Washington, DC is a city rife with economic inequality, especially on the basis of race. Black residents have watched outgoing Mayor Muriel Bowser slash away at critical social safety net programs while federal tax cuts further enrich the city’s wealthy elite, expanding a racial wealth gap that leaves the working class shouldering the burden of economic inequality. 

Local advocacy groups and lawmakers aiming to end this inequitable economic system are calling for a wealth proceeds tax, which is a surcharge on passive income like capital gains or dividends. 

The funds generated from a wealth proceeds tax could help fund dilapidated social safety net programs. It is a progressive tax, meaning the rate increases alongside income. If implemented, the tax could be a first step toward deconstructing economic hierarchy and building a more equitable DC.   

“Over 96 percent of this tax will be paid by billionaires. It is deeply progressive and deeply equitable as a source for recurring revenue,” the Fair Budget Coalition’s (FBC) senior advocacy strategist Katharine Landfield told Inequality.org in an interview.

FBC and other DC-based advocacy organizations such as Empower DC and the Fiscal Policy Institute have thrown their support behind a wealth proceeds tax proposal. Outgoing Councilwoman Brianne K. Nadeau has openly discussed a 2 percent tax on passive income, while local organizations are targeting a 3 percent tax that could generate $161 million in revenue.

The tax, backed by groups like the FBC, would add to the federal Net Investment Income Tax, adding a surcharge to the amount wealthy people are already paying in taxes. 

The fight for a DC wealth proceeds tax comes in the midst of a turbulent economic period for the nation’s capitol. The Trump administration provided DC’s wealthy elite with $1.4 billion in federal tax cuts. At the same time, mass federal layoffs took a heavy toll on the city’s working class.

Bowser’s austere budgets have failed to address the city’s deep inequalities. DC’s FY26 budget gutted programs like the Temporary Assistance for Needy Families (TANF). The program provides money to enrolled families to pay for needs and connects enrollees to childcare and mental health services. The current maximum benefit for enrollees is $803 per month. 

FY26’s financial plan could gradually reduce payouts to just $151 per month, an 81 percent reduction. 

The city’s economic woes compound upon its Black residents, who are overrepresented in poverty statistics. The Economic Policy Institute found that Black employment in the DMV region fell by 5.9 percent between 2024 and 2025, a decline which is directly attributable to the federal layoffs. Insufficient funding to safety net programs from the budget puts DC’s vulnerable Black communities further in danger.

The DC Council voted to advance the new FY27 city budget earlier this month. While council members managed to include funding from budget reserves to address what would have been disastrous cuts to social safety net programs, they failed to introduce and discuss a wealth proceeds tax proposal.

As is, Bowser’s budget does not meaningfully take care of DC residents. A wealth proceeds tax could be the catalyst towards redefining DC’s economic priorities.

“We do not always want to have this tax only address cut restorations to safety net programs. The hope is if we could have a more equitable tax system, we can start really meeting our dreams for communities,” Landfield said. 

The FBC said they will continue to fight for a wealth proceeds tax alongside their local advocacy partners. Their efforts are made somewhat easier by the high level of community support; FBC’s Abel Amene said DC residents back the wealth proceeds tax, including several wealthy residents.

“Some of our fiercest advocates have been people from more affluent neighborhoods…to a certain degree, we’re almost fighting a phantom sometimes, and not actual resistance,” Amene said, explaining how there is very little opposition on the ground.

Several states are instituting taxes targeting wealthy people across the country. In Washington state, Gov. Bob Ferguson recently signed a 9.9 percent millionaires income tax that will kick in on Jan. 1, 2028. Maine Gov. Janet Mills also just signed a 2 percent millionaires income tax, which is expected to raise $244 million across the next three years.

Californians will vote on a one-time 5 percent wealth tax that if passed could raise $100 billion from 2027-2031. DC advocacy organizations are not alone in their desire for a more equitable economy. 

Likely DC voters polled in 2024 overwhelmingly supported higher taxes on millionaires, mirroring nationwide trends on the issue. DC could join this cohort of states pushing to deconstruct economic hierarchy and take care of their Black residents.    

The FBC recommends community members get involved in the fight for a wealth proceeds tax by spreading the word to families and friends. The organization is partnered with several DC advocacy groups that people can find here. 

Community engagement beyond budget season, Landfield and Amene emphasized, is always needed and appreciated.

“Our fight is even more urgent now because [the wealth tax proposal] didn’t come up yesterday. We need to be pulling out all the stops to make sure the community is turning out and demanding this tax move forward,” Landfield said.

The next vote on the FY27 budget is on Tuesday, June 23. The council will consider the budget again and if it passes, it will send the budget to Congress. Council hearings are open to the public. 

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