After a long 25-hour debate, Washington has made history by passing a millionaires tax bill. This is the first personal income tax in the state, moving away from nearly a century of no such tax.
On March 9, lawmakers approved a 9.9% tax on income over $1 million a year. The final vote was tight, at 52-46, marking the longest debate in Washington’s history. Rep. Brianna Thomas, a supporter of the bill, noted how challenging this change was. “We’ve got 93 years of history against us,” she remarked.
Washington was one of the few states without an income tax, relying mostly on sales taxes. Its tax system dates back to the early 20th century, rooted in agriculture and timber. The last attempt to introduce an income tax in 1932 was quickly struck down by the state Supreme Court. Most recently, a 2010 proposal failed to gain traction.
As the state has evolved, so has its economy. Major companies like Amazon and Microsoft call Washington home, but a growing budget deficit—projected at $10 to $12 billion in the next four years—has pushed these changes. Thomas argues the outdated tax system is no longer fitting.
Data from the Institute on Taxation and Economic Policy reveals stark inequalities. The top 1% of earners pay only 4.1% in state taxes, while the bottom 20% pay 13.8%. According to Thomas, “It’s unfair that those with the most pay the least.”
The new tax impacts about 21,000 filers, which is less than 1% of the state’s population. It’s expected to bring in $3.5 to $4 billion each year after its start in 2029. Additionally, the bill offers tax relief on everyday items like diapers and medications, plus an expanded Working Families Tax Credit.
The debate to pass the bill was tumultuous. Despite some disagreements within the Democratic Party, the Senate eventually voted in favor, 27-21. Governor Bob Ferguson is likely to sign the bill into law, but Thomas cautions that the journey isn’t over. The legislation still faces a Supreme Court review and a public vote.
Washington’s move is part of a broader national trend. For instance, Senator Bernie Sanders recently proposed a “Make Billionaires Pay Their Fair Share Act,” which would tax Americans with over $1 billion in net worth. This plan could raise $4.4 trillion over a decade. Similarly, California is pushing for a one-time billionaire tax that might generate $100 billion for healthcare and food assistance.
User reactions have already begun. After the bill’s passage, billionaire Howard Schultz announced he was leaving Washington for Florida, raising eyebrows. While he didn’t directly link his move to the new tax, it does highlight concerns from wealthy individuals about changing tax structures. Jeff Bezos has also relocated, costing Washington significant tax revenue.
The evolving economic landscape signals a need for updated policies. Thomas reflects, “This isn’t just about numbers. It’s a community issue.” Washington’s new tax could open doors for future reforms, potentially shaping how states think about wealth distribution moving forward.
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