WA income tax clears House after 24-hour debate
Washington state’s House has approved a new 9.9% tax on annual income above $1 million, reigniting long‑running arguments over how the state should fund services in the absence of a traditional income tax. Supporters see it as a way to make one of the nation’s most regressive tax systems fairer and to pay for infrastructure, education, and social programs, while opponents fear it will drive high earners and businesses to lower‑tax states and eventually expand to hit the middle class. Many also question its constitutionality under Washington’s treatment of income as property, seeing the measure as a deliberate test case for the state supreme court.
Scope of the New Tax
- 9.9% marginal tax on individual income above $1M (first $1M exempt; $1,000,001 → $0.10 tax).
- Estimated to hit ~20–30k households; W‑2 high earners (specialist physicians, some attorneys, etc.) seen as main direct targets.
- Wealth from stock/options and capital gains is often outside this base or more easily shielded.
Arguments in Favor
- WA’s current system is described as highly regressive: heavy dependence on sales/consumption taxes; bottom earners pay a far higher share of income than the top 1%.
- Seen as a first step toward a more progressive structure and less reliance on consumption taxes, aligning with the state’s liberal politics.
- Supporters argue high earners benefit disproportionately from state infrastructure and economy and should “contribute back” more.
- Some welcome reduced appeal to ultra‑high earners and a possible shift away from tech‑driven inequality in Seattle.
Arguments Against / Slippery Slope
- Strong fear this is a “beachhead”: once an income tax exists, thresholds can be lowered and rates raised, as happened historically with federal income tax.
- Legislature refused to hard‑code a permanent $1M exemption, seen as signaling future expansion.
- Concern that targeting a small group is politically easy now but will spread to the middle class later.
Constitutional and Legal Dispute
- WA constitution defines “property” very broadly; courts have long treated income as property that must be taxed uniformly and capped at 1%.
- Critics argue this law is plainly unconstitutional; supporters expect it to be upheld by recasting it as an “excise tax” (as with the recent capital‑gains tax decision).
- Some are uncomfortable with perceived end‑runs around the constitution instead of amending it.
Economic Behavior and Migration
- Debate over whether high earners will leave or avoid WA, versus how attractive no‑tax states (TX, FL) or alternative hubs (CA, NY) are.
- Some say this will erode Seattle’s draw for top tech and professional talent; others downplay the impact or see rich‑person out‑migration as a feature, not a bug.
- Broader discussion of people already moving between states (e.g., OR/WA, CA→TX/AZ) to arbitrage income, sales, and property taxes.
Use of Revenue and Trust in Government
- Revenue largely goes to the general fund, plus some specified uses (early education/childcare, free school meals, sales‑tax breaks on diapers/hygiene, B&O relief, expanded working‑families credit).
- Several commenters say this does not meaningfully reduce existing regressive taxes.
- Significant distrust of WA state government competence and integrity: examples cited include perceived waste, fraud, poor program delivery, bad infrastructure, and worsening social issues.
- Some argue no new taxes should be added until spending is better managed; others say spending debates should be separated from revenue debates.
Broader Tax Philosophy Debates
- Clash between “progressive income tax is fairest/most efficient” vs. views that broad consumption or land/property taxes distort less.
- Comparisons to European social democracies: some note their broad‑based high taxes on the upper half, not narrowly on “the rich.”
- Moral arguments appear on both sides: high incomes seen as either socially harmful rent‑seeking that should be heavily taxed, or as the product of valuable activity already supporting many others.