A brand new proposed wealth tax in Washington state would impose a 1% tax on billionaires, affecting Seattle-area tech and enterprise leaders reminiscent of Amazon CEO Jeff Bezos, Microsoft co-founder Bill Gates, and about 100 different ultra-wealthy residents.
House Bill 1406 would produce an estimated $2.25 billion in 2023 and $2.5 billion in 2024, based on Rep. Noel Frame (D-Seattle), chair of the state’s House Finance Committee who launched the invoice Wednesday with House Majority Leader Pat Sullivan (D-Covington).
In an interview with GeekWire, Frame stated the intent of the wealth tax is a component of a bigger effort to assist to restructure the tax code in Washington state, which she described as probably the most regressive within the nation. Washington can also be amongst 9 states that shouldn’t have earnings taxes.
“We have a tax code that asks low-income people to pay six times more than the wealthiest, in terms of how much tax they’re paying as a share of their income,” she stated. “As a state that considers ourselves a social and economic leader, I just don’t think it’s acceptable. It’s completely out of line with our values.”
The Washington state Department of Revenue estimates that there are 100 taxpayers with wealth in extra of $1 billion.
The invoice would tax “extraordinary financial intangible assets” reminiscent of money and money equivalents; publicly-traded choices; futures contracts; and shares and bonds. The first $1 billion of assessed worth can be exempt.
The income can be used to supply credit towards taxes paid disproportionately by low-income and middle-income households, in addition to small corporations and low-margin companies. It would additionally fund schooling, little one care, public well being, public housing, and public security companies.
Frame pointed to the invoice’s sponsors — together with House Majority Leader Sullivan — as an indication that lawmakers are critical in regards to the laws. “It should signal to folks that this is much more than a message bill,” she stated.
There have been comparable wealth tax efforts in different states and on a federal stage. Proponents of wealth taxes say they can be utilized to battle inequity and drive extra income.
However, taxing somebody’s wealth, versus their earnings, can get difficult.
Tracking wealth of the extremely wealthy — particularly when it’s unfold throughout shares, LLCs, philanthropic efforts and different belongings — isn’t any straightforward activity. Asked in regards to the challenges of monitoring and imposing a wealth tax, Frame quipped that each one tax regulation is advanced.
Critics of wealth taxes argue that the complexity makes them onerous to implement, ultimately resulting in repeal. Others say they drive rich people to decrease tax locales.
There are additionally potential constitutional questions in regards to the legality of wealth taxes. And there have been a number of wealth tax makes an attempt in Europe that didn’t succeed.
New York Times contributor Neil Irwin wrote about wealth taxes in 2019, citing analysis that the variety of developed international locations imposing wealth taxes had dropped from 10 within the early 2000s to simply three.
As a part of her presidential marketing campaign, Sen. Elizabeth Warren pitched a federal wealth tax that may have positioned a 3% tax on a household with $1 billion or extra of wealth.
Other states are pushing ahead with efforts to implement wealth taxes, partly to assist increase pandemic-related price range shortfalls.
Washington state lawmakers plan to go a $2.2 billion COVID-19 aid package deal, utilizing cash from the federal authorities. In the longer term, Frame stated she doesn’t need the state to depend on federal help in occasions of disaster.
“Let’s pass this now so that if we get hit with another crisis like this, we’ve got better tools to work with,” she stated. “This is a actually a really good time to have this conversation.”
Several states are contemplating numerous “tax the rich” insurance policies amid the pandemic and “K-shaped recovery,” CNBC reported. Washington Gov. Jay Inslee desires to implement a 9% capital-gains tax as a part of his 2021-23 price range proposal.
Nick Hanauer, a Seattle enterprise capitalist and founding father of public coverage incubator Civic Ventures who regularly feedback on financial justice and company greed, stated taxes on the rich are wanted, significantly proper now.
“At a time when our country is being torn apart by radical inequality and our state is in the throes of an economic crisis, every sensible wealthy person should be in favor of any policy that will materially make our economy healthier,” Hanauer stated in an announcement to GeekWire. “To drive economic recovery in Washington we have to raise revenue to invest in the people of this state, and the revenue needs to come from the wealthy. I haven’t read the details of Rep. Frame’s proposal yet, but if it checks those boxes, then I’m for it.”
In an opinion piece for Crosscut, former Seattle mayor Mike McGinn wrote that it’s “time for the wealthy to step up.”
“Nobody likes new taxes,” he stated. “But this is a crisis and we should not be burdening those with the least by cutting essential services or raising regressive taxes.”
Gravity Payments CEO Dan Price, an outspoken advocate for tax reform, stated he deliberate to toss his assist behind Frame’s invoice.
The invoice HB 1406 is authored by finance chair (and my House member) @NoelFrame and Dem Majority Leader Pat Sullivan.
I’ll be testifying in favor the invoice and serving to lead a bunch of companies to struggle for it.
It’s time that billionaires pay their justifiable share. It’s previous time.
— Dan Price (@DanPriceSeattle) January 27, 2021
Since the wealth tax laws was simply launched as we speak, many teams that comply with public coverage such because the Washington Technology Industry Association and Washington Research Council had not but dug into the invoice. However, coverage watchers stated they have been unaware of a wealth tax ever being severely thought of within the state.
The invoice will likely be mentioned at a Feb. 2 listening to at 1: 30 p.m. PT.
See the complete invoice beneath:
House Bill 1406: Washington state wealth tax by GeekWire on Scribd
Editor’s word: This story was up to date to mirror the right income quantity for 2024.