Washington’s ‘Millionaire Tax’ unneeded, unwanted, but it passes anyway

Washington’s ‘Millionaire Tax’ unneeded, unwanted, but it passes anyway

Discerning readers will note several problems with a Feb. 23 New York Times headline proclaiming, “In Washington state, Democrats consider breaking a taboo: Taxing the rich.”

For starters, whoever wrote it either doesn’t know — or more likely doesn’t care — that the rich already pay the lion’s share of taxes in Washington.

Even more to the point, the state’s just-approved 9.9 percent tax on annual earnings in excess of $1 million — passed on Tuesday after 24 hours of debate by the Washington State House and now awaiting only Gov. Bob Ferguson’s signature — isn’t merely “taboo.” It’s quite obviously unconstitutional, too.

Governor Ferguson initially claimed to have reservations about the bill, but those somehow miraculously disappeared because now he’s planning to rubber stamp it.

Washington’s far-left lawmakers have spent nearly a century salivating over the prospect of augmenting the state’s current revenue with an income tax, only to be stymied by a provision in the Washington State Constitution stipulating that taxes must be levied uniformly on the same class of property.

Because the Millionaire Tax imposes higher rates on those earning a larger income, there’s no way it can be reconciled with the requirement that all property (including income) be taxed at the same rate.

For supporters of the measure, of course, the reality that the new tax disincentivizes success by punishing the state’s biggest job creators isn’t a flaw. Rather, it’s one of two things they like most about the idea.

The other is that it opens the door to an income tax not just on high earners but everyone.

Taxing the wealthy at a higher rate, they insist, is necessary to rebalance a regressive tax system that unfairly burdens the poor. According to IRS numbers, however, the wealthiest 1 percent of Washington earners — a total of 35,597 households — currently pays more than 32 percent of all taxes collected in the Evergreen State, despite accounting for only 19 percent of its earned income.

For the record, Washington’s projected revenues for the current biennium are already $75 billion — an all-time high — so it’s not as though the state is destitute. Still, leftist lawmakers claim the Millionaire Tax will produce an additional $3.5 billion to spend on their pet projects.

That can only happen, however, it the wealthy stay in Washington long enough to pay it — which seems wildly optimistic. Starbucks founder Howard Schultz, in fact, announced just hours after the House vote he plans to move to Florida, which has no income tax.

Others will surely follow.

In the meantime, the latest measure does no more to satisfy the constitutional limitations than nearly a dozen previous state and local wealth tax proposals have, and its sponsors know it.

But they fully expect the matter will ultimately be settled by litigation, and they’re counting on Washington’s uber-activist Supreme Court to validate the measure using the same tortured legal reasoning it did two years ago in concluding the state’s capital gains tax didn’t violate the same standard.

Adding insult to injury, architects of the tax assure us it has broad public support. And yet they took great care to insert wording in the bill characterizing it as an “emergency” action, meaning it can’t be overturned by referendum.

The tax could be repealed by voter initiative, but not until after it takes effect in 2028 — a much higher bar to clear, even in a state whose voters have rejected income taxes 11 times over the past 94 years.

So let’s review: Washington’s newly minted Millionaire Tax isn’t needed or wanted. It also won’t work as promised and, just for good measure, it violates the constitution.

So why are we doing this? Follow the money.

More tax revenue means bigger government. Bigger government means more government employees. And more government employees mean more dues-paying members for the state’s public-sector unions — the ones primarily responsible for funding the campaigns of the leftists responsible for imposing the new income tax.

For anyone still harboring doubts about whether elected representatives in blue states like Washington are working for the voters or the Big Labor special interests lining their pockets with someone else’s money, the Millionaire Tax should clear up their confusion once and for all.

Vice President for News and Information
Jeff is a native of West Virginia and a graduate of West Virginia University with a degree in journalism. He served in the U.S. Army at Fort Lewis, Wash., as a broadcast journalist and has worked at a number of newspapers in West Virginia and Washington. Most recently, he spent 11 years as editor of the Port Orchard (Wash.) Independent, which earned the 2011 Washington Newspaper Publishers’ Association’s General Excellence Award as the top community newspaper in Washington. Previously, he was editor of the Business Examiner newspaper in Tacoma, Wash., for seven years. Jeff lives in Lacey; he and his wife have grown twin daughters.