Well-to-do residents of the District of Columbia pay higher local taxes than persons making the same income in the suburbs. Poor persons in the city pay less than those who live in nearby jurisdictions, according to a new city study.
An annual survey by the D.C. Department of Finance and Revenue that was just released shows that a four-member family earning $40,000 paid $4,485 last year in the District.
Taxes for a similar family in the major Maryland suburbs averaged about $3,700 and those in nearby Virginia were slightly above $3,600. Loudoun County, Va., was lowest with $3,352.
For family earning $7,500 a year, District taxes would have totaled $553, just barely above the $532 tax bill in Charles County, Md., lowest in the region.
Taxes for the $7,500-income family ranged in other suburbs from $568 in Loudoun County and $615 in Montgomery County upward to $653 in Fairtax City.
The figures include state and local sales, income, real estate and automobile taxes.
Another, separate study showed the District near the average tax burden among the nation's 30 largest cities. At $7,500 income, a home-owning taxpayer in Washington would have paid $3 less than the 30-city average of $650 in 1977. At $40,000 income, a Washingtonian would have paid $901 more than the 30-city average of $5,683.
Boston, with a high real estate tax, had by far the largest burden in all income brackets. A $7,500-a-year earner would have paid $1,783, compared with Washington's $647, while a $40,000-a-year earner would have paid $8,575 compared with Wadhington's $4,584.
District taxes at the $7,500 income level dropped by between 1977 and 1978 because the city increased the homeowner exemption on real estate, cutting taxes on owner-occupied housing. Real estate taxes are a relatively greater burden on poorer families than on weathier ones, the studies showed.
Preparation of the two studies each year is required by Congress to provide a benchmark for its consideration of the District budget and the level of the federal payment to the city.
Kenneth Back, director of the Department of Finance and Revelue, said the studies show the District's tax system is the most progressive in the region. That means, he said, that taxes are highest on those most able to pay and lowest on those least able.
This is represented by an index figure included in the report - the smaller the index figure, the more progressive the tax system.
Both studies were supervised by Mark I. Gripentrog, a financial economist on the finance department's research staff.
To reach the tax payment figures, numerous assumptions were made about the families in each income bracket. Any changes in those assumptions would alter the calculated tax burdens.
For example, it was assumed that a $7,500-income family in the District earned its entire income from wages and owned a home valued at $20,100 and a 5-year-old Volkswagen.
On the other hand, a $40,000-income family in Montgomery County was considered to receive $35,00 in wages, $4,000 in interest, $1,00 in capital gains while owning a home valued at $70,800 and two automobiles -- a year old Ford LTD and a 3-year-old Dodge Dart.
Differnt housing values were used for each political jurisdiction, based on average tables used for U.S. income tax returns.
Following are some of the findings:
Real estate taxes for District residents are lower than the areawide average for families with $7,500 income, are equal to the average at the $15,000 and $22,500 levels and are greater at higher income levels.
Income tax payments vary widely. District residents earning $7,500 pay 1.7 percent of total earnings in local income taxes, while those earning $50,000 pay 6.8 percent. The comparable state figures for Virginia are 1.1 and 4 percent; for Maryland, 2.6 and 5.5 percent. The Maryland figure includes county piggyback taxes.
The sales tax burden is highest in the District for most taxpayers. Virginia is higher than Maryland for lower-income taxpayers, but the two states are about the same for wealthier taxpayers. At the $22,500 income levels, for example, a D.C. resident would have paid $298, a Marylander $251 and a typical Virginian $259.
Automobile-related taxes are highest in Virginia, because there is a locally collected personal property tax on cars and registration costs more than in Maryland. The District, however, has the highest registration fee, and the District gasoline tax at 10 cents is a penny higher than in the suburbs. The owner of a 1977 Ford Granada would have paid $94 in all auto-related taxes in Maryland, $128 in the District. $291 in Fairfax County and $333 in Arlington.