Ferguson voices support for state ‘millionaires’ tax’

OLYMPIA –Gov. Bob Ferguson on Tuesday said he supports creation of a new “millionaires’ tax” to address what he calls “inequities” in Washington’s tax structure.

“The inequities of our state’s tax structure have been exacerbated by President Trump’s massive tax cuts for the wealthy, an unprecedented upward transfer of wealth that makes the rich even wealthier while hardworking people are overburdened,” Ferguson said in a press statement.

The specifics “will vary” if the proposal goes forward, but the governor’s office said that less than one half of 1 percent of Washington residents would be subject to the millionaires’ tax, and it would provide at least $3 billion in state revenue every year.

Ferguson endorsed imposing the proposed tax on those who make more than $1 million in income in a single year;  not people whose net worth – including the value of their home -- reaches that amount.

The proposal, if enacted, will likely face a legal challenge on its constitutionality since Washington does not have a state income tax and voters have repeatedly rejected creating one.

A constitutional amendment is one way to provide assurance, said Ferguson, who also supports codifying the $1 million threshold, with “appropriate adjustment for inflation,” into state law.

At least some Democrats, who control the state Legislature, may be on board with the Democratic governor but Republicans most probably will line up against it.

Ferguson acknowledged legislators will “have their own ideas” on his plan, but said he “looks forward to having productive conversations” with them. Lawmakers convene in Olympia in early January for the upcoming session.

He said Washington ranks “next to last for fairness and equality in our tax system,” claiming those “who make the least pay much larger shares of their income than those with the most resources.”

Washington families whose income is in the bottom 20% pay nearly 14% of their total income in taxes while those with income in the top 1% pay only 4.1% of their income, the governor stated. “We must rebalance this unfair system and return money and cut taxes for working families and small business owners who have been hit hard by the affordability crisis.”

He said revenue raised by the tax could be used to both expand eligibility and increase the amount of Washington’s Working Families Tax Credit, which currently provides a maximum credit of $1,290 to qualifying households.

Ferguson also favors eliminating the state’s Business and Occupation Tax on small businesses making less than $1 million in revenue. That lost revenue would be replaced by approximately $1 billion gained from the millionaires’ tax, he said.

Other revenues from the proposed tax could go toward additional K-12 education funding and eliminating sales taxes on personal hygiene products such as shampoo, deodorant, toothpaste, and “essential” baby products and clothing, the governor said.

While he hopes the tax will be adopted in the upcoming legislative session, Ferguson said its revenue will not be realized for several years and it “will not and cannot solve (the state’s) short-term budget challenges.”