One part of the liberal project that took a back seat during the Trump era was the drive to tax the 1 percent.
But wow, is it ever back now, and with gusto. It’s fueled by how stupendously richer the 1 percenters have gotten in the meantime, especially during the past year of the pandemic.
A new bill introduced this past week in Olympia highlights how the pitchforks really are coming again for the superrich. Only the target is no longer the top 1 percent, but the truly rarefied 0.0001 percent.
House Bill 1406 would make Washington the first state in the nation to impose a wealth tax. It’s an annual 1% levy not on income or business revenue, but on what it calls “extraordinary intangible financial assets.”
What makes the bill so unusual is its stratospheric target. It exempts the first $1 billion of your wealth — meaning that only the state’s true billionaires, those owning stocks and other investments totaling more than $1 billion, would owe any tax at all.
There are only 14 such people living in our state, according to Forbes magazine, which keeps a “real-time billionaires list” with daily updated wealth totals. Of those, four are sort of “barely billionaires,” with assets totaling $1 billion or slightly above. Those four wouldn’t owe much under this new tax.
So this is really a proposed tax on just 10 people.
In fact, four of them — Jeff Bezos, Bill Gates, Steve Ballmer and MacKenzie Scott — are so otherworldly superrich that they would effectively owe all of the wealth tax.
“By my estimate, about 97% of the tax burden would fall on these four people,” says Jared Walczak, an analyst at a policy group called the Tax Foundation.
He added: “So, uh, what happens if they move?”
Oh well, we’ll worry about that when the time comes, I guess! Dan Price, the CEO of Seattle company Gravity Payments, has been leading a coalition of small businesses in helping lawmakers craft the new tax. He points out that the fact that only four people could possibly end up shouldering 97% of a tax is itself evidence of the problem — which is that the economy has become epic-historically top-heavy.
“Under this tax, Jeff Bezos would pay $1.9 billion” per year, Price says. “But he makes that in a week.”
That was basically true last year. Since the pandemic began, Bezos’ paper wealth has increased by a staggering $70 billion.
The way the tax would work is that at the end of each year, the state’s billionaires would total up their assets as described in the bill, subtract the first billion, and then pay a 1% tax on the remainder. Bezos is worth about $187 billion in Amazon stock alone, so he would potentially owe about $1.86 billion in tax as of today (valuing his wealth would undoubtedly be more complicated than this, requiring teams of accountants, but you get the idea).
The proposed law says billionaires would have to live in the state for only 30 days out of the year to be subject to the tax. So to wriggle out, Bezos would need to spend a ton of time at that $165 million mansion he bought last year in Beverly Hills (though California has been talking about imposing a wealth tax, too).
Fiscal analysts haven’t scored the bill yet for how much it would raise in revenue. Price contended it would “single-handedly make up our state’s $3.3 billion budget shortfall while leaving taxes the same for 99.999% of residents.” Sponsors also want to use some of the money to give tax credits to lower-income people and businesses, to try to make the state’s notoriously regressive tax system a bit fairer.
This isn’t solely political symbolism, with no chance of passing. Introduced on Wednesday, it already has 26 co-sponsors (a bill generally needs 50 votes to pass the state House). These sponsors, all Democrats, include the chairpersons of the state House Finance and Appropriations committees (Rep. Noel Frame and Rep. Timm Ormsby, respectively), as well as the House majority leader (Rep. Pat Sullivan) and the former state House speaker (Rep. Frank Chopp).
The bill is up for a hearing at 1:30 p.m. Tuesday in the House Finance Committee.
I’m skeptical lawmakers will have the guts to pass a billionaires’ tax, or that this specific proposal would even work. Democracy tends to succeed when both its costs and benefits are broadly shared, so the idea of the democratic process imposing a specialized tax on just 10 people, in a state of 7.7 million, seems unprecedented.
But that’s also a sign of where we are today: afflicted by that other pandemic, the inequality virus. Millions have been thrown into poverty this past year while the net worth of America’s billionaires soared by an incomprehensible $1 trillion. The inequities were extreme before the pandemic. Now they’re stretched to the breaking point.
Something’s gonna snap — if it hasn’t already. As local plutocrat though not quite billionaire Nick Hanauer forecast back in 2014: “You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples.”
This bill may be absurd. But that makes it right at home for these times.