Millionaires’ tax is not included in the Governor’s supplemental budget, as revenue would not be realized for several years
Watch the full press conference here. Photos available here.
OLYMPIA – Today, Governor Bob Ferguson announced his support for a millionaires’ tax.
While announcing his support, he made it clear that the millionaires’ tax, which he hopes will be adopted this session, will not and cannot solve our short-term budget challenges. The revenue from such a millionaires’ tax will not be realized for several years, and, in his view, must be used to return money to working families and small business owners most impacted by our unequal tax system in Washington state. These impacts have been exacerbated by the Trump Administration’s harmful economic policies.
“The inequities of our state’s tax structure have been exacerbated by President Trump’s massive tax cuts for the wealthy — an unprecedented upward transfer of wealth that makes the rich even wealthier while hardworking people are overburdened,” Governor Ferguson said. “We must rebalance this unfair system and return money and cut taxes for working families and small business owners who have been hit hard by the affordability crisis.”
Washington ranks next to last for fairness and equality in our tax system — meaning those who make the least pay much larger shares of their income than those with the most resources. Washington families whose income is in the bottom 20% pay 13.8% of their total income in taxes, while those whose income is in the top 1% pay only 4.1% of their income.
Ferguson endorsed a millionaires’ tax on those who make more than $1 million in income in a single year — not people whose net worth reaches that amount based on, for instance, the value of their home.
The specifics will vary depending on the details of the proposal that goes forward, but less than one half of one percent of Washingtonians will pay the millionaires’ tax, and it will raise at least $3 billion every year.
Ferguson also supports codifying the $1 million threshold, with appropriate adjustment for inflation, into state law. In other words, the millionaires’ tax would be paid on income over $1 million in its first year; and while the amount of annual income that triggers the millionaires’ tax will rise due to inflation, that amount will never impact more than 99 percent of Washingtonians.
A constitutional amendment is one way to provide this assurance, Ferguson said.
As for the revenue, Governor Ferguson talked about specific ways the revenue from a millionaire’s tax can be used. Ferguson said the state must use the gains from the millionaires’ tax to return money to working families and small business, specifically by:
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Expanding eligibility for, and increasing the amount of, Washington’s Working Families Tax Credit. The Working Families Tax Credit currently provides a maximum tax credit of up to $1,290 per qualifying household, depending on their income and number of qualifying children, if any. The Working Families Tax Credit is a proven success in providing meaningful tax relief to Washington families.
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Reducing taxes on small businesses. Small businesses are the backbone of our economy and our communities, driving economic growth and creating jobs. And amid the affordability crisis, many of them are struggling. In Ferguson’s view, the state should not require small businesses to pay B&O taxes until they make $1 million in revenue. The state can achieve this tax reduction for small businesses using approximately $1 billion gained from the millionaires’ tax.
Ferguson said that revenue from the millionaires’ tax should also be used to, for example:
- Provide more K-12 funding to bolster Washington students’ access to a world-class education.
- Eliminate sales taxes on essential personal hygiene products, such as shampoo, deodorant and toothpaste; essential baby products, such as diapers, wipes and infant formula; or essential and affordable clothing items. Those with fewer resources have to spend a larger share of their income on these essentials, meaning that more of their resources are taxed.
Ferguson acknowledged that legislators will have their own ideas for how a millionaires’ tax could serve our state. Ferguson looks forward to having productive conversations, while remaining committed to sending a significant portion of what is gained from a millionaires’ tax back into the pockets of hardworking Washingtonians, to help make life more affordable for them.
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