Taxes

Washington State Might Tax 4 People Billions of Dollars. What If They Leave?

A proposed wealth tax would collect 97 percent of its revenue from famous billionaires.

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If there is a multi-billionaire club in Washington state, a large portion of the legislature is apparently looking to drive the wealthiest members of the club out of the state. The legislature calls this effort H.R. 1406. Everyone else calls it a wealth tax.

The preamble to the bill claims that Washington's tax system is "the most upside down and regressive in the nation," and that its "overreliance on low income and middle-income families…is simply not sustainable."

To fix this, H.R. 1406 proposes a wealth tax based solely on the financial intangible assets of those very few Washington residents whose assets have a fair market value in excess of $1 billion–– fewer than 100 people. For the most part, this means taxing the fair market value of these residents' stock and bond portfolios. 

The sponsors of the legislation believe that "Washington's status as an economic and social leader is threatened by growing wealth inequality and a tax structure that perpetuates it." The taxing of the wealth of a very few residents would appear to be the sponsors' solution to what they see as these inequities. Washington can be in favor of progressive or regressive taxes, but it should not be pretending that taxing the accumulated wealth of a few billionaires would make much of a difference in its self-described "upside down" tax system which currently includes no income tax or any other progressive taxes.

The Tax Foundation's Jared Walczak, using Forbes data, estimates that of the Washington residents who would be subject to the wealth tax, four people would provide about 97 percent of the tax revenues: Jeff Bezos, Bill Gates, Steve Ballmer, and Mackenzie Scott (Bezos' ex-wife).

The specific individuals who would pay nearly all of the wealth tax revenues are directly and indirectly responsible for creating millions of jobs in the state and across the country. They have contributed billions of dollars to charity. Why would the state choose to punish these folks?

While the sponsors of the bill express concerns regarding the sustainability of the existing state tax code, a wealth tax where virtually 100 percent of the revenue will come from four individuals who could exit the state at any time and therefore no longer be subject to the wealth tax is not a sustainable or reliable method of funding state programs. (Besides this, the death of a single taxpayer could be catastrophic to the expected stream of wealth tax revenues. One of Washington's richest residents, Paul Allen, passed away in 2008 at age 65.) 

Notably, the sponsors chose only to tax intangible financial assets. If Washington is choosing to tax wealth, deciding not to tax other forms of wealth such as artwork, patents, or "private nongovernmental athletic or sports franchises" seems to unfairly target only the assets of job creators. This needs serious explanation from the sponsors. 

The tax is projected to bring in about $2.5 billion a year, though the fiscal analysis admits "this revenue estimate assumes that no taxpayers move out of state or take other actions to reduce their liability under the tax." Tax revenues are hard enough to predict during the pandemic, and the overreliance of this tax on a few billionaires who could flee the state would put Washington at risk of dramatic budget shortfalls. 

Bezos, for example, would represent just under half of Washington's estimated wealth tax revenues. As a result, if Bezos left Washington or died, half of the tax's projected revenue would disappear. There is basically zero chance of his lost revenue being replaced by a new resident moving into the state. Further, if there was a decline in the price of Amazon stock to its lowest price in the last year, that would reduce estimated wealth tax revenues by about 37 percent.

Amazon has never paid a penny in dividends. The company has reinvested 100 percent of its after-tax profits to date in building a bigger and bigger company. Amazon employs some 800,000 employees in the United States and arguably has been the most important cog in our economic wheel during the pandemic. Many of those jobs would never have been created if Bezos had needed Amazon to pay dividends over the years so he could pay his personal wealth tax. In fact, Amazon might not have been prepared to assume the role of America's retailer during the pandemic.

Though the proposed legislation has classic language about prohibiting an individual from doing transactions to avoid the tax, the state is not realistically going to be able to stop billionaires from investing in real estate rather than stocks and bonds. Gates, for one, is already the largest owner of private farmland in the country. The state will not be able to stop him from converting financial assets into more farmland and borrowing to do so. Investing $15 billion and borrowing $10 billion to purchase more farmland would result in Gates' wealth tax being reduced by $250 million annually. In that scenario, the state would lose 10 percent of its expected wealth tax revenues.

State Rep. Noel Frame (D–Seattle) hand-waved concerns like these away, saying, "The idea that they will just pick up and leave is a cynical view and it's not supported by evidence," as if Bezos doesn't already own a 27,000-square-foot mansion in Washington, D.C. Bezos can live anywhere.

With these risks, the wealth tax could not possibly be seen as good policy.

The legislature can choose to take 1 percent of the value of the intangible assets of its richest citizens, but those residents can leave the state. Then, of course, legislators could change the rules and tax more wealth by lowering the exemption. The new spending funded by the proposed tax revenues may never be repealed. Someone will need to pay when the legislature hikes taxes the next time, but the billionaires will all be gone.

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  1. “With these risks, the wealth tax could not possibly be seen as good policy.”

    That presumes its purpose is to be good policy, rather than a cynical attempt to attack a small, hated class of people by economically illiterate politicians in order to provide a distraction from their other policy failures to their ignoramus progressive voters.

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    2. Both sides certainly do like their demagogic appeals, don’t they?

      They dress up their hatred of “the other” with rationalizations of good policy, when really it is to “stick it” to the people they hate.

      1. For years and years, it seems like Team Blue and Team Red have managed to suck people into taking sides in their partisan culture war.

        My hope is more and more Americans are growing tired of both major parties. The new thing under the sun, thanks to Trump, is maybe the Republican Party has become a permanent minority, internally-divided party at the Federal level.

        1. Then, at least in the short term, are you pleased that the Democrats will act as a permanent majority?

          1. Dee’s a lefty, so yes.

          2. As I have said several times, I wanted the Georgia Senate runoff to go the Republicans so there would be gridlock. But Trump and his associates, Lin Wood and Sidney Powell, made sure the runoffs were lost.

        2. Yay Jeff is using his sockpuppets to obfuscate in support of leftist fuckholery again.

          It’s always funny how when leftists are evil, it’s right to “both sides” with you Jeff.

          1. WA progressives definitely ARE evil. They’ve ruined the state.

      2. Yet its only the Blue side that burns cities – cities run by Democratic politicians for generations – and tries to drive people they don’t like out of work and public life.

        Oh, and, as in this case, try to steal all their shit.

      3. An article about a Democrat controlled state, and here’s Lefty Jeffy and Dee with a both sides to virtue signal to all there lefty buddies.

        1. Gosh, who besides “lefties” are critical of both sides — oh, yeah, non-partisan libertarians.

          1. You should try and learn about libertarianism. So far it’s completely foreign to you.

      4. You seem to be full of hate or assume others are.
        This is not usually the case and promoting hatred is always bad!

    3. It likely violates the state constitution as well:
      “All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only.”

      Which means that there has to be one uniform rate across the state for a wealth tax. The supreme court is getting more and more progressive lately, but it’s struck down income taxes repeatedly, and this wealth tax seems a clear violation requirement for a uniform rate.

      1. Since when have progressives ever cared about the law if it wasn’t being used to get their way? They have no integrity whatsoever. It’s all about their power and desire to enslave everyone.

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    7. There is no more efficient way to pass a bill than to employ the hand-wave when reasonable concerns are presented.

  2. If the purpose of the wealth tax is to reduce wealth inequality among Washington’s residents, having all of Washington’s billionaires leave the state accomplishes the same goal, so what’s the problem? You can be unequally rich or equally poor and when you’re happy to beggar your neighbor for no gain for yourself simply out of envy, well, there’s fables and proverbs and parables warning about that sort of behavior. Yet socialism is well-known for creating equality in poverty, it’s probably it’s best-known attribute. These people aren’t stupid, they know what’s going to happen and they approve.

    1. I bet the insider elites do NOT expect to be equally poor. They considers themselves a nobility above the masses they direct, and thus entitled to special stores and dachas.

    2. Bezos only picked Washington to set up Amazon because of its tax structure. No state income tax, plus it had relatively small population so Amazon wouldn’t have to collect sales taxes for shipments to California, or other large state alternatives.

      But there is no reason for him to stay now. But perhaps Bill Gates will stay, he has supported an income tax in the past, in fact his father led the initiative effort that lost badly about a decade ago.

      1. If Gates supports an income tax, presumably a progressive one, why isn’t he writing checks to the state government on a voluntary basis?
        Any chance at all it is because he knows an income tax would come with enough loopholes that he skates, and the (alleged) middle class get the shaft?
        Any gazilloinaire claiming to be for “more taxes” who doesn’t pay the state on his own is a fraud. (paraphrasing Lenny Bruce)

  3. “Washington’s status as an economic and social leader is threatened by growing wealth inequality and a tax structure that perpetuates it.”

    With this introduction, how can you expect a policy based in reality?

  4. How to make a hellhole.

    The Power to Steal. Don’t encourage people to create anything of value for mankind by free market rewards and consequences…

    Instead; encourage them to Steal from others all the value there is until no more value can be found!

  5. Do they have a case that this constitutes a bill of attainder?

    1. If the bill doesn’t actually list them by *name*, I’m not sure.

    2. What case? The courts are sure to find that none of these few taxed individuals will have “standing,” right?

  6. “What If They Leave?”

    How about border fences? Works for DC.

    1. Like NY, the WA leeches will attach themselves to any wealth they claim is connected to the target’s history in-state.

      1. And CA.

        But how would they collect? Billionaires could just leave the state and never return. They don’t have the IRS to follow them around the world or freeze their accounts.

        No wonder Bitcoin is going up.

        1. WA’s billionaires will either pay to shutter this bill, or move their residences elsewhere.

    2. Now, now. My sources inform me that those fences, as well as all the troops, are to keep the authoritarians at bay.

      1. And yet, the authoritarians still bay – – – –
        Usually at the expense of the individual.

  7. It was just a matter of time until someone tested the “ad absurdum” argument…

  8. Politicians constantly tell their supporters “I want to do the RIGHT THING”, when they know perfectly well the “right thing” would be a disaster.

    They’re not going to pass this wealth tax. But they still want the headlines.

    1. “Virtue Signal Goes to Washington”

      1. “Virtue Signal”
        Good name for a stripper

  9. State Rep. Noel Frame (D–Seattle) hand-waved concerns like these away, saying, “The idea that they will just pick up and leave is a cynical view and it’s not supported by evidence,”

    evidence like this? https://www.nytimes.com/2016/05/01/business/one-top-taxpayer-moved-and-new-jersey-shuddered.html

    I believe this man has returned to NJ for family reasons, but don’t say stupid shit like “they won’t leave.” Of course, they will. Because they can.

    1. What is wrong with you economics-denying libertarians?
      Did you not see the hand wave?

  10. 10 year tax. Hopefully California can get away with it so that other leftist states can follow suit. Maybe it will help the refugees from those states think twice before importing the same leftist policies at their destination.

    1. It won’t.

      It will just drive rich leftist to your town to try to remake it in the same image – they’ll get it right this time, promise. Oh, and don’t bother telling them that you’re fine as you are. They know better than you.

      1. Conquer and Consume mentality.

      2. There is no cure for “I know better than you”.

        1. It is as impervious to reality as “for your own good”.

          1. They’ll change that too.

  11. Washington has nothing to worry about. There are no real John Galts.

    1. No, but there are millions of angry serfs with torches and pitchforks at the ready to storm Olympia. That faggot Inslee has really fanned the flames of hate towards him and his lackeys here.

  12. I didn’t see what rate the bill wants to charge, but you know it will grow and grow as the base shrinks and shrinks from rich victims leaving. They can also probably get away with it, assuming the rich victims stick around, as long as it stays local to Washington state. But if it shows even the slightest signs of success, other states will ape it, the Dems in DC will ape it, and then … these clowns will find out what happens to wealth when it has to be sold but the only people who could buy it are also trying to sell theirs.

    Bunch of myopic morons. But that has always described politicians.

    1. Plus the billion dollar threshold will undoubtedly drop.
      Warren wanted to make it 30 million for her “billionaire’s tax”.
      Sanders wanted to make it 8 million.
      And it won’t be indexed for inflation, so when the 30 trillion dollar deficit and the free cash handouts make everyone millionaires, voila!

      1. Pretty sure they could get the votes to pass a “more millions than me” tax.

  13. “Why would the state choose to punish these folks?”

    Let us count the ways:
    1. Personal success is unfair.
    2. Rich people are evil.
    3. Mega-rich people challenge the government monopoly on power.
    4. They are all white and mostly male.
    5. Daddy issues.

    Others?

    1. Democracy.
      If you’re in the top 1%, and they offer to give free stuff to 51% of the people, you’ll lose every time.

    2. “Meritocracy is a white supremacist fiction.”

  14. I hope it passes, it’s the only way people will learn.

    Then we can round up the socialist agitators and put them in prison where they belong.

    1. If they haven’t learned yet; what make’s you think they ever will?

      Heck; they aren’t even entertaining the idea of ‘learning’ anything. IN FACT they’re holding onto and massively expanding their failed ideology like never before.

      1. “If they haven’t learned yet; what make’s you think they ever will?”

        Because places like Poland and Hungary exist.

  15. Washington State Might Tax 4 People Billions of Dollars. What If They Leave?

    That’s actually pretty simple.

    You create a law that says they are subject to tax based on the residency findings of the state’s residency standards agency. Said agency will, of course, find that even the slightest nexus with Washington means you’re a resident of Washington state – for tax purposes.

    Secondly, you create a law that says residents of Washington state are subject to taxation on their world-wide earnings for a period after leaving the state.

    California does both of these things.

    1. Shit, I have visited both CA and WA. When will they come after me?

    2. That’s what California is planning to do — tax the earnings of pro athletes if they went to college in California for one year. Good luck recruiting when they figure that one out.

  16. The tax is projected to bring in about $2.5 billion a year,

    2.5 billion.

    1/4 of that is 625,000,000 dollars.

    Do these people even *earn* 625 million a year? If not then what is WA expecting?

    Are they expecting that these guys will sell off their stock portfolio to come up with the cash to pay this? Because that will immediately start reducing the ‘fair market’ value of their ‘intangible’ wealth (though, IMO, their use of the term ‘fair market’ screams ‘government bureaucrat determined’) and reduce the amount of tax income they’ll get the next year. And the year after that.

    1. They might attempt to tax retained wealth to get around the income problem. If you have more than N dollars we will steal N% of it each year.

      1. Thing is, none of these guys have a ton of money in *dollar* form. Its in assets. You’re not getting 2/3 of a billion of dollars out of someone who’s cash income is is in the 10’s of millions. Bezos’ cash income was 1.7 million in 2019.

        The only way this works is if they’re taxing the assets directly – and it *is* a wealth tax, after all. Which means to pay it, he’ll have to sell off assets to get the cash to pay the tax bill.

        Which will drive the value of those and the remaining assets way down. Especially as this is a recurring wealth tax – the worst possible way to do a wealth tax.

        1. I’m sure the state would accept ownership in Amazon.

        2. Never thought it would work well, but I think they might attempt it. They might limit it to taxing stock and real estate value, stuff that is already tracked.

          1. That would still require them to sell assets – which will then drive the value of those assets (both sold and the stuff still owned) down.

            So every year this will generate less and less tax revenue even if everyone stays put.

            Its commonly understood – by people who have a basic grasp of economics – that wealth taxes are bad and the only ‘good’ wealth tax is a surprise, *one-off*, wealth tax. Not a repeating one that you can see coming from miles away.

    2. I too once reduced my tax burden by becoming substantially poorer.

      I don’t recommend it.

      1. I do.
        My retirement income is less than half what I earned when working.
        Yet by eliminating debt, I live as well as I did. I have just stopped buying ‘stuff’ to play with, as I now have all I want.

        (as an aside, before “him”, my retirement income was just above the national average. After “his” term as President, the economy improved so much that even after the stock increases, I am now just under the national average)

  17. The state will not be able to stop him from converting financial assets into more farmland and borrowing to do so.

    You’re forgetting that the state can seize your bank account solely on the suspicion that that last deposit or withdrawal you made was to avoid filing an IRS Form 8300.

    So, yeah, the next step after declaring that WA residents are subject to WA taxes forever is to set up an agency to monitor ‘tax avoidance’ activities with the power to seize assets.

    But, remember, these people are the *anti*fascists.

    1. According to the Ministry of Truth, your post should read “You’re forgetting that the state can seize your bank account just because.”

  18. Inslee is already driving the rich (and everybody else who can afford to move) out of the state. Worst governor ever.

    1. ooh…2020 taught me not to designate anything “the worst”. It seems to generate a “hold my beer” effect.

  19. Bezos can live anywhere.

    Would love to see him move to Portland.

    And, are these people forgetting that Bezos stepped down as CEO? Like he has not even the slightest need to be in Seattle on a DTD basis anymore.

    So, they’re banking on half their revenue coming from a guy who doesn’t even work there any more.

  20. Purpose of Government —
    1) Protect you from criminals by ensuring your liberty and justice.
    2) Protect [WE] mobs from you by ensuring you have no liberty or justice?

    1. 3) Protect pensions and health benefits for current and former state workers. This is probably item #1 actually.

    2. Sorry to be uninformed, but what does “[WE]” mean?

      1. Collective thinking instead of Individually. Highlighted in ‘lefty’ DNC platform everywhere as well as being the very basis of communism.

        Sell your individual souls to the [WE] foundation; because YOU don’t own you [WE] own you!

        1. Thanks. How utterly nasty.

  21. It’s not like 4 people have increased their demand on Washington’ s infrastructure to the extent of taxes demanded. Holy shit, what a preposterous law! The revenue from jobs created and economic activity should have been welcomed, period. Bad politicians make bad decisions.

  22. Taxing future possible money is their dream. They missed out on IBM and others.

  23. I encourage washington state to pass this tax as I am sure it will lead to equal division of the remaining wealth. I further encourage this tax to not just target the top 0.001% but to target all of the top 1% of wealth controllers in Washington state! Just think of what washington state will be able to do with the changes in finances their new tax will bring!

    1. Well, since the state pays $30k to put up a road sign, (that was 10 years ago; it’s probably $50k now) I’m guessing they can waste more money on signs?

  24. Wealth inequality is a sign of freedom and a healthy economy, where entrepreneurs can create value for everyone.

    Targeting a small group of people to fund government employee pension plans is just flat out stealing.

    1. Yeah? So what’s your point?

  25. God these people are so foolish.

  26. Bozos and the rest will just move residence to another state or country. They have plenty of time to get it done before the bill can be signed into law.

    We’re already seeing the same thing happen to California.

  27. Please oh please pass this legislation. We need to have a concrete example of what will happen when a confiscatory tax rate is implemented. Do it!

  28. It should be noted for the record that if everyone who would be affected by this tax leaves the state of Washington, then Washington state will have made a significant stride in solving their wealth inequality problem.

  29. Years ago in Maryland they passed a millionaires tax. A year later we had 1/3 few millionaires in the state and there was less revenues collected by people earning $1 million plus per year. For billionaires even easier especially for Gate and Bezos that are out of day to day operations of their companies. Maybe do the Larry Ellison move and buy a Hawaiian Island.

  30. You have to understand that the Washington State government has a history of trying to push these types of stealth income taxes (only on the very, very rich of course) in an attempt to find one loophole that will let them get around the state constitution.

    The voters have steadfastly resisted any income tax so the goal isn’t to tax these individuals, it is to find a constitutional way to tax income/wealth. Once they do, they will then be able to legislatively lower the threshold until it affects the middle class.

  31. Sure, right. Blame the tax structure. And then make it worse than it is. What a bunch of friggin idjits.

  32. Makes more sense when you realize it’s not about revenue, it’s about punishing the successful. Gin up jealousy among your constituents for those people. Make them believe that whatever the successful have, it’s only because they got it through theft & deceit. Politicians keep getting re-elected pushing this until scam until they pull it all down.

  33. every rich person is mostly afraid to pay taxes, even though it is the duty of every citizen

    1. The rich are “afraid” of paying taxes? Naahhh. But they do try to pay as little as possible, taking every legal tax break.

      JUST LIKE YOU DO! Have a mortgage? Write off the interest on your 1040? I would hope so!

      Does that mean you are “afraid” of paying taxes?? By taking that deduction, are you shirking the “duty of every citizen”?

  34. Amazon has never paid a penny in dividends… Many of those jobs would never have been created if Bezos had needed Amazon to pay dividends over the years so he could pay his personal wealth tax.

    Are you freaking kidding me? Dividends are the ONLY return on equity capital for a non-controlling shareholder. Yes it’s obvious that the US has created a perverse system over the years to punish dividends and distort all measures of everything. And now – some whore wants to pretend that simply providing a return on capital to the smaller provider of that capital is what actually undermines job creation? Like jobs in the US depend exclusively on the ability of billionaires to play tax games?

    If Amazon had paid dividends that would have meant that:
    Amazon the corporation was providing the return on capital to those non-controlling shareholders not named Bezos.

    Those non-controlling shareholders not named Bezos would have then had control of their own wealth to create jobs themselves.

    And if the controlling shareholders named Bezos had a sound enough idea about creating wealth so that it appealed to those non-controlling investors not named Bezos, then those non-controlling investors not named Bezos would have reinvested dividends right back into Amazon and everything would have been exactly the same. Except that in this case it is not about a billionaire making control decisions that go beyond his own assets.

    Fucking plutocratic whores are gonna kill the future of the US

  35. There are two groups quietly hoping this “soak the wealthy” tax goes though in Washington state:
    1. The business development agencies in the other states seeking to poach the businesses and rich people from Washington state. This tax would make their job much easier. Their only problem? Too damn many competing states!
    2. Libertarians such as myself who love it when progressives shoot themselves in the foot — or in some part of their body that is much more sensitive.

  36. Some rich people will stay in Washington and pay the tax — all surely clueless progressives.

    They will get EXACTLY what they deserve.

    IF the bill doesn’t pass, a super-rich true progressive should pay the tax anyway — voluntarily. Man up!!

  37. One thing you can be sure of. If this tax is imposed, there will be a subsequent effort to lower the “trigger point” to include more people and their assets.

    The amazing thing is that liberal Washington state has no state income tax. People fear imposing an income tax on the rich today will result in everyone paying income tax in the near future.

    BTW, Washington state already has the highest inheritance tax rate in the nation — 20%. Indeed it starts at 10% at a very low threshold. Most states have done away entirely with the state inheritance/estate tax.
    https://dor.wa.gov/taxes-rates/other-taxes/estate-tax-tables

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