Shot:
[Washington’s state] legislature passed a wealth tax on the capital gains profits of about 0.2 percent of Washington taxpayers. . . . The new tax applies to capital gains profits from the sale of stocks, bonds, and other non-retirement assets exceeding $250,000 a year. The first returns for the new tax will be due in April 2023. Only 0.2 percent of Washington taxpayers see enough profits to pay this tax. . . . The rate is 7% on all non-exempted profits above $250,000 per year.
Shot:
Washington’s state constitution puts strict limits on property taxes. It also defines property extremely broadly, to include “everything, whether tangible or intangible, subject to ownership.” A century of case law has held that this definition encompasses income, and thus functionally prohibits the state from adopting an income tax. . . . State lawmakers tested the limits of this prohibition in 2021 by adopting a tax on high-earners’ capital-gains income. Then, they proceeded to defend it under the specious claim that it isn’t really an income tax at all, but rather an excise tax on the privilege of earning income. . . . The Washington supreme court has . . . decid[ed] that a tax on income is not an income tax if the legislature calls it an excise tax.
This flies in the face of all logic and legal precedent, but the court’s reasoning goes like this: Washington is allowed to tax the exercise of privileges and can certainly tax transactions (true). Capital-gains income is realized in a transaction (also true). Therefore, if the state taxes the resulting income, it can characterize it as a tax on the transaction to get around the restriction on taxing income (self-evidently false).
Shot (March 9, 2023, press release by the Washington state senate’s Democrats):
More than 2,600 people signed in to support the Washington State Wealth Tax proposal during a Senate Ways & Means Committee hearing on Thursday. The legislation, SB 5486, would create a narrowly tailored property tax on extreme wealth derived from the ownership of stocks, bonds, and other financial assets, with the proceeds dedicated to education, housing, disability services, and tax credits for working families. The first $250 million of assessed value is exempted, meaning only the wealthiest people in Washington would pay the tax, including some of the wealthiest individuals in the world.
Shot (April 15, 2023):
Lawmakers are also considering a proposal to raise the decades-old 1% cap on the growth of property tax collections, which local government leaders have long criticized for constraining spending on public services. . . . King County Executive Dow Constantine has been among the local government officials pushing to raise the cap.
Shot (April 23, 2023):
King County, which includes Seattle, is holding a special election Tuesday for a property-tax levy that would raise $1.2 billion over nine years. . . . The measure would impose a yearly tax of 14.5 cents for every $1,000 in assessed property value for nine years.
The levy passed with 56 percent of the vote.
Chaser, from Jeff Bezos’s Instagram feed on Thursday:
Seattle has been my home since 1994 when I started Amazon out of my garage. That’s my dad behind the camera in this video, touring Amazon’s first “office.” My parents have always been my biggest supporters. They recently moved back to Miami, the place we lived when I was younger (Miami Palmetto High class of ’82 — GO Panthers!) I want to be close to my parents, and Lauren and I love Miami. Also, Blue Origin’s operations are increasingly shifting to Cape Canaveral. For all that, I’m planning to return to Miami, leaving the Pacific Northwest. I’ve lived in Seattle longer than I’ve lived anywhere else and have so many amazing memories here. As exciting as the move is, it’s an emotional decision for me. Seattle, you will always have a piece of my heart.
I’m sure Bezos had a number of reasons for the move, including those he mentions. But if you’d like one of the world’s richest men to keep calling your city home, it is not a great idea to be constantly threatening him with new taxes on his property and investments. Score another win for the Florida model.