Washington's 'Millionaires Tax' Bill Advances: Governor Seeks Major Amendments

A proposed "millionaires tax" bill is currently advancing through the Washington state Legislature. The bill, which suggests a 9.9% tax on annual income exceeding $1 million, passed the Senate by a vote of 27-22 and is now under consideration in the House of Representatives.

Governor Bob Ferguson has indicated he requires significant amendments before he would sign the legislation.

He emphasized that he will not support any form of income tax for individuals earning less than $1 million annually.

Governor's Stance and Proposed Affordability Changes

Ferguson supports the concept of a tax on incomes over $1 million but seeks a plan that allocates a substantial portion of the revenue back to Washington residents and small business owners to address affordability challenges. His suggestions include:

• Allocating approximately $1 billion in tax revenue for small business tax reductions.
• Expanding sales tax exemptions to include essential items such as diapers and baby products.
• Implementing a twice-a-year sales tax holiday, eliminating sales tax on items priced under $1,000.
• Dramatically expanding the Working Families Tax Credit, which provides financial relief to low- and moderate-income workers and families.

These proposed changes aim to enhance affordability for Washingtonians and small business owners. When asked if he would veto the bill if these changes are not incorporated, Ferguson declined to answer directly, reiterating the necessity of his proposed amendments.

Economic Impact: Concerns and Counter-Arguments

Critics of the tax proposal have expressed concerns that it could lead to high earners and businesses relocating from Washington. Governor Ferguson stated he does not see evidence supporting this claim based on his discussions with businesses, noting that the broader concern often relates to the cumulative effect of various taxes.

However, Collin Hathaway, founder of Skylight Capital and operator of multiple small businesses in Washington, disputed the governor's assessment.

Hathaway indicated awareness within the business community of individuals and businesses already moving within the state, such as from Seattle to Bellevue, citing tax policies, homelessness, and crime.

He also mentioned that the "millionaires tax," alongside the capital gains tax and estate tax, contributes to Washington becoming a more challenging environment for business expansion. Hathaway confirmed that while his businesses are not yet moving out of state, the possibility is increasing.

Legislative Outlook

Both legislative chambers must approve the final version of the bill before the session concludes on March 12. Governor Ferguson reaffirmed his objective to enhance affordability for Washingtonians.