Ironically, my home for the last decade (MO) has recently moved forward with a bill eliminating the statewide income tax in favor of a higher sales tax. This is in a state where the two largest cities are situated on the borders of other states, so it's essentially a guarantee that this will backfire.
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The way to make a consumption tax progresive is with a prebate, or if you want to be more complicated, a rebate. With a prebate, every citizen or resident would recieve a check each period for the amount of the consumption tax up to the spending level you set as the curve for regresiveess, such as the federal poverty line.
It would be difficult for Missouri to implement a prebate on its own due to the proximity of the population to other states! (Residents could take the prebate, then travel across state lines to spend it, resulting in a huge loss to the state).
Income taxes are complicated to collect, subject to massive violations of privacy, and generally provide more perverse incentives than consumption taxes.
Also, I would be wary bragging about buying your goods in Oregon, you technically may owe WA use tax https://dor.wa.gov/taxes-rates/use-tax.
Nope, that is false. The language of the bill only requires filing if tax is owed. There will be a handful of folks on the cusp who will need to calculate their AGI to determine their state tax liability but everyone else knows offhand if they need to file.
The language is "Individuals not owing tax under this chapter are not required to file a return..."
It is absolutely no business of State 1's what I do when I travel into State 2. Whether or not I buy something and/or the value of that purchase should not enrich State 1 in any way. The only reasonable exception I can think of is if I'm buying things to bring back and resell.
In my experience, this is well-known around Vancouver and elicits nothing but eye rolls when mentioned. If there is any enforcement whatsoever for that rule (a big if), it's clearly toothless and people don't worry much about it. A Best Buy opened a couple miles north of the river in the late 2000s and didn't make it much more than a year because another one existed in Jantzen Beach, immediately across the state line. The Vancouver location amounted to a showroom before people decided if they wanted to drive the extra 15 minutes.
I wonder if introducing income taxes will impact Seattle's tech hub status going forward. Sometimes people talk about how much these measures will lead to rich people moving away, but discouraging high-income people from moving there I think is a bigger long-term impact.
Remains to be seen, as the next legislative session isn't until 2027.
TX: Average Effective Rate: Approximately 1.36% to 1.6% (some estimates range up to 1.8%) of a property's assessed fair market value. The typical homeowner in Texas pays a median annual property tax of $4,108
WA: Effective Rate: The average effective property tax rate in Washington is approximately 0.75% to 0.79% of the home's value. State mean the median annual property tax payment is roughly $4,361 to $4,729
It's a sliding scale tax. Someone making a million will barely feel it. Someone making 50 million will feel it a lot. Objectively, anyone making $50 million should feel it a lot and be taxed heavily. Nobody is making $50 million under their own power.
I know numbers are hard for the ultra rich. I've mostly only posted this for all the poor souls only making a mil a year. I want them to know this won't impact them.
This is not about the money at all, it's about getting an income tax on the books. In a year or two they'll lower the limit a few hundred grand. They're start removing exemptions, they'll add more brackets, and before you know it Washington will have California's tax structure and the people who live there will not be any better for it. But the government will be bigger, and the people will be poorer.
It's about what their alternatives are, where they choose to be domiciled, what job-creating businesses they take with them, and what effect that has on the state's economy over the long term.
As it is, California and New York have the highest income tax rates in the nation, and are both experiencing large net domestic out-flows. Florida and Texas have no state income tax and have been the largest net recipients of domestic migrants for several years.
You’ve got it backwards. The people making $50,000 are the ones who are dependent on someone else to provide all the infrastructure for their job.
Easy for you to say.
> Objectively, anyone making $50 million should feel it a lot and be taxed heavily.
How is that objectively true? Why should they?
There is no way this meaningfully changes the income distribution of hires in any industry.
I for one support the tax. The dichotomy of being a liberal state with a regressive tax structure needs to stop. Slippery slope argument aside this tax is a good first step. Income tax while imperfect seems to be the best system we have to tax the rich and not the poor.
Orig Income Rate Adj Income (2025 Dollars)
Up to $20,000 1% Up to $600,000
$20,000 to $50,000 2% $600,000 to $1,500,000
$50,000 to $75,000 3% $1,500,000 to $2,250,000
$75,000 to $100,000 4% $2,250,000 to $3,000,000
Over $100,000 5% Over $3,000,000
I don't have a dog in this fight and if it's what the people of Washington want, so be it.
(edited for formatting
Why is it when people are against a tax they typically talk about it in terms of historical context, unintended consequences, interstate migration, while people in favor of the tax almost exclusively appeal to emotional blackmail statements like "paying your fair share" (when something like 40% of the country pays no federal income tax whatsoever) or "good conscience" or assume anyone with any money got it through borderline illegal activities?
Many Democrats object to it in principle because the new income tax is unconstitutional on its face; they support an income tax but ignoring the constitution because it is inconvenient and blocking people from voting on it is gross. The supreme court in Washington won't be any help, they are have an unfortunate track record of rubberstamping whatever the party wants.
This is in addition to many years of tax increases exceeding growth, the regular introduction of new poorly designed taxes that are simultaneously wasted and expanded with no accountability.
Many Democrats fully expect a rugpull is coming because that is the recent history in Washington. Regressive taxes are never lowered or removed, they just stack new ones on top of them.
For all the reasons you can vote against any tax.
Taxation is not the default. The justification always has to come from the proponents.
And I say this as a pro tax person who has voted for more taxes and lives in a high income tax state.
Defense contractors, road works, entitlement fraud, politicians' unexplainable wealth, college tuition, learing centers, and the list goes on.
Manage the money properly.
You want people to vote for a millionaire tax tie it with a constitutional amendment that requires a higher vote bar to ever increase it and have all numbers automatically inflation adjusted
Then you have intellectual blinders on. There’s good reasons to have broad based taxes instead of singling out rich people. In Sweden, for example, the top tax bracket kicks in at 1.5x the median income. In Germany, the second highest 42% bracket kicks in around 70,000 euros and the top 45% bracket kicks in at 277,000 euros.
None of the countries that American liberals admire in terms of having a robust welfare state adopt a policy of “soak the rich.” The have policies based on solidarity where everyone in the top half or third take on a heavy tax burden.
In the 1%, average income in Germany is 272k usd. In California, it's north of 1mil usd. At 0.1%, it's 1.1 mil usd in Germany and 3.2+ mil in California.
The distributions between high and low income earners are much flatter in Germany because it is harder to abuse the system to get to such salaries. No so in America. Hence Germany also does not need such aggressive taxation schemes as what's proposed (they also have way more flat taxes as well).
Bourgeoisie blinders are on.
For now. The legislature refused to add an amendment forbidding the threshold from ever being lowered to guarantee that it only applies to a million and above.
The way the Washington state constitution works is income is treated as property, and property taxes must be uniform.
So this bill isn't just a millionaire's tax, it's a state-wide income tax of 9.9% with the first million exempt.
It's a good thing, for now, but it does set precedent and the fact they refused to add language to the bill forbidding that exemption from every being removed or lowered is telling. The income threshold will eventually be lowered.
Wouldn't such a change have to be made by the same legislature with a similar majority? Or was this some sort of constitutional change that required a more qualified majority, after which the threshold can be changed more easily than this could be introduced?
The WA constitution doesn't seem to have anything to say on income tax, just a lot about property tax?
Bigger impact im sure will be Seattle but the impact to Portland is not insignificant. I'm sure the WA tax would be less than the OR one though so I don't see the moves stopping, but probably akin to whats happened in CA where people moved to NV or AZ to escape some of the taxes (not a significant number but ive met enough to wonder). As people retire, they moved away to those places as they think they will be taxed less
It's frustrating to me that people shirk responsibility for their actions when they act in the way that economic models would predict. As if acting like a rational agent within a system voids any responsibility you have as a member of society.
See any/all of the following and tell me how often you hear similar lines of thinking among techies:
* "Well, I can get rich quick by running this scam, and it's not technically illegal, so, me being a rational agent, I'll run this scam"
* "Sure, Facebook may be contributing in large part to the downfall of western society but those RSUs taste so sweet"
* "I'll use the Oregon infrastructure but if I live across the river then I don't have to pay for it. And I can buy things without sales tax in Oregon!"
I am uncomfortable that supporters of the income tax are so unbothered by it being unconstitutional. So few are insisting we amend the constitution to allow or not do it at all, on the grounds that violating the constitution (or flexibility construing it to match our desired ends) is bad.
We have the same problem at the federal level in part because SCOTUS will not or cannot provide input or warnings on proposed legislation. How many federal laws would simply not exist if SCOTUS got a veto before it went to the President for signing?
Is it this?
> the aggregate of all tax levies upon real and personal property by the state and all taxing districts now existing or hereafter created, shall not in any year exceed one percent of the true and fair value of such property in money
Asking an AI (I know, I know) it suggests "Courts have ruled that income is property" which to me sounds like ruling up is down. I mean everywhere that has property tax separate from income tax or only one or the other would object...
There was initiative 2111 which seems it wouldn't even be necessary if income tax was against the constitution to begin with? Also I assume this law basically nullifies initiative 2111?
The state constitution is quite strange wrt. taxes:
https://law.justia.com/constitution/washington/constitution-...
There is a school of thought that the powers should be enumerated in the constitution. But this is not in favor.
Instead this argues that Culliton the ruling that classified income as property was incorrect. And once that door is opened saying that the claims within the existing constitution only apply to property and finally that there is a strong presumption of constitutionality.
Seems like a gauntlet. But it seems clear that given the composition of the supreme court that they will pass the gauntlet.
A constitution is but paper. It does not hold back the motivated.
This is exactly what happened with the national income tax, which initially only applied to <1% of the population. Of course the snare was set, and after WWI broke out the snare then sprung. It took less than a decade to go from <1% to >33% of households.
It is very easy politically to target those over the top 2-5% of income, but you better believe those tranches will be expanded in the future.
Would you mind saying a little bit more about your thinking here? A million a year doesn’t just sound like a lot, it is a lot. FRED reports the median income in Washington at just shy of $100,000 [0]. We’re talking about households that make 10x the median.
Also, what does it matter the length of time they earn it? If they don’t earn more than $1m, they don’t pay it, right?
Correct, and for the times they do earn more than $1m, with this tax they are only taxed on the income over $1m and pay nothing for income of $999k and below. If you make a million and one dollars, you owe 10 cents.
If I was in that type of role and I could routinely expect to make $1.5-$2M/yr it would absolutely make me consider places like Florida or Texas more, especially with the marriage penalty mentioned in the article (although I'm curious how many households have two people both earning more than $1M/yr).
Howard Schultz just left.
Classically the ranking is :
Least distortionary
Land value taxes / recurrent tax on pure land rents
Broad recurrent property taxes
Broad consumption taxes (uniform VAT / sales tax)
Tariffs / trade taxes
Personal income / labor income taxes
Corporate income taxes
Transaction taxes
Most distortionaryI would love to pay my taxes if I had seen reasonable outcome. So far all I see is a corrupt state government with no accountability and transparency.
Also isn’t this illegal? I thought the state constitution says it is illegal.
The state constitution treats income as property, and states that property taxes must be uniform.
So the bill is actually a state-wide, uniform 9.9% income tax but with the first million dollars exempt.
It is expected to be challenged almost immediately in probably a long court battle so we will see what the arguments are. I'm in support of the tax, but I'm a bit miffed that they refused to add language that prohibited lowering the threshold.
Well that's because the entire point of this is just to get a tax on the books so they can later increase the amount and lower the thresholds when all of a sudden this $4B windfall isn't enough.
This is absolutely going to be a lions-eating-faces situation a few years from now when we're talking about a 14.9% tax with a $250,000 exemption.
I'm also genuinely curious how the exemption doesn't by definition make it no longer uniform. How does any exemption at all not violate the uniformity requirement?
Or is it just a punish the rich type of support?
States don't issue social security numbers. Your complaint is with the Feds.
Speaking of documents, here's a tip. Use your name as it appears on your birth certificate on any government forms even if nobody ever calls you by that name. Also probably a good idea to use it when you sign up for utilities, on rental and lease agreements, property deeds, and medical records.
The SSA is real picky about names. Even if no one ever in your entire life has called you anything other than "Rob", if your birth certificate says "Robert" and that is what was on the form when you got your SSN assigned shortly after your birth if you ever need a replacement card they are not going to be happy with documents that say "Rob".