A bill sponsored by Senator Noel Frame would trigger a 1% tax on financial assets such as stocks and bonds, excluding the first $250 million. If passed, it would repirtedly affect around 700 taxpayers in Washington state. This would also include many who made their fortune in the tech industry. Some of those wealthy residents believe such laws can discourage companies from coming to the state.
Other critics look at this as a tax reform scheme. Washington has no income tax. The state relies on sales and property taxes to fund government programs. But property taxes don’t apply to assets like stocks and bonds. Washington’s tax code is rated the worst for working people in the nation, with the lowest income residents paying 17% of their income in state and local taxes while the highest-income households pay 3% or less.
Many believe that the poor progressively pay more taxes. Washington households making between $17,000 and $30,000 annually pay 8.2% of their income toward state taxes. Those earning more than $208,000 per year only pay 1.8% of their income in state taxes.
The wealth tax bill is one of several legislative attempts to tax wealthy Washingtonians without instigating a formal income tax. If Washington’s tax bill eventually ends up becoming law, tax revenue generated would be funneled into education, affordable housing programs, disability services and a taxpayer justice program designed to offset taxes paid disproportionately by low and middle-income families.
Many Democrats in the legislature say the crux of Washington’s current taxation system is that residents with the least end up paying a much higher percentage of their income in taxes, often to the detriment of home ownership and other investments that build generational wealth.
