House Finance Committee passes controversial wealth tax; no, we don’t know why.

We saved this for today so no one would mistake it for an April Fools joke. The House Finance Committee voted March 31 to pass HB 1406, a controversial wealth tax (or “billionaire’s* tax”). We previously wrote about the tax here.

There’s no question: The money is not needed. Even the expansive House and Senate budget proposals did not rely on the tax, although they did include a capital gains tax. 

The Lens reports,

If enacted, the bill would impose a one percent wealth tax on all “intangible” financial assets a resident has that totals more than $1 billion.

An estimated 100 Washington residents would be subject to the tax, though 97 percent of the revenue would come from a handful of billionaires including Bill Gates and Jeff Bezos. The original bill would have directed the revenue into the general fund, while the substitute places it in a newly created tax justice and equity fund.

The bill report explains,

The Washington Tax Justice and Equity Fund (WTJE) is created. Moneys in the fund must first be used to offset reductions in revenue from the anti-displacement property tax exemption program and may be used after that to offset reductions in revenue due to implementation of a variety of other tax policies.

All revenues from the wealth tax, including penalties and interest, are to be deposited into the WTJE fund.

While the headline says, “we don’t know why,” this is the sponsor’s explanation:

For supporters such as Chair Noel Frame (D-36), the tax is regarded as a tool to rebalance perceived inequities in the existing state tax code that relies primarily on a sales tax and property tax.

Meanwhile, as The Lens reports, a state tax structure work group is studying the Washington tax system, with a report due out next year. So, perhaps the wealth tax is premature? Again, from The Lens:

Ranking Member Ed Orcutt (R-20) said that’s just one of several reasons he’s opposed to the proposal, noting also that the state has received billions in additional revenue in recent years. “Seems like somewhere along there we should have done…some other form of tax relief and not have to go resort to raising taxes on someone else.”

The bill has been referred to the House Finance Committee.

*The “billionaire’s” tax may have quite a reach. Washington Research Council economist Kriss Sjoblom explains it could turn out to be “a wealth tax for all,”