Economic Growth DC welcomes the slight decrease to the city’s sales tax. This will provide incremental help to small retailers, making their goods less expensive compared to Virginia and Maryland. It may seem counter-intuitive, but lowering the individual and corporate income tax rates would lead to an increase in tax collections for both these taxes. It would make the District an even more appealing place to live and work. The rate of new residents moving to the city would increase even more. And businesses would find it a more attractive place to do business, especially for folks from Maryland who are running from the persistent tax increases experienced there. It would also be of benefit to the DC economy. Taxpayers would have more money available for investment and consumption, thereby increasing private sector economic activity and creating more jobs along the way. The District is a high-tax jurisdiction in comparison with many places around the country. We think making the tax climate more competitive is the best way to increase tax revenues.

http://www.washingtonpost.com/blogs/mike-debonis/wp/2013/06/25/sales-tax-cut-likely-to-get-d-c-councils-okay/