Legislators in Washington state are taking bold steps towards instituting a state-level wealth tax. The proposed tax is a 1 percent levy on wealth over $1 billion, applying to fewer than 100 households in the state.
According to the state’s Department of Revenue, the tax would raise an estimated $2.25 billion in 2023 and $2.5 billion in 2024. At a February 2 hearing, House Finance Committee chair Noel Frame said it’s time to put a new “tool in the toolbox for comprehensive structural tax reform.” The state’s current tax system places an enormous burden on Washington’s working class.
At the February 2 virtual hearing, over 40 witnesses lined up to testify in support of HB1406, an act to “improve the equity of Washington state’s tax code” by creating a wealth tax and “taxing extraordinary financial intangible assets.”
Many witnesses pointed out that Washington state has one of the most regressive tax systems in the country, with no income tax, a weak corporate tax system, and an overdependence on sales taxes. “Low income families pay 18 percent of their income in taxes while the very wealthy pay less than 3 percent,” observed John Burbank from the Economic Opportunity Institute in his testimony.
“This state is a wonderful place to raise a family and to plant roots,” said Mary Curry, a Tacoma resident and owner of a day care center, in testimony before the committee. “But how do I build when the tax laws are so harsh to the working class such as myself?”
Washington state has been hammered during the pandemic, with nearly 312,000 state residents falling ill from Covid and 4,300 deaths. An estimated 2.1 million of the state’s workers lost jobs during the accompanying recession. The state government is facing a three-year budget gap of $3 billion.
“Rich millionaires like me pay less than what workers pay, even those who are barely getting by,” said Dan Price, CEO of Gravity Payments. “Even after this tax, billionaires will still pay a lower percentage than working people here… We have a $3.3 billion budget deficit that needs to be closed. There’s an easy way to close it.”
A number of legislators pointed to research by the Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS) on the growing concentration of billionaire wealth. As of February 2019, Washington state’s 13 known billionaires had $293 billion in wealth. By January 29, 2021, their total wealth had increased to $474 billion. In the last 10 months, starting with the pandemic lockdown in mid-March, Washington state billionaires saw their wealth surge by a combined $151 billion, an increase of over 47 percent.
Washington state’s effort is aligned with discussions taking place about a wealth tax at the national level. Senators Elizabeth Warren and Bernie Sanders have proposed wealth taxes — and, as a just-appointed new member of the Senate Finance Committee, Senator Warren repeated her call for a wealth tax. Such tax-the-rich proposals are popular with the wider public, even across partisan divides.