(The Center Square) – Proposed legislation that would create a “narrowly tailored property tax on extreme wealth derived from the ownership of stocks, bonds, and other financial assets” in Washington state drew passionate responses from supporters and opponents at a public hearing before the Senate Ways & Means Committee.
Senate Bill 5486, sponsored by Sen. Noel Frame, D-Seattle, would levy a 1% property tax on those financial assets, excluding the first $250 million, and is expected to generate approximately $3.2 billion in revenue annually, starting in fiscal year 2026. The money would go towards education, affordable housing, disability services, and tax credits.
SB 5486 would only apply to some 700 people in the state, she added.
Supporters characterized the bill as a tool for fixing what they consider Washington’s upside-down tax code that also brings in much-needed revenue for services state residents need.
“A wealth tax is not novel, it’s been an essential component of, for example, Switzerland’s tax system for more than a century,” Prof. Brian Galle of Georgetown University said via remote testimony.
By most metrics, he said, a wealth tax works better than the U.S. income tax and Washington’s state sales tax.
“So let’s just say that we’ve learned a lot over the past decade about how to design and implement wealth taxes and how to make them work successfully in places like Switzerland and Spain,” he said.
As of Jan. 1, all residents of Spain with a net worth greater than 3 million euros have to pay a new Temporary Solidarity Tax for High Net-Worth Individuals. This new tax applies not only to residents of the country, but also to people who have assets in Spain.
Andy Nicholas, senior fellow at the Washington State Budget and Policy Center, said SB 5486 “would be a boon for Washington’s economy, strengthening community structures like schools and affordable housing, creating thousands of jobs, boosting personal income, and making Washington more attractive for business investment.”
During remote testimony, he took issue with the claim the wealth tax would cause the richest Washingtonians to flee the state, as some critics of the bill contended.
Emily Shay, director of government affairs at the Association of Washington Business, pointed out the potential negative consequences of SB 5486 on the state’s business community.
“This could have a huge impact on businesses deciding to relocate out of our state who decide the risk of investment is too high, or that it cuts too deeply into their investment returns,” she told the committee during her in-person testimony.
She noted that the bipartisan Tax Structure Work Group did not include a wealth tax in its list of recommendations to lawmakers earlier this year for improving Washington’s tax system. The group did recommend replacing the business and occupation tax with a margin tax and giving local governments the ability to expand property tax limits.
Others were more outspoken in their opposition to SB 5486.
Jeff Pack of Washington Citizens Against Unfair Taxes, an organization he described as “over 3,000 really angry people,” did not hold back in his remote testimony.
“You taxocrats in Olympia really like to play up class warfare: those evil rich people,” he said. “You’ve been on a tear this session and the last one. You’ve hit them with an unconstitutional capital gains tax, taken away their $30 [car] tabs, going to try to overtax the sales of their homes and other bills, all to give the money to someone else that didn’t earn it. You must feel like Robin Hood, except for you folks are far from Robin Hoods, more like Robins in hoods, the grim reaper of wealth taxation, because surely no one needs that much money, so it must be given to others.”
Eyman is the man behind an October 2019 measure that would have steeply discounted the price of car registrations at $30. In October 2020, the Washington State Supreme Court struck down the initiative on constitutional grounds because it “contain[ed] more than one subject and its subject is not accurately expressed in its title.”
“Bills like these are pushed to pit people against one another, to make then envious of one another – jealous, covet they neighbor’s goods; it almost gets biblical after a while,” he said of SB 5486.
Eyman continued with the class warfare theme, saying, “Successful people weren’t just lucky; they worked their butts off. They took huge risks, sacrificed a lot over many years and earned their money. And the people who didn’t earn this money don’t deserve to get it from the people who did.”
He concluded by criticizing the scope of the legislation.
“The stupidity of this bill knows no bounds,” Eyman said. “I find it amazing that it would even be pushed, and to think that you can tax everything somebody owns in the entire world and think you can bring it to the state of Washington is just beyond absurd.”