House Finance chair floats $2.25B tax on Washington’s billionaires — mostly Bezos
House Finance chair floats $2.25B tax on Washington’s billionaires — mostly Bezos
Carlyle tries again to slow the revolving door to the lobby
Most of the taxation buzz in Olympia this year has been about a capital gains tax and some type of carbon taxation. But suppose the Legislature decided to go directly after the really big fish — the state’s billionaires.
That’s exactly where House Finance Chair Noel Frame went on Wednesday. Her House Bill 1406 would impose a 1 percent annual wealth tax on “intangible financial assets” (think stock, bonds, etc.) over $1 billion. Frame says the Department of Revenue estimates it would hit just 100 people and bring in $2.25 billion per year.
Frame, D-Seattle, plans a hearing on the bill next week, alongside a proposal to finally implement the Working Families Tax Credit. That program has been on the books for years, but lawmakers have never found the money to actually pay tax credits to working families. Between Wednesday morning and the the formal introduction of the wealth tax in the afternoon, it had 25 co-sponsors, or nearly half the Democratic majority.
So we’re talking some real Robin Hood action here, grabbing the actual wealth of Washington State’s richest and pushing it out to the working poor. The formal list of that 100 people is strictly confidential — even Frame hasn’t seen it — but we can be sure that it starts with Amazon founder Jeff Bezos and includes Microsoft founder Bill Gates, former Microsoft CEO Steve Ballmer, investor and activist Nick Hanauer, and a bunch of other recognizable names.
Bezos currently owns roughly $170 billion worth of Amazon stock alone, so figure at least $1.7 billion would come out of his pocket.
Unlike other states and the federal government, which tax such wealth as people earn it via an income tax, and again when assets are sold via a capital gains tax, Washington doesn’t really tax the rich except for their tangible possessions such as houses, cars and boats.
Along with its sheer audaciousness, the plan has the added appeal of apparently dodging the decades-old constitutional barriers to imposing a progressive income tax. The Observer reached out to University of Washington Law Professor Hugh Spitzer, an expert on these matters.
“In my view, a wealth tax/intangible property tax would be a type of property tax,” Spitzer told the Observer via email. “In the 1930s, Washington considered imposing taxes on intangible property like stocks and bonds. But those types of assets are notoriously hard to track, so we never moved ahead with it.”
There are, of course, drawbacks. Billionaires have, shall we say, influence. Also, they tend to own multiple houses and jets to move easily between them. Some of Washington’s wealthiest likely maintain residency here specifically because of its favorable tax climate, while spending much of the year elsewhere avoiding the actual climate. Some would surely take their wealth elsewhere.
But at a time when billionaires are riding out the pandemic in splendid isolation while record numbers of Washington workers are scraping by on unemployment, or fear-sweating into their masks as angry customers breathe on them, lawmakers hungry for tax money for pandemic relief and other needs will surely be tempted to tap the fattest wallets of all.
It’ll be interesting see how the billionaires react. Many are famously philanthropic; some are even advocates for taxing themselves more. (Hanauer told Geekwire that he’s likely supportive,) But this one might feel a little personal.
Oft-stymied revolving-door bill resurfaces
A perennial proposal to mandate a one-year cooling-off period for state officials who leave public service to become lobbyists is back for another year of fervent support from clean-government advocates and uncertain prospects in the Legislature.
Previous iterations of Senate Bill 5170, sponsored this year by Sen. Reuven Carlyle, D-Seattle, died quietly in 2016, 2017, 2019, and 2020.
The U.S. Congress and 37 states have such cooling-off periods. Washington legislators, who currently make $52,766 per year, have strangely declined to foreclose the option that they might leave office to be much better paid to persuade their former colleagues.
“Sen. Carlyle, you feel like Sisyphus?” State Government and Elections Chair Sam Hunt said in jovial greeting to Carlyle, referring to the figure from Greek mythology who was condemned to perpetually roll a boulder up a hill.
Carlyle, D-Seattle, was at pains not to impugn anyone’s motives.
“There is not some accusation of anything nefarious when people move from public service to private lobbying,” Carlyle said. “But there is a perception among the public.”
The bill would also apply to executive-branch officials such as Gov. Jay Inslee’s policy advisors, two of whom have left recently for jobs outside government. One of them, Charles Knutson, who recently registered as a lobbyist for Amazon, was featured in this Austin Jenkins story last year about the revolving door because he had the misfortune to receive an email from a former colleague-turned-lobbyist.
Interesting work from other reporters
About those looming Sound Transit overruns…
Erica Barnett at PubliCola unpacks Sound Transit’s substantial financial woes. Among the interesting tidbits.
“Sound Transit is already the nation’s largest Transportation Infrastructure Finance and Innovation Act borrower, making it less likely the agency will be approved for additional debt.”
“…the likelihood of more federal grant funding is dampened somewhat by the fact that Sound Transit already receives one-tenth of the Federal Transit Agency’s grant funding nationwide…”
Any cuts are likely to prioritize preserving the “spine” of Sound Transit’s system, which is basically the Interstate 5 corridor from Tacoma to Everett. As Erica notes, that puts planned expansions to West Seattle and Ballard on the chopping block.
That hammers home one of the unpleasant truths about Sound Transit: Seattleites who live in West Seattle or anywhere north of downtown but significantly west of I-5 — roughly a third of the city — have cast a lot of votes for Sound Transit and paid a lot of taxes to the agency over the years without getting any transit to speak of.
Have you seen your Facebook data? It’s a little creepy
Monica Nickelsburg at GeekWire takes a look at this year’s version of the data privacy bill. Sen. Reuven Carlyle’s Washington Privacy Act would give consumers the right to access, transfer, correct, and delete the data that companies such as Facebook or Google hold on them. Consumers can also opt-out of targeted advertising and the sale of their personal data. Short version: The bill has been massaged enough from past versions to win support from major tech companies, but the ACLU and other hard-core privacy activists aren’t happy that it leaves enforcement up the attorney general instead of letting individual users — or groups of users — sue.
There’s no reproach like dog reproach
His stock is worth $170B+ So he gets taxed on everything over $1B. Pretty sure my math is right.
You're slightly wrong above. Under Frame's proposal the first $1 billion of intangible assets are exempt, so Bezos would only be on the hook for $700 million. Otherwise, great coverage of Oly!