Coalition and policy groups press Council to adopt business activity tax, expand child credit and tax capital gains

Advocates from the District’s fiscal-policy and community organizations used the Committee on Business and Economic Development’s oversight hearing to press the council to pursue a package of tax reforms they say will raise local revenue and address racial inequities.

Elizabeth McNickle, co-chair of the Poor People’s Campaign in Washington, D.C., told the committee the city has “the resources” to reduce poverty but needs political will to direct revenue toward anti-poverty programs.

The nut graf: Speakers from multiple organizations said that the city should both look for budget efficiencies and pursue revenue changes — including taxing capital gains more heavily, adopting a business activity tax (BAT) and strengthening the DC child tax credit — to fund housing, child care and other services targeted to low- and moderate-income residents.

Erica Williams, executive director of the DC Fiscal Policy Institute, said a 2% business activity tax could raise an estimated $500,000,000 in fiscal 2026 and argued that a BAT would broaden DC’s business tax base without increasing tax burdens on small, locally owned firms. Williams also recommended strengthening the child tax credit and eliminating caps that penalize larger low-income families.

Joanna Blotner of DC Action and other coalition witnesses emphasized racial equity considerations: they argued that preferential tax treatment for capital gains and inheritances disproportionately benefits wealthier, majority-white households and that reform is needed to reduce long-term disparities. David Schwartzman of the DC Green Party and other speakers urged the council to combine tax changes — hikes on capital gains and higher marginal rates on millionaire incomes — to generate hundreds of millions in revenue.

Several witnesses noted the Office of the Chief Financial Officer (OCFO) staff provided research and that the Tax Revision Commission had considered related reforms. But witnesses also told the committee they are concerned OCFO’s fiscal-conservative stance has at times constrained equity-oriented policy choices. Joanna Blotner criticized last year’s enforcement of reserve rules that she said forced the administration to tap the pay equity fund.

Council members signaled openness to continued debate and noted the committee will continue oversight with OCFO and agency witnesses as the fiscal year budgeting process proceeds.

Ending: Advocates presented a set of revenue proposals and equity rationales the council will consider as it moves into budget and tax deliberations; no legislative actions were taken at the hearing.