Outgoing Washington Gov. Jay Inslee is proposing a tax on wealth above $100 million in hopes of plugging a budget shortfall and averting cuts to education, mental health services and police.
The tax would apply to about 3,400 residents — Microsoft founder Bill Gates among them — and bring in $10.3 billion over four years, Inslee, a Democrat, said Monday.
His successor as governor, Democrat Bob Ferguson, did not immediately respond to an email seeking comment. He recently told The Seattle Times he would not rule out tax increases to cover the budget shortfall, which Inslee said Monday is estimated at $16 billion over four years.
Lawmakers in several Democratic-led states, including Washington, have in recent years proposed wealth or other taxes on their richest inhabitants, with Massachusetts voters in 2022 approving a “millionaire tax” — an income tax surcharge on those making more than $1 million a year.
Washington, which does not have an income tax, is considered to have one of the most regressive tax systems in the country, meaning lower-income residents pay a larger share than richer ones. Voters in November overwhelmingly upheld the state's new capital gains tax against a repeal effort, demonstrating a desire to make the tax system fairer, Inslee said.
“The state and the nation has to respond to this inequity beyond human imagination,” Inslee said. “We cannot survive as a healthy, robust community ... while we have this level of poverty and want amidst this enormous wealth.”
The Tax Foundation, a conservative-leaning policy organization, calls wealth taxes “economically destructive,” saying they encourage perverse tax-avoidance strategies and cut into investment returns.
Washington is among a number of states facing budget shortfalls. Inslee blamed inflation, higher caseloads in social safety net programs, and lower-than-expected state revenues from home sales and the capital gains tax.
Inslee said that in addition to the wealth tax, his budget proposal includes increased taxes on about 20,000 businesses with annual income of more than $1 million in the “service and other activities” category, such as some lawyers and accountants.
It also includes $2 billion in cuts or delayed spending, including by shuttering the Mission Creek Corrections Center for Women because of less need for lower-security beds.
