When we discuss ways to correct Washington’s unfair tax structure, we’re often met with questions. If we passed a state wealth tax, who would pay? And who would benefit? How would the revenue be spread across the state, and would less-dense counties really stand to gain much value?
These are fair questions – and they’re questions we can answer using existing data and research.
First, a quick review of the policy and why we need it.
Currently, the ultra-wealthy get a very good deal with it comes to taxes. Whereas you pay ~1% tax on the total value of your home each year whether or not you sell it, billionaires are able to grow their wealth in financial assets (like stocks and bonds) tax free. And under the wealth tax, they’d still be able to keep a lot of their money. That’s because the Washington State Wealth Tax is a 1% tax on the financial assets (stocks, bonds, mutual funds) of multi-millionaires and billionaires over a significant threshold. Under this proposed tax, the first $250 million of value in financial assets is exempt from taxation. That means that 99.9% of Washingtonians would not qualify to pay the wealth tax.
In fact, the Department of Revenue (which would administer the tax) estimates that at this exemption threshold (a quarter billion dollars in financial assets) only about 700 individuals would pay into the tax. The first quarter billion dollars of assets still gets to sit tax free. At the same time, we’d raise over $3 billion a year in public revenue.
That’s billions of dollars in revenue that we could spend on all manner of inspiring and direly needed programs and services: free meals for all students, cost-free higher education, guaranteed basic income for kids and seniors.
Wealth Tax: Who Pays and Where Do They Live?
So where do those 700 wealth-tax payers live? And where do the beneficiaries of the billions in public revenue reside?
The Department of Revenue estimates that essentially all of the wealth tax payers for the $250 million threshold reside in King County. In fact, there are entire counties in Washington where no one – not one single resident – possesses this extreme wealth. We have to look at the lower wealth thresholds to get more information about where the very wealthy reside in our state.
Counties that have households/tax units with greater than $50 million in financial wealth, with number of taxpayers in that county in parentheses:
- King (2570)
- Clark (280)
- Snohomish (260)
- Pierce (240)
- Spokane (170)
- Kitsap (140)
- Whatcom (100)
- Yakima (70)
- Thurston (60)
- Skagit (60)
- Chelan (50)
- Benton (50)
- San Juan (40)
- Island (40)
The following counties have no one* with this level of wealth:
- Grays Harbor
- Pend Oreille
- Walla Walla
At the higher thresholds, we see that almost all the taxpayers reside in King County. At the $100 million taxpayer level,
- King (1260)
- Clark (140)
- Snohomoish (110)
While wealth is located almost entirely along I-5 corridor, poverty and need for funding is spread throughout our state. That’s why we need a statewide solution – a solution that doesn’t continue to burden the lowest earners. Because our state and country face severe economic, health, and climate challenges, and we need more revenue to solve these problems.
It’s Time to Fix Our Tax Structure
We define poverty as 200% of the Federal Poverty Rate, which is $46,060 of income a year for a family of three. Critically, a “self-sufficiency” wage for a family of three (what it costs to provide basic shelter, food, and care for one parent and two children) is $49,040 a year in Yakima County and $82,045 a year in King County. All Washington counties have a poverty rate of at least 18.4%, with a median poverty rate of 31%.
Wealth inequality has reached staggering highs across the nation. Here in Washington, one out of four residents earns well below a insufficient income. Meanwhile, a handful – just a few thousand in our state – have more wealth than they could spend in a lifetime. And at the same time, they’re paying a lower tax rate than those living on the margins.
Now more than ever, we need significant investments in public services to support working people in our state. Our rural, urban, and exurban areas all require more revenue to help fix our broken social safety net. We can fully fund and expand the social programs that make a difference for everyday people by asking those with extreme wealth to pay what they owe through a state wealth tax.
When everyone pays their fair share, we can foster thriving communities and build a Washington that serves all our communities. We just need to decide to make it happen.
* An important caveat for this information: The Department of Revenue relies on federal tax information to obtain these estimates of taxpayers and their location. The Department must abide by IRS disclosure rules for reporting, which limits disclosure of geographic information for small numbers of tax payers. For instance, county-level information must include more than 20 tax “units” or taxpayers. If a county has fewer than 20 tax payers, that will be reported as zero.
More To Read
November 9, 2023
What can we really learn about taxes, wealth, and policy from the behavior of one person?
October 26, 2023
The queer community has always been an economic powerhouse - in unions, they found equity and recognition
October 20, 2023
Many Washington counties don't have a single resident who would pay a wealth tax - but they would benefit