Which taxes are on the table for Washington state lawmakers
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Democrats in Washington's Legislature are weighing a range of taxes to help bridge a multibillion-dollar budget shortfall, including proposals that would target the state's wealthiest residents and businesses.
Why it matters: Democrats, who control both legislative chambers in Olympia, say new revenue is needed to avoid deep cuts to public services, while Republicans are focused mainly on reducing spending.
Between the lines: Some proposals that Democrats have rolled out since Thursday are aimed at corporations and people who hold tens of millions of dollars in assets.
- But Democrats are also looking at changes to property tax collections and the state sales tax — things that would affect low- and middle-income households, too.
Wealth tax
Democratic leaders in both the House and Senate are proposing variations on what has commonly been called a "wealth tax."
- Their proposals would apply to people who have more than $50 million in worldwide "financial intangible assets," which would include stocks, bonds and mutual funds, but not earned income.
- Senate and House leaders estimated their proposals would affect about 4,300 Washington residents, while raising between $2 billion and $4 billion per year for public schools.
Lifting the property tax cap
Another set of proposals would lift the current cap on annual property tax collections, which state law says can grow by only 1% per year without voter approval.
- Under the Senate's plan, state and local governments could increase their property tax collections each year by the rate of inflation plus population growth.
- The House plan would let property tax collections grow by up to 3% yearly.
- Such a change would bring in hundreds of millions more dollars for K-12 schools, while allowing local governments to raise additional money for costs like hiring police officers and public defenders, state Sen. Noel Frame (D-Seattle) told reporters last week.
- To help offset the impact on property taxes, Senate Democrats are proposing to lower the state sales tax rate from 6.5% to 6%, something not in the House plan.
Taxes on businesses
Senate Democrats are proposing a payroll tax similar to Seattle's JumpStart tax.
- Frame said the tax, which would affect companies with at least $7 million in annual payroll expenses, would apply to fewer than 5,300 businesses statewide.
- House Democrats are proposing something different: raising taxes on businesses with taxable income over $250 million per year, which they estimated would affect 400 companies.
- House Democrats also aim to raise taxes on roughly 200 banks.
Other tax proposals
Senate Democrats want to close 20 tax exemptions to save about $1 billion over four years, and they have floated a 6-cent-per-gallon increase to the state gas tax.
What's next: The two chambers will have to resolve their differences, including whether to impose furloughs on state employees, something included in the Senate budget but not the House spending plan.
- Both chambers are proposing about $6.5 billion in spending reductions over four years, leaders said.
What we're watching: Whether Gov. Bob Ferguson warms to the wealth tax — an idea he expressed "deep skepticism" about earlier this year.