In early March 2021, state senators in Washington narrowly voted (25-24) in favor of a Capital Gains tax on Washington residents. This falls on the heels of local municipalities, like Seattle, who, in 2017, imposed an income tax on those who earn more than $250,000 per year ($500,000 for married couples, approximately 5% of residents, and the proposal of a 1% wealth tax, sparking an uproar in what was already a divisive debate over taxation within the state. This legislation would challenge Washington’s long standing history of being one of only nine states in the Union that doesn’t currently have an income tax for its citizens. Citing a reduction in federal funding as cause for introduction of this new legislation, state officials in favor of the taxation argue that it’s a necessary step in ensuring that the state has enough funds to meet their annual budget. Lawmakers who disagree argue that taxation, labeled as “capital gains tax”, “wealth tax”, and local income taxes on top earners are unconstitutional and unfairly place the burden of fiscal responsibility on wealthy Washington residents. In a study it was found that “the top five percent of wealth holders own over half the total wealth in Washington state." (Note that wealth estimates for the wealthiest Washingtonians are probably understated)

With such narrow voting margins, it’s clear that the issue of taxation is going to be an uphill battle for lawmakers on either side of the fence. Those who support taxation believe that federal budget cuts force the state to offset funding by imposing appropriate taxes on citizens who take advantage of the services the state provides. Countering the point, there is growing concern among those who disagree that taxation could make the prospect of relocating to the area less appealing for businesses and individuals who are top earners within their industry. Washington state has a long standing history of being income tax friendly for its residents and opposing lawmakers fear this may produce a negative outcome if enacted. Beyond the perception, those who oppose also argue that the state is not in a financial crisis and does not need to increase taxation to offset potential budget shortfalls; but state spending has increased more than 20% primarily for education and teacher salaries. 

The question for debate, in order to prevent #budgetcuts should Washington enact a #wealthtax?