Washington state has beaten California and <\/span>New York<\/span><\/a> in their race to soak the rich.\u00a0<\/span><\/p>\n

On Thursday, the state Legislature passed a “<\/span>millionaires tax<\/span><\/a>” along <\/span>party lines<\/span><\/a>. Starting in 2028, households making at least $1 million will be subject to a 9.9 percent income tax. The money raised from this duty will allow the state to eliminate sales taxes on diapers, over-the-counter drugs, and select hygiene products; provide free school breakfast and lunch; and to generally “fund K\u201312 education, health care, [and] higher education.” Unless Gov. Bob Ferguson <\/span>unexpectedly<\/span><\/a> vetoes the bill, it will <\/span>automatically become law<\/span><\/a> in April.<\/span><\/p>\n

In passing this law, the Evergreen State has implemented the most regressive wealth tax in the country, at least for now. In November, Californians will vote on a proposed <\/span>5 percent billionaire wealth tax<\/span><\/a> ballot initiative (which Gov. Gavin Newsom <\/span>opposes<\/span><\/a>). Meanwhile, New York City Mayor Zohran Mamdani has <\/span>called<\/span><\/a> on state legislators to impose an additional 2 percent income tax on millionaires and is <\/span>considering<\/span><\/a> proposals to increase the city’s corporate tax rates and lower its threshold for death (estate) taxes from $7.1 million to $750,000.\u00a0\u00a0<\/span><\/p>\n

While California and New York have, respectively, the highest and third-highest <\/span>state income tax rates<\/span><\/a>, Washington’s millionaires tax “is probably one of the biggest changes in Washington state political history since our founding,” state Rep. Chris Corry (R\u2013Yakima) <\/span>told<\/span><\/a> Komo News.\u00a0<\/span><\/p>\n

As Jared Dillian recently <\/span>explained<\/span><\/a> for <\/span>Reason<\/span><\/i>, Washington did not tax any kind of income until 2021, when it passed a 7 percent tax on long-term capital gains above $250,000, which <\/span>encouraged<\/span><\/a> Jeff Bezos’ relocation to Florida. In 2023, the Washington state Supreme Court <\/span>upheld<\/span><\/a> this law despite the state’s constitution explicitly <\/span>requiring<\/span><\/a> “all taxes [to] be uniform” and “the aggregate of all tax levies…[to] not in any year exceed one percent of the true and fair value of [taxed] property.”\u00a0<\/span><\/p>\n

Because the state’s property taxes must be applied at a uniform rate instead of bracket-specific rates, like the federal income tax, Washington households with a gross annual income of $1 million or more would have to pay a 9.9 percent duty on <\/span>all<\/span><\/i> their income, not just the income made in excess of $1 million.\u00a0<\/span><\/p>\n

This means that a household is better off if it stops working after earning a gross wage of $999,999 per year, unless it expects to earn at least $1,109,877\u2014the point at which the after-tax income would match $999,999, thanks to the new law. This will discourage six-figure income earners from continuing to earn $1 million, so that they don’t trigger the flat tax on all their income, or encourage them to work elsewhere.\u00a0<\/span><\/p>\n

Seattle Seahawks General Manager John Schneider <\/span>said<\/span><\/a> the tax is “going to sting from \u200ba recruiting standpoint.<\/span>” <\/span>Starbucks founder Howard Schultz has already left.\u00a0<\/span><\/p>\n

On Tuesday, Schultz <\/span>announced<\/span><\/a> that he and his wife would be relocating to Florida to enjoy their retirement, and expressed their “hope that Washington will remain a place for business and entrepreneurship to thrive.” Kristofer Johnson, president of the Association of Washington Business, is not optimistic; he <\/span>says<\/span><\/a> “this move…will unfortunately cause more small- and medium-sized business owners to seriously consider starting, growing or moving their business to other states with a more stable tax environment.”<\/span><\/p>\n

The post Washington State Just Passed a 9.9% Income Tax on Those Making $1 Million<\/a> appeared first on Reason.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

The new tax \u201cis probably one of the biggest changes in Washington state political history since our founding,\u201d says one state representative. …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[19,9],"tags":[],"class_list":{"0":"post-125954","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-policy","7":"category-politics"},"_links":{"self":[{"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/posts\/125954","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/comments?post=125954"}],"version-history":[{"count":0,"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/posts\/125954\/revisions"}],"wp:attachment":[{"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/media?parent=125954"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/categories?post=125954"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/3rdcitynews.com\/news\/wp-json\/wp\/v2\/tags?post=125954"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}