DC Tax Revision Commission releases Chairman’s Mark, includes Business Activity Tax and Data Excise Tax

In particular, the Chairman’s Mark tentative proposals include:

• Create Business Activity Tax – the proposal is described as a “[l]ow-rate, broad base ‘value-added tax’ on gross receipts minus the sum of purchases from other businesses, rent, and capital expenditures.” The tax would be fully creditable against the District’s corporate franchise tax and individual income tax. The tentative rate is set at approximately 1.4%;
• Create Data Excise Tax – the proposal calls for a “[t]ax on businesses that are extracting data from over 50,000 DC residents, at rate of $4/participant/year”;
• Repeal Unincorporated Business Franchise Tax;
• Switch to Finnigan Rule for Corporate Franchise Tax;
• Repeal Personal Property Tax;
• Enact SALT Cap Workaround; and
• Tax Electric Vehicles (at same rate as other cars and trucks).

The Commission advises that these proposals are “not intended as a menu of discrete ideas to pick and choose from.” Rather, “[p]olicymakers and the public should view these recommendations as a package to be adopted together.”

The Commission is currently scheduled to hold three recommendation review sessions, set for January 8^th at 2 p.m., January 17^th at 1 p.m., and January 19^th at 2 p.m. These sessions are available to join virtually. During these meetings, the Commissioners will share their reactions to the Chairman’s Mark and potentially suggest amendments.

On January 22^nd, after the recommendations are finalized for public review, the two-week public comment period is expected to begin. During mid-February, the Commission expects to review the public comments and finalize its tax proposal recommendations to the DC Council and Mayor.

Eversheds Sutherland will continue to monitor and update on the DC Tax Revision Commission’s proposals.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

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