Washington state lawmakers are considering levying a 1 percent tax on "extraordinary intangible financial assets" of people whose personal wealth exceeds $1 billion. This includes assets such as cash, futures contracts, and publicly traded options — not income.
Washington Democrats have rallied around the measure as one way to help combat growing economic inequality in the state, which has only intensified during the pandemic.
"The conditions were there before the pandemic, but the pandemic has laid bare the true inequity in our tax code here in Washington state," State Rep. Noel Frame told Cheddar.
The representative said that Washington had the distinction of having the most regressive tax code in the country, with lower-income households paying disproportionately more than higher-income households. The state does not impose a personal income tax.
"I think it's egregious and out of step with our values as a state," she said.
Using confidential data from the IRS, U.S. Federal Reserve, and proprietary information from Forbes, the state estimated that the law would impact 100 taxpayers in Washington.
Among them are world-famous mega billionaires such as Jeff Bezos, Bill Gates, MacKenzie Scott, and Steve Ballmer, who would contribute the lion's share of the tax contributions.
Based on the latest data from Forbes, the Tax Foundation found that about 97 percent would come from those four individuals, though roughly a dozen people would be liable for the tax.
"I have to tell you that number is jaw-dropping to me," Frame said. "I think we know a few of those billionaires in our state, but it turns out there are many, many more."
If passed, the levy would be imposed starting January 1, 2022, for taxes due the following year.
Frame said another goal of the bill is to help fund existing tax credits for lower-income households, including a credit against the sales tax, which she said the state is overly reliant on. She added that about 47 percent of Washington's revenue in 2020 came from the sales tax, which is generally considered more regressive than other taxes.
"When you think about somebody who has a total household income of $24,000 or less, you can imagine how quickly the sales tax on those everyday purchases will add up as a share of your household income," she said.
State lawmakers are set to let the bill "simmer" over the next few weeks, Frame said.
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Catching you up on what you need to know on March 25, 2022, with Ukrainian forces retaking Kyiv, 300 deaths reported from the bombing of a theater used as a shelter in Mariupol, U.S. regulators ditch a climate review of natural gas projects, the 94th Academy Awards, and more.
North Korea says it test-fired its biggest intercontinental ballistic missile under the orders of leader Kim Jong Un, who vowed to continue expanding his nuclear arsenal while preparing for a “long-standing confrontation” with the United States.
Ukrainian authorities in the besieged ruins of Mariupol say that about 300 people died when a Russian airstrike blew up a theater where hundreds of civilians were sheltering.
