WASHINGTON, D.C.—Councilmember Brianne K. Nadeau’s legislation to add a small surtax on passive income from D.C.’s wealthiest taxpayers got its first official feedback in a Friday hearing that looked at seven tax proposals in a broad review of possible changes to the District’s tax structure.
Expert witnesses spoke to all the proposals, including one other from Nadeau, which would improve the District’s uneven property tax cash flow and split off land value in property assessments to pave the way for future policymaking.
Nadeau had the only two proposals on the meeting agenda that have been submitted as legislation.
“Reforming our tax code is about ensuring a fair, shared responsibility for the programs and services – for safe and clean streets, for public infrastructure, for housing assistance, for healthy food access – that we all rely on,” Nadeau said. “Our District must work for all of us, not just those who can most easily afford it.”
Nadeau’s first bill, the Wealth Proceeds Tax Amendment Act of 2026, would make D.C.’s tax code more equitable by applying a 3 percent surcharge to qualifying passive investment income above $400,000 for an individual or $500,000 for a married couple. It is modeled after the federal Net Investment Income Tax (NIIT) but kicks in at a much higher threshold and exempts more kinds of income. Nobody who doesn’t pay the federal NIIT would pay the new local tax, and many of those who do pay the federal would be exempted from D.C.’s.
“The goal is simple: protect ordinary wages and ensure that those who receive substantial returns from accumulated wealth contribute fairly to the city we all depend on,” Nadeau said.
The other measures that were discussed: a business activity tax, pied-a-terre tax, and changes to the sales, real property, and individual income taxes.
In remarks to the Council’s Committee of the Whole, Nadeau said the conversation on revenue proposals is long overdue. With a long history of advocating for “revenue raisers,” she said it’s time for the Council to take a comprehensive look at taxation and to come up with predictable, stable revenue to pay for much-needed city services, rather than asking residents with the least to absorb the human costs of reduced government services.
Nadeau was one of the authors of the Homes and Hearts Amendment in 2021, which generated funding for housing for 2,000 residents, and increased wages for childcare workers, through a small tax increase on the wealthiest Washingtonians.
“Analysis from the Tax Revision Commission found that this did not result in any discernable tax flight,” she noted in anticipation of criticism that any tax increase would cause wealthy people to leave the District.
Read Councilmember Nadeau’s full comments – a slightly edited version of her remarks.
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