I’ve got a lot of family in Washington state, and now the governor has slammed them all with a massive new tax.
Governor Bob Ferguson signed a new tax on income over $1 million into law, affecting less than half of one percent of Washington residents while aiming to provide relief to millions, the governor said in a release.
Senate Bill 6346, known as the Millionaires’ Tax, does not apply to income under $1 million.
“It does not tax the first million dollars. If you’re fortunate to earn $900,000 in the year, you will not be taxed under this legislation,” Gov. Ferguson said before signing the bill. “So for example, if you make $1.2 million in income in single-year, you pay taxes on the $200,000 over the 1 million that you made”
Oh. Wait. I don’t think anyone in my family makes a million dollars a year. They won’t notice this tax at all. But you know what they might notice?
The legislation funds free breakfast and lunch for every K-12 student, expands the Working Families Tax Credit to 460,000 new working families and reduces or eliminates the B&O tax for an additional 138,000 small businesses.
The bill also invests more than $320 million into affordable childcare in the first full biennium and eliminates sales tax on diapers, over-the-counter drugs and hygiene products.
There are some novel objections raised against this policy.
Furthermore, Todd Myers from the Washington Policy Center explained that future legal challenges could come down to the question of whether income constitutes property under the constitution.
In 1933, the Washington State Supreme Court struck down a graduated income tax 5-4. The majority ruled that income is property and cannot be subjected to an unequal tax.
I did not know that! I knew there was no income tax in the state when I lived there, which was nice, but that instead we had that damned ubiquitous sales tax that afflicted all of us sort of equally, which was not nice — if you were rich, you didn’t care about paying an extra 6 cents on a dollar, but it was terrible if you were a kid earning a little spending money by mowing lawns. If you’re concerned about inequality, why would you ever impose a sales tax? I’m all in favor of an unequal tax that hurts rich people a little more.
Then there’s a familiar argument.
Legislators and community members also raised concerns about the potential for millionaires to leave Washington.
Strangely, they never do leave. The things that make a state or a city an attractive place to live are still appealing, and millionaires aren’t really hurt by losing a few pennies on a dollar. They’re not going to want to leave Seattle to live in Pocatello, Idaho (nothing wrong with Pocatello, but it lacks the amenities of Seattle). If they do want to leave, though…bye bye, have a nice trip, you won’t be missed.
What can we do to get a version of this law in Minnesota?
Why stop at MN? Why not try for the entire country? (Hey – if you’re going to dream, dream big, is what I always say.)
As for Washington, if it is a matter of wording in the state constitution, it should be possible to amend it with a ballot proposition.
How to Sponsor an Initiative or Referenda
Be sure to have someone who knows what they are doing involved in the process. For example, if you are trying to institute a tax on “income over $1 million,” be sure that income includes the most popular tax dodges, not just salary.
Six cents on the dollar? I wish — it’s 10.5% now (state plus county plus city darned near everywhere in the state), and a lot higher on things like fuel.
That said, there are millionaires I really wish would pack up and leave — like certain hedge-fund multimillionaires/billionaires who made their millions gambling with other people’s money in California and then moved here for the lack of a state income tax, then started funding antitax political campaigns. C’mon, you know who your are; actually, almost everyone paying attention knows who you are…
The USA really needs to follow the example of the European nations that have high taxes – and great services and quality of life and regularly top the lists of the happiest contries on Earth.
Reginald, the problem is not the wording of the state constitution; no amendment is required, merely judges getting their heads out. Instead, it’s a combination of three bad things, one coincidental:
The actual decision in Culliton v. Chase came down just after the very first, Depression-era federal income tax forms were plopped onto the desks of the (then disproportionately rich with lots of outside income) state judges. There’s just enough documentation of personal outrage and confusion to treat this as at least one factor, however coincidental.
The meaning of “property” adopted in Culliton was ill-researched, idiosyncratic, and — ironically enough — doesn’t hold up under either then-current legal interpretation methods or even under the most-skewed version of “original popular meaning” put forth today. As to OPM: In the nineteenth century (when that constitutional provision was adopted), income itself was something that one converted into property; it was only a right to receive income in exchange for something else of value that was property. It’s a fine and functional distinction, and runs right into the other objection:
There are at least six (by my count) contradictory clauses in the 1888 state constitution that implicitly or explicitly contemplate the state’s right to take property without individual adjudication or imposed uniformity of rate. So they keep using that word, but I do not think it means what they say it does…
Newsom is positive to expanding the supreme court.
Ferguson is willing to tax millionaries.
It seems as if Democrats are growing a spine, merely 45 years after Reagan (sarc).
Oh please, please tell me this is finally the year when we start finding mysteriously empty mansions and “Who is Jon Gault?” graffiti scrawled on factories. I’d be happy to pretend I’m totally stumped by that mystery. Even if I knew they were all just hiding out in some Hilton in Texas by the pool.
Rick Steves isn’t leaving.
https://www.reddit.com/r/Seattle/comments/1s8cga5/notable_seattlebased_travel_writer_and/
The first, whatever, doesn’t matter.
The second.. wtf? Why can’t property be subjected to unequal taxation? Happens all the time.
Okay, so no Millionaire Tax.
Instead, just repeal the statute criminalizing murder, when the victim is a millionaire.
I’m sure they’ll find that better, amirite?
@9 nifty: I continue to be amazed by Rick Steves. His travelogues are not splashy and he seems like such a nondescript everyperson. But then you find out that, he directly supports a homeless shelter in his hometown, he was a major and vocal proponent for marijuana legalization in Washington, and he has over a million in income (that one was the biggest surprise).
Living proof that you don’t have to be a horrible person to succeed financially.
Colorado recently passed something similar with a target of $300,000 a year (which realistically is still only going to affect millionaires in any meaningful capacity; four years of income tied up in assets is something you’d expect from almost every homeowner, let alone the top few percent). I expect we’ll be seeing the same playbook in WA as we saw in CO to try and shut it down, probably including the hilarious part where we get some propaganda about how it’s bad to raise taxes in “these economically trying times”. Coloradoans largely didn’t believe that people pulling in 300 grand a year were experiencing economic difficulties; I don’t think Washingtonians will believe it for people pulling in a literal million.
I live in rural-ish Wa now and patrol my local Facebook groups to see what folks are saying. It seems most are fine with it. It’s a wealthy-ish area but not many 1M+
The primary objection seems to be “oh, millionaires now but later SOON! it’ll be ALL of us! Oh noes!”
Also, I’ve met Rick Steves in person. Seems a genuinely sweet guy. Supports lots of local Edmunds arts groups and such. During COVID lockdown, he’d play his trumpet off his back deck for the neighborhood.
I hope it’s indexed to inflation because after 3 years of the coming Trump inflation we may all be making a million a year, only it will be the equivalent of $50K/yr today.
We could use something like that in Wyoming. The Jackson Hole area has the worst income inequality in the state. The New York Times had a long article last weekend about how the super-rich there are harming everyone else. It would be nice if the state got rid of decanting, which allows people to leave the assets that won’t have a high tax upon their deaths in the states where they live and move everything else here where it won’t be taxed as much. The catch is that to do that, you have to have some connectyion to the state, which is why people build houses here but don’t actually live here.
“They’re not going to want to leave Seattle to live in Pocatello, Idaho (nothing wrong with Pocatello, but it lacks the amenities of Seattle).”
Until the millionaires move in and Pocatello imposes its own super tax on them to fund those amenities for everyone.
Minor quibble: ‘millionaire’ normally refers to wealth, not income.
I often see confusion between the two.
I am a millionaire in technical terms (my dwelling and my superannuation and other assets) but my income is around 30% of the average weekly wage, for example. I live fairly frugally.
WA Supremes have consistently ruled income is property. I will be pleasantly surprised if the current Court doesn’t find the Millionaires tax unconstitutional.
A graduated income tax should apply to all State residents in exchange for ending the State sales tax. This would address the fact that we in the Soviet of Washington have the 49th most regressive tax structure in the nation.
I had a shower thought the other day that I can’t for the life of me shake. Why not sink all private yachts worth over whatever, just to make sure we don’t get mum and dad’s fishing dinghy, and similarly destroy all private aircraft? Give the people on them an hours notice to leave and BOOM! I mean it would be nice to confiscate them and put them to better use, but then they would just be tied up in litigation or whatever for years, and would probably still be used in the mean time for cocaine and champagne whatever. Better just to take them out of play. It’s not like the destruction of that asset/wealth would have any meaningful effect on anyone who counts, we could easily employ the crews or port staff to do something else surely? Just hand them a $100k bonus? And it would force the parasite billionaire class to live among us in a meaningful way just a little bit, right? Sorry Lear family (I utterly guess) but your parasitizing off the parasites days are over…
I mean not EVERY one of these, there are some that are for legit businesses or whatever, but I’m sure we can be smart enough to figure out which ones are which. Ask the crews, what is this primarily used for, occurs to me for instance.
Maybe I need a card table, 2 seats, a cup of tea, a nice day in a nice park, and a prove me wrong sign.
indianajones:
“I had a shower thought the other day that I can’t for the life of me shake. Why not sink all private yachts worth over whatever”
Every single ‘private’ yacht is worth something. None are cheap.
(If one can afford a private yacht, fine. But it’s clearly discretionary)
“I mean not EVERY one of these, there are some that are for legit businesses or whatever”
What? You clearly don’t get to what a yacht refers!
A yacht is, by definition, a large, privately owned pleasure vessel for recreation.
If it’s a commercial workboat, a fishing vessel, a charter boat, a ferry, or any other business‑use craft, it is not a yacht.
(Good grief!)
@ ^ John Morales : FWIW :
Source : https://en.wikipedia.org/wiki/Yacht
Always think of them as sporting boats used to race each other or sail around the world in – recall watching the America’s Cup as a kid when Australia won that with the boat with the winged keel. (Australia II?)
@ indianajones : “Why not sink all private yachts worth over whatever,”
Pollution. The ocean (& waterways) has already had too much crap dumped in it.
Waste of resources – they could be broken up, dismantled and recycled.
Oh and there’s the issue of international law and enforcement (in)ability to do so.
StevoR, indeed. How the fuck you imagined that somehow disputes my synopsis (“a yacht is, by definition, a large, privately owned pleasure vessel for recreation.”) is left to the imagination.
The qualifier is ‘private‘, so it’s something owned by someone for pleasure, cruising, or racing.
Renting it means it’s not private. It’s a rental.
Remember the original claim? “Why not sink all private yachts”.
Laurian @19:
That’s a bit of an overstatement. The last time the issue was presented squarely, without a procedural rationale to rule on the matter without reaching the “definition of property” issue, was last century — and then all they did was rely on “settled precedent.” Admittedly, the state judiciary has refused to confront the matter, relying on the “settled precedent” doctrine at the Supreme Court and “binding precedent” in the Court of Appeals… but three of the current Supreme Court justices have written in the past criticizing Culliton as overreaching, which is a good start toward reversing a dubious precedent.
It’s also worthwhile remembering that the political and economic makeup of the state have changed rather radically in the last century, and even in the last quarter of a century. I’m not expressing confidence that there will absolutely be a reversal — just that the issue will get a fresh look, and especially regarding the meaning of the uniform-rate component in the context of the much-more-recent school-funding-mandate decisions.