Ferguson Delays Support for WA Millionaire Tax Bypassing Voter Approval

Washington state lawmakers have put forth a controversial income tax targeting millionaires. The proposed legislation, identified as HB 2724 in the House and SB 6346 in the Senate, aims to impose a 9.9% tax on individual incomes exceeding $1 million, effective from January 1, 2028. However, this provision comes with a significant caveat: it prevents voters from having a say at the ballot box due to its designation as emergency legislation.

Key Features of the Income Tax Legislation

• Emergency Legislation: The bills are presented as essential for state government support, thus making them exempt from a referendum.
• Tax Details: The 9.9% rate applies only to income over $1 million, with adjustments for inflation starting in 2029.
• Revenue Allocation: 5% will fund public defense, with the remaining balance going towards the state general fund, supporting sales tax relief and other tax initiatives.

Governor Ferguson’s Position

Governor Bob Ferguson expressed reservations about the current form of the proposal. He stated that only about 7% of the anticipated revenue, approximately $230 million, would directly benefit taxpayers. Ferguson emphasized that a greater portion must return to the residents of Washington to help alleviate financial burdens.

Democratic and Republican Views

Democratic leaders regard the legislation as a pivotal reform to Washington’s outdated tax structure, potentially generating approximately $3.7 billion annually. They argue that a mere 1% of the state’s wealthiest households will bear the tax burden.

In contrast, Republican leaders criticized the proposal, asserting it could harm small and medium-sized businesses. They argue it sets a precedent for further tax increases affecting a broader population over time.

Constitutionality and Future Steps

Critics of the millionaire tax have raised concerns about its constitutionality, citing historical failures of income tax proposals in Washington. Calls have emerged for lawmakers to pursue constitutional amendments instead of legislative mandates that may bypass voter input.

The current legislative session is set to run through March 12, and while bipartisan support seems unlikely, Democrats appear confident in their ability to pass the proposals independently.

In summary, the upcoming decision on Washington’s millionaire tax has sparked significant debate, highlighting varying perspectives on taxation, state revenue, and economic impact.