State Democrats join multi-state effort to tax the ultra-wealthy
Can a multi-state partnership to advocate for a wealth tax get Democrats’ legislation passed this year in the Washington Legislature?
It’s still too early to tell, but lawmakers will have the next few weeks of the session to clear some major hurdles for the proposed legislation that would impose a 1% tax on the wealthiest residents’ financial assets.
On Thursday, House and Senate Democrats announced their latest proposal, the Washington State Wealth Tax, which they say is narrowly tailored to tax ultra-wealthy Washingtonians.
The legislation would tax “extreme wealth derived from the ownership of stocks, bonds, and other financial assets,” Democrats said in a news release Thursday.
Sen. Noel Frame, D-Seattle, opened a press conference with reporters Thursday by saying that more than two-thirds of Democrats in the Legislature already support the measure. Additionally, she said, the legislation is part of a partnership with legislators from seven other states, including Hawaii, California and Illinois, to “put billionaires and ultra-millionaires on notice that it’s time that they pay what they owe, and state legislators are the ones to make them do it.”
The tax revenues would go towards under-funded needs in the state such as disability services, education, housing and tax credits for working families, Frame said.
For millionaires and billionaires in Washington, the first $250 million would be exempt from the 1% tax on financial assets, according to Frame. That means about 700 residents in the state would be impacted, and the tax would raise $3 billion in revenue per year.
Frame is sponsoring Senate Bill 5486. My-Linh Thai, D-Bellevue, will sponsor the companion, House Bill 1473.
Thai said other states joined in simply because it is the right thing to do. She said the current tax code is hard on working families as well as small businesses.
Frame sponsored similar legislation in 2021 as a House of Representatives member, before joining the Senate this year.
House Bill 1406 would have taxed billionaires in the state 1% on intangible financial assets. That legislation passed the House Committee on Finance, but stalled in the Appropriations Committee. A companion bill sponsored by Sen. Sam Hunt, D-Olympia, also stalled that year.
Some groups have already vocalized their opposition to the newest proposal.
“We haven’t even seen the conclusion of the capital gains income tax legal fight yet (the state Supreme Court hearing is on Jan. 26) and it looks like some lawmakers may already be gearing up for another tax increase with suspect constitutional viability,” Jason Mercier, director of government reform at the Washington Policy Center, said in a news release Thursday.
Gov. Jay Inslee did not specifically say if he would support the proposal yet, either.
Inslee told reporters during a news conference on Thursday that he appreciates leaders’ ideas for bringing more equity to the state.
He mentioned the Working Families Tax Credit, which he said restores a little equity to the current system. The embattled capital gains tax too, he said, has been “embraced” and will soon tax wealthier individuals instead of lower-middle class families.
“I’m not opposed to this concept of a property tax on intangible assets, also called a wealth tax,” Inslee said. He added that he would continue the discussion about the proposal with lawmakers.
When asked about the potential legal hurdles, he said from his brief review of the legislation that he believes it meets all constitutional requirements.
The Legislature is in the midst of a 105-day session that will end April 23.
