WA governor proposes revenue from millionaire tax go to sales tax holidays

WA Democrats have weeks to pass millionaires tax

Democrats in Olympia only have several weeks to push their so-called "millionaires income tax" to the finish line.

OLYMPIA, Wash. - Democrats in Olympia only have several weeks left in the legislative session to advance a proposed "millionaire tax," as Gov. Bob Ferguson floats a sales tax holiday as part of the plan.

The millionaire income tax will be imposed on individuals or households earning more than $1 million, generating an estimated $3.7 billion annually for the state.

Ferguson said a portion of that revenue should fund two annual sales tax holidays. One would take place during a three-day weekend and another during a two-day period. During those times, consumers would not pay sales tax on items priced under $1,000.

"During that time there will be no sales tax on items less than $1,000. That would put approximately $141 million back in the pockets of Washingtonians every single year," Ferguson said.

Local perspective:

The Tax Foundation ranks Washington state with the third-highest combined state and average local sales tax rate in the country. Because local rates vary by city, the total sales tax differs across the state.

In Seattle, the combined rate is 10.55%. Cities including Edmonds and Lynnwood have the highest sales tax rate in the state at 10.7%.

Ferguson’s proposal isn’t new, with more than a dozen states offering sales tax holidays already.

But whether Washington gets a sales tax holiday could be in the hands of House Democrats who are considering the millionaire tax bill. The Senate already passed the measure with some tax cuts in their version of the bill, which includes no sales tax on hygiene products. Republican senator Nikki Torres tried to pass an amendment that would also get rid of the sales tax on diapers. But democrats voted that down. This week, Ferguson said he supported the sales tax cuts on hygiene products but he also wanted that to be extended to diapers and baby products.

Lawmakers consider possible rollback of WA state tax increase

Washington's estate tax is the highest in the country after legislature passed an increase last year, but now it's on the way to a potential rollback to what it used to be.

The other side:

In a statement, House Majority Leader Joe Fitzgibbon said, "We welcome all of the ideas proposed by Gov. Ferguson and others for additional tax reductions. We will be considering the governor's ideas and our members' ideas as we move the bill forward."

Republicans are unified against the income tax saying they are skeptical of any promises Ferguson is making because he signed the largest tax increase in state history last year.

Rep. Chris Corry sent a statement which reads in part:

"We still have an affordability crisis in this state, partly due to policies that have been implemented over the past decades of one-party rule in Olympia. Addressing this crisis starts with right-sizing government, which is another promise that Governor Ferguson made and broke last year. If we can rein in out-of-control state spending, we can then look at ways to provide struggling Washingtonians with real tax relief by addressing property, sales, and B&O taxes. While sales tax holidays are great, and House Republicans have supported them in the past to help with back-to-school costs, it’s not enough. Families need meaningful tax relief and for Democrats to stop passing regressive policies that add to their financial burdens. What the governor is pushing is barely a first step in a long journey of much-needed tax relief for all Washingtonians."

An income tax is against the state constitution, but Ferguson said he is confident his millionaire tax proposal will overcome a legal challenge. Republicans argue the measure is misleading. They don’t see it as just a millionaire tax. As the bill is written now, they say it opens the door to a universal income tax eventually on all Washingtonians.

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