DC Council Punts Wealth Tax Debate to the Fall

The fight for a wealth proceeds tax in Washington, DC lives on, at least for now. Instead of floating a proposal during this summer’s budget hearings, outgoing DC City Councilmember Brianne Nadeau said she will introduce the measure next month so that the city council can consider it during a September tax and revenue hearing.

The capital’s racial wealth gap continues to plague its Black residents, and is only expected to intensify with deep federal funding cuts to social safety net programs. Advocates of a wealth tax have argued that extracting more revenue from the city’s wealthy could have provided a consistent way to fund these critical programs.

While such a tax is still technically on the table, a budget without it does not meaningfully protect DC’s Black communities.

The council’s budget uses $600 million from reserves and a decoupling from new federal tax code revisions to plug cuts from outgoing Mayor Muriel Bowser’s budget. Some of the programs that will receive extra funding include:

• Early childhood educator pay equity fund: $61.5 million for early educators’ salaries ($73.5 million total)
• Childcare subsidy programs: $39 million to eliminate the enrollment freeze ($153.2 million total)
• Housing vouchers: $28.2 million to fully support 469 housing vouchers
• Education: $6 million for the University of DC, $2.7 million for Saint Coletta of Greater Washington

Some funding went to delaying the time limit on Temporary Assistance for Needy Families (TANF). Enrollees have a federal time limit of 5 years to stay in the program. However, DC helped extend that time through local funding. Bowser proposed to cut local funding, and the council prevented that cut until at least next year.

Council members also approved a contingency plan that will send excess revenue to different programs. The first $150 million in excess revenue will replenish the fiscal stabilization reserve.

The next $9 million will go towards housing vouchers; $3 million will go to the emergency rental assistance program; $2 million will go to the credible messengers program; and $36 million will go to the workforce investment account. The DC Fiscal Policy Institute’s (FPI) chief policy and strategy officer Tazra Mitchell told Inequality.org this list could potentially change after Tuesday, July 7’s council hearing.

These programs will have more funding than what the mayor initially proposed. Still, this money is on a one-time basis, meaning funding will expire next year. The council employed a band-aid approach that effectively punted the issue to next year’s budget.

Representatives from local advocacy organizations tepidly celebrated the final budget. However, they criticized the council for failing to implement a more consistent funding source.

“The DC Fiscal Policy Institute (FPI) definitely applauds the DC Council for finding revenue to fill significant holes the mayor left…but it’s just a one-time fix. By failing to take up the wealth proceeds tax, which would advance racial and tax justice, it means lawmakers are kicking the can down the road,” Mitchell said following the final budget hearing.

Fair Budget Coalition’s (FBC) senior advocacy strategist Katharine Landfield said political calculations and the primary election pushed the council to consider the wealth proceeds tax at a later date. DC’s poor Black citizens do not have the luxury to wait.

FBC and FPI held a press conference just before the budget hearing. They continued to advocate for a 3 percent wealth proceeds tax, which would raise $200 million in its first year according to Nadeau’s office.

“We don’t experience a partial cut as a partial loss. We experience it as an eviction, as a loss of healthcare, a loss to jobs…it is not a partial cut for us, our lives are on the line…Raising revenue by taxing wealth would have handed the next mayor a budget built on a stable foundation, instead of a structural deficit papered over with one-time money,” FBC executive director Niciah Mujahid said.

Mujahid said the advocacy campaign for a 3 percent wealth proceeds tax will continue.

Councilwoman Janeese Lewis George, a member of the Democratic Socialists of America, recently won the Democratic mayoral primary and is virtually guaranteed to win the general election in November. Landfield said her victory reflects a hunger in the electorate for a budget that prioritizes working class needs.

“We just had an election that shows people want something different. They want a government that takes care of the people…I think there is a sense [Lewis George] may want to have her own [tax] package. I’m hoping they don’t wait until she’s mayor. I’m hoping they use the momentum of the election and actually do something in the fall,” Landfield said.

Lewis George has yet to comment directly on the wealth proceeds tax proposal. However, she said she supports a business activity tax, which is a tax on for-profit businesses operating in the city. This tax would include companies headquartered outside of DC, who often avoid local taxes.

Time will tell how the wealth proceeds tax proposal will play out next fall and during Lewis George’s first term next year. The proposal could raise millions in consistent funding for social safety net programs that Black DC residents need. If the DC Council takes their constituents’ needs seriously, they will vote accordingly in the coming months.