Washington State’s Proposed tax on Four People
Lawmakers in Washington state are on the lookout for new sources of tax revenue and a group of them believe they have found it…in the wallets of about a dozen people. But more specifically, the new wealth tax they are thinking of targets just four people: all billionaires.
As the Tax Foundation notes, the problem with such a narrowly, and obviously, targeted tax is those very rich people could simply leave Washington, and never return:
Only one of these four (Jeff Bezos) has a day-to-day corporate role in a Washington state-based company, and even he spends much of his time in a Washington, D.C. residence not far from his company’s second headquarters in Northern Virginia. What if Bezos, Gates, Ballmer, or Scott, uninterested in liquidating investments every year to pay a Washington state wealth tax, decided to make their primary residence elsewhere? They could still spend up to 182 days a year in Washington without being subject to the tax, provided they could demonstrate that their other location was their primary place of residence.
This would not only foil the wealth tax but would deprive the state of other revenue as well. Washington state does not have an income tax, so it does not stand to lose quite as much from these departures—at least directly—as some other states, but these wealthy residents still pay a disproportionate share of state and local taxes and contribute substantially to the local economy. Chasing them out would have serious consequences beyond the failure of a new tax.
The rich leaving high tax states and localities for less confiscatory climes is nothing new. People on far more modest means have done the same thing, seeking out opportunities in lower tax states like Texas or Florida, and a handful of others. “Tax migration” is a real thing – and it’s not just for the rich and famous.
Image Credit: By SounderBruce [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], from Wikimedia Commons