This browser does not support the Video element.
Millionaires tax debate continues as bill moves to WA House
With the Senate passing the so-called "millionaires income tax," it is now on the House side with less than a month left before the legislature is done for the year.
OLYMPIA, Wash. - A day after the Washington state Senate passed the millionaire income tax, Governor Bob Ferguson on Tuesday said he does not support how his democratic colleagues want to spend the billions. Ferguson supports a millionaire income tax, but he says the current measure does not reallocate enough money back to small businesses and needy families.
The main sponsor of SB 6346 is Senator Jamie Pedersen. He and other democrats drafted the bill after the millionaire income tax idea was pushed by Ferguson.
The current proposal would tax 9.9% of the income of an individual or a married couple in any household that makes $1 million or more per year.
Ferguson says the taxable amount will come from anything that exceeds $1 million.
"If you make $1.2 million, if you’re fortunate to be in that category, you are taxed on $200,000 right. The $200,000 above the $1 million, it does not count the value of your home," Ferguson said.
If approved, the income tax on the wealthy is expected to generate $3.7 billion per year starting in 2028.
"I feel optimistic we will get there on the millionaires tax, I do," Ferguson said.
But Ferguson says he will not sign the measure as it is if it comes to his desk.
"Must send a significant percentage of the revenue back to Washington families and small business owners. We are not there yet, as we are still not close to being there," Ferguson said.
Governor Bob Ferguson discusses the proposed millionaires income tax with the Washington State Legislature.
The governor says most of the revenue cannot go back into the general fund. He is lobbying lawmakers to earmark $1 billion for small businesses so they can avoid paying Business and Occupation (B&O) taxes.
Ferguson estimates the B&O tax break could reach around 170,000 businesses. The state has more than 600,000 businesses.
He also wants nearly $400 million invested into dramatically expanding the Working Families Tax Credit by not only capturing more families into the program, but by increasing the payments. Ferguson on Tuesday said currently around 350,000 families qualify for the tax credit, receiving a check anywhere from $300 to $1300.
He wants to add an additional 460,000 families, while at the same time increasing their payments by 30%. The program is aimed at helping lower-income working households.
On Monday, the full senate passed the millionaire income tax. All Republicans voted against, while several Democrats also voted no on the measure, but with Democrats holding almost a super majority, the bill passed 27-22.
What they're saying:
Democrats on the floor argued that it’s only common sense for the rich to pay more to boost services and subsidies for others.
"It will generate billions for schools, for health care, housing and higher education," Senator Vandana Slatter said.
Slatter says a sizable chunk of the millionaire tax would come from the people of Bellevue, an area she represents.
Senator Lisa Wellman, who represents Mercer Island, also shared that she’s heard from her constituents supporting the tax.
"My constituents know our schools are underfunded and they are willing to pay more in taxes," Wellman said.
The other side:
Outside of arguing that the Democrats' so-called millionaire tax violates the state constitution, Republicans have argued that the tax is misleading.
Republicans have said from the beginning that the income tax will one day become a tax for everyone, not just the wealthy.
On the Senate floor Monday, Republicans supported passing an amendment limiting the tax to just millionaires. But they say Democrats shot it down.
Senator Pedersen spoke against the amendment.
"At this point, the cutoff has passed the time for consideration in committee if such a measure is passed, it’s prohibited," Pedersen said.
Senator John Braun released a statement shortly after the vote which reads in part:
"They left the door open for the tax to expand to include all of us. Even worse, they included a clause in it that prevents you, the people, from overturning it through a referendum."
Governor Ferguson has verbally promised not to support any tax that is below the $1 million threshold. But without that promise inked on paper with no binding legislation, critics argue the millionaire tax is just the beginning.
"This bill represents the largest tax increase this century at a time when state revenues have never been this higher," Senator Chris Gildon said.
Other amendments did pass, including one to get rid of the sales tax on hygiene products. Ferguson says he supports that amendment but wants to see the sales tax relief expanded to baby products like diapers.
Republicans argue the income tax debate is following the passage of the largest tax increase in state history last year targeting businesses. They argue this year’s debate over the income tax includes no significant or immediate tax relief.
"It’s not lowering sales tax, it’s not lowering the cost of fuel, nothing in this bill is about tax relief now," Senator Perry Dozier said.
Republicans say the bill will penalize many businesses and successful people.
"We clearly don’t have a revenue problem, we definitely have a spending problem," Senator Nikki Torres said.
During her speech, Torres pointed out that in 2024, around 50% of all state and local taxes were paid by Washington businesses.
"We are going to end up losing jobs and a lot of these businesses," Torres said.
SB 6346 will be heard next in the house finance committee. The legislature is more than half way done scheduled to end March 12.
MORE NEWS ON FOX 13 SEATTLE
Two skiers rescued in separate backcountry incidents near Mount Baker in WA
Reptile Zoo says goodbye to Monroe, WA community following attempts to save business
Costco launches mobile app ordering for custom cakes and deli trays, easing customer woes
Mom urges son's killer to come forward after Seattle shooting in Pioneer Square
Young 12's lost football at Seattle parade leads to call from Seahawk, community response
To get the best local news, weather and sports in Seattle for free, sign up for the daily FOX Seattle Newsletter.
Download the free FOX LOCAL app for mobile in the Apple App Store or Google Play Store for live Seattle news, top stories, weather updates and more local and national news.
The Source: Information in this story came from the Washington State Legislature and FOX 13 Seattle reporting.