Lawmakers in Washington state are proposing a 1% tax on wealth of more than $1 billion, expected to generate about $2.5 billion in annual revenue. The legislators say the tax would only apply to nontangible financial assets or financial investments like stocks or options.
The lawmakers say the proposed new tax is part of an effort to reduce inequality and offset the state’s lack of an income tax.
Seattle’s Democratic state Rep. Noel Frame who sponsored the bill, said the lowest earners in Washington State currently pay 18% of their income in state taxes while the top 1% pay 6% of their income in state taxes, CNBC reported.
“We have a tax code that is entirely inequitable,” Frame said. “I just don’t think that’s acceptable any longer.”
Frame told ABC News “It actually really isn’t about them, it’s about the working people of Washington who right now are disproportionally paying for community investments like public education, public health, you name it.” “This is about equity in the tax code,” she added.
If the bill passes, it means that Jeff Bezos who is currently worth about $200 billion, would owe about $2 billion a year in tax.
Washington State is home to some of America’s mega billionaires and two of three richest people in the world. According to tax expert, Jared Walczak the four billionaires in Washington state will pay 97% of the targeted $2.5 billion annual revenue. Bill Gates who is currently worth about $135 billion, would owe about $1.3 billion. Steve Ballmer would owe about $870 million, while Bezos’ ex-wife, MacKenzie Scott, would owe about $600 million a year under the new tax.
The only way the billionaires can avoid the payment is to move out of Washington State. Walczak said any of the billionaires could move to another state, setting it as their primary residence, and still spend up to 182 days a year in Washington state and avoid the tax.
“This would not only foil the wealth tax but would deprive the state of other revenue as well,” Walczak said. “These wealthy residents still pay a disproportionate share of state and local taxes and contribute substantially to the local economy. Chasing them out would have serious consequences beyond the failure of a new tax.”
Currently, none of the four mega billionaires has any day-to-day corporate roles. Hence, analysts say it is possible they may choose to move. Bezos recently stepped down as the CEO of Amazon after 27 years.
If the bill passes, Washington State could become one of the first states in the US to implement such tax code.
New York Gov. Andrew Cuomo has proposed to raise taxes for the state’s wealthiest, but he has also stated that proposals to tax billionaire’s assets were unconstitutional, according to the Hill. Lawmakers in California also proposed a measure to create a 0.4 percent yearly tax on residents’ worldwide net worth exceeding $30 million, ABC News reported.