Washington’s Millionaire Tax — A Tax Debate Getting National Attention

The Washington Legislature has passed the nation’s first millionaire’s tax.

Since President Trump’s Department of Government Efficiency (DOGE) was formed, people have paid attention to government waste. It has led to a concern in a lot of circles about taxing and taxation, and how government is spending your money.

With federal government cuts, many states and local governments are looking at new taxes to replace the lost income. That takes us back to the opening sentence of this stry and to the PIA Western Alliance state of Washington.

Until now it did not have an income tax.

The Washington Legislature has passed a millionaires tax. When signed into law by Governor Bob Ferguson, Senate Bill 6346 will put a 9.9% tax on households with incomes topping $1 million annually. The governor has said he will sign the bill.

According to Google’s AI, this is what the taxation will do. The bill’s key provisions starting with the threshold:

• The tax applies to adjusted gross income over $1 million for both single and joint filers, creating what some call a marriage penalty

Exemptions:

• Retirement savings and primary home values are not counted toward the $1 million threshold
• Qualified pension income and retirement account withdrawals are excluded

Interactions with Other Taxes:

• Capital Gains: A credit is provided for Washington capital gains taxes already paid (currently 7% on gains over $250,000 and 9.9% on gains over $1 million) to avoid double taxation.
• B&O Tax: Small businesses may receive a credit for Business & Occupation taxes paid, potentially reducing their liability to zero.

Revenue Use:

• Funds are intended for tax relief (like the Working Families Tax Credit), childcare, and early learning programs.

The now new law will see some challenges. Among the critics is former Washington Attorney General Rob McKenna. He said Washington’s constitution doesn’t allow this tax. It has never defined property as income.

“They are, apparently are going to pass it without bothering to amend the Constitution,” McKenna said. “Presumably, they're hoping the state Supreme Court will effectively amend the Constitution by deciding that income is not part of property. I don't think they will.”

Another consideration is many times the citizens of the state have rejected an income tax since 1930. The Legislature has also gotten into the act. Two years ago the Washington Legislature passed Initiative 2111 that bans personal income taxes statewide.

This bill works around that law.

How do the people feel? Few are for a millionaire’s tax. They think it is the first step toward putting a permanent income tax in place that will tax all Washingtonians.

• 96% of those polled in a recent poll believe that to be true
• Just 4% say it isn’t

So, Washingtonians will no doubt see a ballot initiative on the November 2026 election to overturn the millionaire’s tax if it passes and is made law.

Source: Google AI, Weekly Industry News

Source link: The Washington Standard — https://bit.ly/4ruh7JT