by Leo Brine
Progressive legislators have been unleashing a slew of tax legislation this session, with bills like the capital gains tax (SB 5096) and the working families tax exemption (HB 1297) grabbing headlines after historic floor votes on both earlier month.
And they have more cued up. Legislators typically pass tax and revenue bills late in the session as a means of funding the budget, but this year Democrats have a much bigger agenda: They want to pass tax legislation that reforms how the budget is actually funded. They plan to create new taxes on carbon-dioxide emissions, extreme wealth, data collection, and more this year.
Ingeniously flipping the script on Republicans who say that sudden rosy revenue forecasts prove our tax system doesn’t need reform, progressives say the latest revenue forecast actually highlights the volatility of Washington’s current tax structure. In June, the state forecast a nearly $9 billion revenue shortfall. However, a sequence of higher forecasts based on an uptick in retail sales tax revenue between September and March nearly re-balanced the budget.
Ingeniously flipping the script on Republicans who say sudden rosy revenue forecasts prove our tax system doesn’t need reform, progressives say the budget turnaround is being funded on the backs of low-income residents who pay a disproportionate amount of their incomes in regressive sales taxes.
Seizing on the volatility argument, and noting that the turnaround is being funded largely on the backs of low-income residents who pay a disproportionate amount of their incomes in regressive sales taxes, Democrats are pushing a sweeping tax reform agenda.
At the March 17 revenue forecast meeting, House Appropriations Committee chair Rep. Timm Ormsby (D-3, Spokane) said the revenue increase was not a reason to change course on new progressive tax legislation. “I think we have to be quite concerned about ongoing stability of our revenue system. I think that today’s forecast and other economic news will affect our discussion, but I don’t see a wholesale change in discussion [around tax legislation] in the legislature,” he said.
Wealth Tax
One of the most daring pieces of progressive legislation is the wealth tax bill (HB 1406). Sponsored by House Finance Committee chair Rep. Noel Frame (D-36, Seattle), the bill proposes a 1 percent tax on worldwide “intangible financial assets of more than $1 billion.” Intangible assets include cash, stocks, bonds, pension funds and ownership in revenue-generating partnerships such as businesses. (In contrast, tangible and intangible personal property includes things like as homes, farm equipment and federal and state bonds.) The bill is currently in the house finance committee, where it is awaiting an executive session.
The Department of Revenue estimates the tax will generate an additional $2.5 billion in annual revenue for the state.
Rep. Frame surmises Bezos is already claiming residency in a different state.
One of the main critiques of the bill, along with other bills aimed at taxing the rich, is that people like Jeff Bezos or Bill Gates could just leave the state and live elsewhere. Rep. Frame said she is not worried about this. Frame told GeekWire in February that based on the DOR revenue predictions, she believes Bezos is already claiming residency in a different state. As for Gates, whose father campaigned for an income tax a decade ago, Frame believes he is too invested in his home state to leave.
Carbon Tax
The legislature is working on several environmental bills this session, including two bills aimed at curbing carbon emissions and greenhouse gases. The Senate Ways and Means committee currently has SB 5126 scheduled for executive committee hearings, while SB 5373 remains in the Environment, Energy & Technology committee waiting for an executive session.
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