WA Gov. Ferguson backs last-minute ‘millionaire tax’ rewrite
Washington 'millionaires tax' bill gets some major changes
A bill to tax Washingtonians on income over $1 million dollars was recently re-written by Democrats and Governor Bob Ferguson says he'll now sign off on it.
OLYMPIA, Wash. - A major development came on Friday for the most hotly debated bill in Olympia.
Democrats have rewritten the so-called "millionaire tax," and Gov. Bob Ferguson says he supports the revamped proposal and would sign the new version if it reaches his desk.
The legislation still calls for a 9.9% tax on income over $1 million for individuals or couples in a household.
The changes came after Ferguson raised concerns about the earlier versions of the bill in recent weeks, saying it didn’t go far enough to make life more affordable for working families and small-business owners.
State Rep. April Berg introduced what’s known as a "striking amendment," a legislative maneuver that allows lawmakers to completely rewrite a bill.
What’s new in the proposal
Dig deeper:
The revised legislation adds several measures aimed at affordability, including:
- Free school breakfast and lunch for all Washington students
- A sales tax exemption for over-the-counter drugs
- A plan to dedicate 5% of the tax’s revenue to the Fair Start for Kids Account, which supports child care and early learning
What stays from the earlier version
Several provisions from the earlier House version remain in place, including:
- A sales tax exemption on hygiene products and diapers
- Tax breaks for small businesses
- Expanded eligibility for the Working Families Tax Credit
That credit gives qualifying families a check ranging from $300 to $1,300 once a year when they file their taxes.
FOX 13 interviewed Rep. Berg on Friday about her revised version. She called the investments historic.
"It is a historic investment in our Working Families Tax Credit, expanding it from 350,000 families to over 810,000 families. It is a historic nod to affordability," Berg said.
What they're saying:
In his statement on Friday, Gov. Ferguson said in part:
"I strongly encourage the Legislature to pass this bill with all of these investments in affordability included," Ferguson said. "It represents a historic step forward in rebalancing our unfair system and making life more affordable for Washington families and small-business owners."
Rep. Berg told FOX 13 Seattle that she believes Democrats will back the updated proposal when it reaches the House floor.
"I was really pleased to hear the governor come out and support the striker that’s out on the millionaire’s tax bill," Berg said. "I do believe I have the support of my colleagues. We won’t know until we get to the House floor, but there’s nothing that makes me think folks aren’t excited or supportive."
Debate over income taxes
Democrats have called it the millionaire tax, but opponents say it is simply an income tax, reigniting debate over the legality and economic impact on businesses and Washingtonians.
FOX 13 Seattle asked Berg why Democrats supported a ban on an income tax just a few years ago but are now advancing an income tax on millionaires.
Berg says she views the two as different.
"Two years ago, I took that vote. It was a broad-based income tax saying, ‘Will you say no to it?’ And I said no then, and I would say no now, to a broad-based income tax," Berg said. "This measure is about millionaires."
The other side:
Republicans remain strongly opposed.
State Sen. John Braun says the proposal is unconstitutional and warned Democrats could eventually expand it.
"All it will take to expand the tax to everyone is for majority Democrats to amend it during a future legislative session," Braun said.
When asked whether lawmakers might add language restricting the tax only to millionaires, Berg said it would not be helpful to bind the legislature and restrict lawmakers when it comes to this kind of policy.
"For this piece of legislation, future lawmakers, I don’t think should be bound to not having it be graduated," she said. "There are going to be conversations, I’m sure, at some point, but I do not foresee them anytime in the future."
Braun also criticized the latest version of the bill, saying it contains what he called a ‘poison pill.’
"The House’s changes add some tax relief, but they also add what we refer to as a ‘poison pill,’ repealing all of that tax relief if the people repeal the income tax at any point," Braun said.
Critics say tax isn’t needed
The proposal is also drawing criticism from the Washington Policy Center.
The group calls the plan an unnecessary new tax and argues the state’s proposed $80 billion operating budget could be spent more wisely to fund the programs lawmakers want.
In a statement, the group said, "The governor’s willingness to fold on a bill that so clearly violates his own public statements suggests that his commitment to taxpayer relief was more a matter of optics than a genuine legislative requirement."
The organization also pointed to the sharp differences between Ferguson’s earlier goals and what’s in the current proposal.
The Washington Policy Center says Ferguson wanted at least $1.9 billion a year — a majority of the tax’s revenue — to go toward tax relief. The agency says the bill currently provides about $950 million.
The governor also proposed $1 billion for small-business tax relief, but the revised proposal only gives $130 million.
The proposal also does not include the two sales-tax holidays Ferguson had pushed for.
Big picture view:
But supporters say the measure will go far to help needy families in Washington and provide tax relief for many. They also say the wealthy are simply not paying their fair share and the millionaire tax will be one major step in fixing a regressive tax structure.
A vote could come in the House next week with just six days left before the session is over on March 12.
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The Source: Information in this story comes from original reporting by FOX 13 Seattle anchor Hana Kim.