in the District’s tax code.”

Former Mayor Anthony Williams, credited with restoring D.C.’s fiscal footing during two terms in office ending January 2007, chaired 10 appointed tax policy experts, business community representatives and advocates from liberal policy groups. Divergent perspectives culled an initial 63 recommendations to only about a dozen measures comprising a balanced plan thought within the realm of political viability.

Unfortunately, these consensus recommendations are expected to encounter opposition by politicians longing for more money to toss around in an election year. Frustrated by spending constraints requiring expenditure prioritization, Council members have taken to creating an annual budget “wish list” well in excess of potential revenue surpluses to pay for them.

Williams was quoted last week as saying, “to be the competitive city we want to be, we’ve got to have government within the proper bounds in terms of the private-public sector relationship, and I don’t think we’re really cognizant of that.” In other words, officials still don’t “get” it.

While the Commission proposes to reduce the business franchise tax from an astounding 9.975 percent of net income to 8.25 percent, this merely matches high-tax Maryland. While arguing that cutting the tax is “a signal that D.C. is ‘open for business’,” it doesn’t lower it to be competitive with Virginia’s 6 percent rate. D.C. business taxes are worst in the region and among the highest nationwide and this proposal is an inadequate remedy.

Worse, a reduction in business taxes is partially offset by levy of a local services fee to be imposed on all employers – including non-profits and other tax-exempt entities – by assessing a quarterly payment of $25 per employee for those with more than four. While the intent to generate revenue from tax-exempt organizations not currently contributing to city service benefits is a good thing, it diminishes the lessening of the business tax burden.

In addition, instead of preserving the general sales tax rate when expanding taxable businesses to include those currently exempt – such as hair salons, health clubs, bowling alleys, carwashes, construction and carpentry contractors, upholstery cleaners and storage facilities – the current 5.75 percent rate is recommended for return to 6 percent.

And while the vast majority of revenue reductions, totaling nearly $100 million, originate from a laudable cut in the income tax rate for low and middle-income earners by adding new tax brackets, the existing too-high rates for taxpayers earning more are untouched.

A first step in reducing D.C. business and personal tax rates is long overdue, if inadequate, and is deserving of support – and does offer enterprise a modicum of relief.

At least it’s a start.

Mark Lee is a long-time entrepreneur and community business advocate. Follow on Twitter: @MarkLeeDC. Reach him at [email protected].

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Speaker Kevin McUseless calls for Biden impeachment inquiry

Stunt will backfire on Republicans in 2024

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House Speaker Kevin McCarthy (Washington Blade file photo by Michael Key)

Congress has joined the world of the insane with Republicans calling to impeach any Democrat they disagree with. It is happening in Wisconsin to the new Supreme Court justice, and now lily-livered Kevin McUseless, facing threats from his MAGA members, announced an impeachment inquiry of President Biden.  

He could name no reason, and in fact during the nine months of Republicans investigating Biden, they have found none. Two weeks ago, he said he wouldn’t do this without a vote of the House, but moderate Republicans rightly figure this will all backfire on them, so wouldn’t agree to vote for it. Meanwhile the country is waiting for House Republicans to do their job and pass a budget, which they are unable to do. The result could close the government again. That will also backfire on them, as it will hurt so many people. 

So, what better time for Democrats, thinking independents, and any sane Republican left, those willing to put the country above their own party, and in the case of Liz Cheney (R-Wyo.) and Adam Kinzinger (R-Ill.), even their own reelections, to just vote all these Republican clowns out of office? 

Oversight and Accountability Committee Chair James Comer (R-Ky.), who will lead the inquiry on Biden, has for the nine previous months come up with zilch — nothing meriting impeachment or even further investigation. The IRS whistleblowers’ testimony he touted was contradicted by the FBI in sworn testimony. But then it isn’t Comer asking for this impeachment inquiry, it is Marjorie Taylor Greene and Matt Gaetz, and the MAGAs holding McUseless hostage. Those two should be arrested for criminal behavior, charged with being an embarrassment to the country. They are joined by the likes of Lauren Boebert (R-Colo.), recently thrown out of a Denver theater for groping her boyfriend, vaping, taking pictures, and recording a show, Beetlejuice. This is today’s Republican Party. 

Clearly, most elected Republicans are not willing to stand up to these jokers; all afraid of the Trump cult, aka the Republican Party. They are being threatened with a primary by Trump if they do. They would lose the primary, part of the reason Sen. Mitt Romney (R-Utah) just announced he would not run again. The Trump cult controls roughly 35% of the party and you can’t win without them. But Trump-supported primary winners have shown they lose general elections. 

I am more confident than some in a Trump/Biden replay, Biden will win by 10 million votes this time, but not get one more electoral vote. It will again be about seven or eight states. If Republicans go ahead with this impeachment Democrats will win in 2024.

As to Hunter Biden, he should be punished for anything he did wrong, like any private citizen; whether it is not paying his taxes or lying on a gun permit application. President Biden should stop inviting Hunter to the White House, and curtail his public embrace of his son. It hasn’t helped his son, and is clearly not helping his own campaign, or for that matter any other Democrat. What he does in private is his business. The president has two homes, one in Wilmington, and one in Rehoboth Beach, where he can meet with, and entertain his son. I think the president owes that to the people he is asking to support him. He owes it to the party to not put himself in positions his opponents can take advantage of. 

Joe Biden has been a public servant since he was 28 years old, starting on the New Castle County Council, in Delaware, in 1970. He ran and won his Senate seat in 1972. He has never been accused of any impropriety until the Republicans decided they could make unfounded accusations for political gain. He has shown himself a decent and honest man. A man with empathy for those less fortunate; and a president with one of the most successful administrations in modern times. 

So McUseless, do your worst. Bend over for the MAGAs and get screwed. Hope it hurts. You have no balls as depicted in a recent funny meme where Barbie is shown on her knees in front of Ken, saying she finally understood; McUseless was the model for Ken. 

The country will survive McUseless and the congressional Trump cult and be stronger for it. The decent people of the country will end up winning and McUseless, Marjorie Taylor Greene, Matt Gaetz, and their cronies, will be relegated to the dustbin of history with nary an asterisk to their names. If there is an asterisk it will read that they were useless, venal, and screwed up.

Peter Rosenstein is a longtime LGBTQ rights and Democratic Party activist. He writes regularly for the Blade.

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Impact lingers 22 years after that bright September morning

Religious zealotry that led to 9/11 can be seen in far right politics

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The Pentagon in Arlington just across the Potomac River from Washington D.C. on the morning of September 11, 2001, approximately 10 minutes after terrorists flew American Airlines flight 77, which had taken off from Dulles International Airport, into the southwest side of the building killing 184 people. (Screenshot/YouTube Archival news footage)

Tuesday, September 11, 2001, a point in time that forever altered the world in a series of events, terrorist attacks, that would linger on politically, spiritually, culturally, and leave an indelible mark on those alive at the time who experienced that day.

A human being born that day celebrates their twenty-second birthday this week, having grown up in a world where security measures — some draconian — dominate and where a certain sense of collective innocence has been lost.

Perhaps the ultimate irony is that lessons of peaceful diplomacy that could have possibly been gained from that day were instead lost to the sense of paranoia and nationalistic ideology and messaging as governments reacted, and in the case of the United States, commencement of a war that became the longest in American history.

The number of American service members who died fighting the wars in Iraq and Afghanistan had passed 7,000 at the end of 2021. The ‘War on Terror’ as it was known spanned 20 years, saw the expenditure of $6 trillion, 900,000 lives lost around the globe and at least 38 million people who have been displaced. 

9:37:46 AM, The Pentagon in Arlington, Va., just across the Potomac River from Washington, D.C.: American Airlines Flight 77, which had taken off from Dulles International Airport, struck the southwest side of the building killing 184 people.

This reporter was in the Pentagon that fateful morning, having agreed to substitute for a sick colleague. I witnessed the utter disbelief on the faces of every one of my colleagues as we were clustered around a television set watching the events unfolding in New York City at the World Trade Center and then suddenly it was our turn as the entire building shook as Flight 77 crashed into the southwestern face of the Pentagon.

The next 16 hours are still a vignette of sounds, smells, and sights from that day that have never left me. The events of that day would later define my career and set me on a path of being far more cynical than I was previously as I viewed a changed world.

Here, two decades later, I reflect still on what could have been and yet still remain optimistic even in the face of greater turmoil, widespread authoritarianism, a global climate crisis exacerbated by war, and then too of war itself as evidenced by the illegal incursion into the sovereignty of Ukraine.

The rise of nationalism, especially of the white supremacist variety tied to religious fundamentalism, is the primary danger and the direct linear descendent of the terrorism that was seen on that Tuesday morning 22 years ago. It is not just an American issue, it is a global issue, one that needs to be exposed and then dealt with.

The religious zealotry that fed the extremist ideology that led to the acts of terrorism that bright September morning can be seen again manifesting in the extremist actions of the far right beyond politics. Book bans, the war on trans and queer people, stifling of free speech and ideas, promotion of anti-immigrant, anti-LGBTQ and racist ideas all contribute to a society that is rapidly becoming very unsafe and a petri dish for the next 9/11.

This is the lingering impact of that long ago day and must be mitigated, before history repeats itself.

Brody Levesque is editor of the Los Angeles Blade. 

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There’s a good chance you’re overpaying for medication

New policy lets worst offenders behind high drug prices off the hook

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(Photo by Vitalii Petrushenko/Bigstock)

In its push to lower the cost of medicine, Congress has focused on giving Medicare the authority to negotiate drug prices with manufacturers. Officials just announced the first 10 medicines up for negotiation under the Inflation Reduction Act (IRA).

Unfortunately, all of the attention given to that policy lets some of the worst offenders behind high drug prices off the hook: pharmacy benefit managers, or PBMs — companies that function as powerful drug-industry middlemen.

Acting on behalf of insurers, PBMs use their buying clout to obtain discounts and rebates from drug makers. In theory, these savings should be passed on to patients at the pharmacy counter. But in fact, while PBMs extract billions of dollars in profit for themselves each year, patients see little to no benefit.

It’s time to change this system. Thankfully, lawmakers now have PBMs in their sights in a proposed bipartisan reform bill.

The fundamental problem is that PBMs wield enormous influence over drug prices, with virtually no transparency or accountability. They’re able to wield such power because they control insurance company formularies — those lists that determine which drugs your insurer will cover, and on what terms.

PBMs have drug manufacturers over a barrel because (in a helpless position), in order to make sufficient sales, the manufacturers need their products on formularies on favorable terms. But even though PBMs are charged with obtaining discounts, their interests are not aligned with those of patients. In fact, just the opposite is true.

The PBM revenue model is linked to the list prices of drugs. The higher the list price, the bigger the discount they can obtain. That means that PBMs make more money off more expensive medicines, giving them a perverse incentive to offer better formulary placement to pricier treatments. But that, in turn, pressures drug makers to increase list prices, on the expectation of offering larger discounts.

Meanwhile, the coinsurance obligations that patients pay continue to be calculated based on list prices — not the discounted prices insurers actually pay. By exploiting this difference, PBMs manage to charge two-thirds of patients for the full list price of a drug, even though they’ve negotiated deep discounts from the manufacturer.

Mergers and acquisitions among PBMs and insurers have given them even more power. Currently, just three PBMs make up 80% of the prescription drug market, and the top six control nearly the entirety, 96%. At the same time, the three biggest PBMs either own or are owned by the three biggest insurance companies. They also use their sway to steer patients to fill prescriptions at the pharmacies they likewise own.

Consider how this whole setup affects patients with HIV. While there are more than 30 FDA-approved medicines to treat the virus, a PBM can steer patients toward the most expensive options via their insurance coverage. Then, a patient can be required to pay a percentage of the list price out of pocket, rather than a percentage of the lower price the insurer actually paid.

There’s still more in the PBM-insurer bag of tricks. Drug makers often issue discount coupons to help patients with coinsurance requirements. But PBMs and insurers essentially steal the value of those coupons right back, by refusing to count them toward deductibles and annual caps on out-of-pocket spending.

Insurers and their PBMs are also behind the “utilization management” rules that patients increasingly face when seeking care. So-called “prior authorization” policies, for instance, require doctors to ask insurers’ permission before ordering certain drugs or tests. Such policies have been an obstacle to patients obtaining PrEP drugs, the pre-exposure prophylaxis that prevents HIV transmission.

As so many activists and lawmakers have observed, we need to bring down out-of-pocket medication costs. One-third of Americans report not filling a prescription because of price, and we know that when prescription costs increase, patients are less likely to adhere to their medication regimen. Their health suffers as a result, often requiring additional interventions and hospital stays.

But the new IRA plan for drug-price negotiations can’t solve all these problems. Lawmakers also need to rein in PBMs. Specifically, any new legislation should decouple PBM compensation from the list prices of drugs, so that the companies aren’t motivated to steer patients toward the most expensive treatments.

For the sake of patients, myself included, there’s no time to lose.

Guy Anthony is president and CEO of Black, Gifted & Whole.

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