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In a significant move to address Washington state’s budget shortfall, House Democrats have unveiled a tax proposal that could raise up to $15 billion over the next two budget cycles. The plan includes new taxes on wealth and large businesses, alongside increased property tax collections, to help close an estimated $16 billion budget gap through 2029.
The proposed tax reforms include a wealth tax targeting the state’s wealthiest individuals, with a surcharge on large businesses and financial institutions. Additionally, the plan aims to loosen the current 1% property tax cap, allowing for tax rate hikes tied to inflation and population growth.
According to House Democrats, the proposal would generate $5.1 billion for the 2025-27 budget and $14.8 billion over the next two biennia. These funds would go towards vital state programs, including public education and early learning initiatives.
The wealth tax, outlined in House Bill 2046, would apply an $8 tax per $1,000 of assessed value on stocks, bonds, mutual funds, and other financial assets exceeding $50 million. The tax is projected to impact 4,300 of the wealthiest residents, contributing approximately $2 billion annually starting in 2027.
In contrast, Senate Democrats have proposed a more aggressive wealth tax rate of $10 per $1,000 and are looking to tax the entire value of financial assets above $50 million, rather than just the portion exceeding the threshold, which could generate an additional $2 billion per year.
In addition to the wealth tax, the House Democrats’ plan includes a permanent 1% surcharge on businesses with taxable incomes over $250 million, and a significant hike in the business and occupation tax rate for financial institutions with annual net incomes of $1 billion or more. These measures are expected to generate $2.6 billion in the upcoming biennium.
Both the House and Senate proposals aim to increase property tax revenues, but House Democrats propose a cap of 3% for combined population growth and inflation adjustments to state property tax rates, while Senate Democrats are advocating for a less restrictive model.
While Democratic Governor Bob Ferguson has yet to comment on the proposals, the future of these measures depends on negotiations between the House and Senate, with the goal of reaching an agreement before the end of the legislative session on April 27.
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