Washington Considers 1% Billionaire Wealth Tax

OLYMPIA, WA — Washington lawmakers are considering legislation that would create a new wealth tax, levied only for billionaires, as part of an effort to correct the state's regressive tax system and raise revenue in the wake of the coronavirus pandemic.

House Bill 1406, authored by state Rep. Noel Frame (D-Seattle), would establish a first-of-its-kind, 1 percent tax on assets above $1 billion. The state Department of Revenue estimates the tax would apply to fewer than 100 Washington taxpayers and raise $2.5 billion annually.

"If your family makes $24,000 a year or less, you are paying six times more in taxes as a share of your income than the highest-earning households in Washington state," Frame said Tuesday. "Even if you're middle class, and you're making closer to $70,000 a year, you're still paying four times more in taxes. Those highest-earning households are paying 3 percent or less in taxes."

Frame, who chairs the House Finance Committee, told GeekWire in January that her bill is part of a broader goal to restructure the state's tax code and decrease Washington's reliance on federal funding in times of crisis.

Lawmakers discussed the bill in a remote hearing of the House Finance Committee Tuesday afternoon. Frame called Washington's tax system the most regressive in the nation and said continuing to tax the state's lowest earners disproportionately would be "unconscionable, unacceptable and, frankly, unsustainable."

"The regressive nature of our tax code is largely driven by the overreliance on sales tax but also on the state's property tax," Frame said. "By taxing financial, intangible property similarly to how we already tax real properties, we will bring parity and equity to the state's tax code."

Balance Our Tax Code, one of the groups supporting the effort, pointed to Forbes data showing the net worth of 13 Washington billionaires rose nearly $152 billion since the pandemic began, as more than 2,000 businesses closed permanently across the state and hundreds of thousands of workers filed for unemployment.

The group's analysis found Washington's billionaires have the highest average net worth of any state in the nation, due in large part to hosting some of the richest people in the world, including Jeff Bezos, Mackenzie Scott, Bill Gates and Steve Ballmer.

Data analyzed by Americans for Tax Fairness found the nation's 661 billionaires saw their wealth increase by $1.2 trillion over the same period.

"The growth in wealth of Washington's billionaires during the pandemic is mind-boggling, like no place on earth," said Frank Clemente, executive director of Americans for Tax Fairness. "The needs of Washington's working families suffering from the ravages of the pandemic are also profound. A state wealth tax would not come close to evening things up, but it's a start."

More than four dozen people signed up to testify Tuesday, including residents, community groups and business leaders. Among the proponents of the measure was Dan Price, CEO of Seattle's Gravity Payments, who gained national notoriety in 2015 after raising his company's minimum annual salary to $70,000 and lowering his own pay to match.

Price began:

"This is an obvious solution. We have a $3.3 billion budget deficit that needs to be closed. There's an easy way to close it. Rich millionaires like me pay less than what workers pay, even those who are barely getting by. Billionaires pay a lower tax than workers in Washington state. How could we not close this gap? In fact, even after we put this wealth tax into place, billionaires will still pay a lower percentage than working people here."

The public testimony heard Tuesday was largely in support of the plan, apart from pushback from anti-tax activist Tim Eyman, and Jim King with the Independent Business Association. Legislative officials said lawmakers received more than 1,300 public comments, including those sent digitally, with approximately eight in opposition. New comments can be submitted online until early Wednesday afternoon.

Read the full text of the bill and other documents via the Washington State Legislature website.