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By Aliss Higham and Toby Meyjes
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Washington has moved a step closer to enacting a so-called "millionaire's tax' after the measure was approved by the state House after a more than 24-hour debate.
The proposal, which now moves to the Senate as early as Wednesday, would see income tax imposed for people earning more than $1 million a year. The final vote was 51-46 after eight Democrats joined Republicans in opposing the tax.
Why It Matters
The legislation would impose a 9.9 percent tax on income exceeding $1 million for individuals, and would be the first time Washington State has implemented an income levy on some of its residents. The measure is expected to affect roughly 20,000 to 30,000 households in the state.
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Supporting lawmakers say the measure is intended to help close the state’s multibillion-dollar budget deficit while easing financial pressure on working families and small-business owners.
What To Know
The tax would apply only to income above the $1 million threshold. For example, someone earning $1.1 million would be taxed only on the final $100,000. Collections would begin in 2029 based on income earned the previous year.
The bill text reads: "The legislature intends to limit the tax established by this act to only individuals with annual adjusted gross income of $1,000,000 or more. Washingtonians with an annual adjusted gross income of less than $1,000,000 will not owe this tax.
"As a result, the millionaires' tax is estimated to affect only the wealthiest one-half of one percent of the households in this state, taking a significant step toward reducing the disproportionate reliance on working people to fund K-12 education, health care, higher education, human services, the working families' tax credit, and other essential governmental services to benefit Washingtonians."
The tax is projected to generate between $3.5 billion and $4 billion annually.
A portion of the revenue generated by the new income tax would be used to offset existing sales and business taxes. The plan would also eliminate the state sales tax on diapers, over-the-counter medications and personal hygiene products. In addition, it would expand the Working Families Tax Credit to another 460,000 households, according to Governor Bob Ferguson’s office. Eligible families could receive rebates of up to $1,330 per year.
Lawmakers in the House debated the bill and a series of proposed amendments for more than 24 hours, beginning at 5:38 p.m. Monday and continuing until about 6:10 p.m. Tuesday.
Republicans argued the tax change is unconstitutional. In the Washington State Constitution, income is classified as “property,” meaning taxes must be applied uniformly and cannot vary based on a person’s earnings.
Republicans mounted a filibuster by introducing nearly 60 amendments, many of which were decided through time-consuming oral roll call votes. Democratic lawmakers also put forward nearly two dozen amendments of their own.
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What People Are Saying
Washington Governor Bob Ferguson, a Democrat, said in a statement: "The Millionaires’ Tax passed by the House represents historic progress in rebalancing our unfair system. It sends significant dollars back to Washington families and small businesses.
"It expands the Working Families Tax Credit to 460,000 additional households: that’s money straight back into the pockets of working families. It saves working parents money and ensures our kids are prepared to learn by funding free breakfast and lunch for all Washington K-12 students, which has been a priority of mine since I ran for governor.
"The Millionaires’ Tax will apply to less than one half of one percent of Washingtonians, but make life more affordable for millions. I look forward to signing it."
House Majority Leader Joe Fitzgibbon, a Democrat, said: “It has been a long journey here to this moment, not just the over 24 hours that we’ve spent on this floor debating this proposal, but the 93 years that Washingtonians have struggled with a grossly outdated tax structure that falls by far the heaviest on the lowest income."
Republican Representative Jim Walsh said in a statement following the vote: “The majority Democrats wanted to run their terrible income tax bill in the dark of night, but we forced them to defend it in the light of day. As Democrats worked to bypass the will of the people, we made sure the public saw exactly what they were doing.”
What Happens Next
The bill now heads back to the Senate for final approval.
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