Democrats push new tax on billionaires

House Democrats are rallying around a proposal to tax Washington State’s billionaires.

House Bill 1406 would impose a 1 percent tax on intangible assets, such as money or stocks, on people whose wealth exceeds $1 billion.

The Washington State Department of Revenue estimates the tax would raise close to $5 billion from 2023 through 2025 and affect fewer than 100 state residents. Revenue raised by the plan would fund tax relief for low-income individuals and contribute to the state general fund.

The department also notes the lion’s share of the revenue would come from the state’s most wealthy individuals—such as Amazon founder Jeff Bezos and Microsoft cofounder Bill Gates, who are both worth more than $100 billion. The department analysis said the projected revenue would fall significantly if one or more of the wealthier individuals targeted by the bill left the state in the coming years.

Rep. Noel Frame, D-Seattle, primary sponsor of the bill, said at a hearing Feb. 2 the aim was to shift the tax burden from Washington’s struggling working class.

“Who should be funding economic recovery?” Frame asked her colleagues at the hearing. “The families that have lost their jobs and their healthcare...or perhaps should we ask the wealthiest Washingtonians—many of which happen to be the wealthiest people in the world—to share equitably in the responsibility to recover, rebuild and reimagine our economy.”

The bill drew little opposition, although Republicans at the hearing suggested the bill could have unintended consequences, including pushing the state’s billionaires to pack up and move.

“My concern is that we won't raise any revenue from this because people will just leave the state if they have to pay a billion dollars in taxes every year,” said Rep. Jeremie Dufault, R-Selah. “Is there any mechanism in this bill that precludes people from moving out of the state?”

Frame dismissed the idea.

“I think it's a really pessimistic view of the world to just assume somebody would leave,” she said. “These are folks who are deeply invested in our community, some of which have been outspoken advocates for progressive tax reform for many years.”

Frame explained that Washington’s billionaires have increased their wealth by an estimated $151 billion in the past 10 months during the pandemic while many of the rest of the state’s population struggled to pay their bills.

Twenty-six lawmakers have signed on as cosponsors, including Majority Leader Pat Sullivan, D-Covington, and several committee chairs. All of the sponsors of the bill are Democrats.

Among the 1,326 members of the public who took positions at the bill hearing, 1,317 testified in favor of the proposal.

As lawmakers arguing in favor of the bill are quick to point out, Washington’s tax system is one of the most regressive in the nation. The state’s lowest income earners pay six times more as a share of their income than do the state's wealthiest residents. Those making close to $70,000 pay approximately four times their share.

Frame believes that, whatever happens with her bill, the state tax system still requires reform.

“I absolutely do not think that this is the end-all be-all solution to the tax code… There is much work to be done, and this is not the answer to that process by any stretch of the imagination,” Frame said. “It is me as your colleague putting forward a possible tool in the toolbox for consideration.”

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