(The Center Square) – During a Thursday morning public hearing, the House Finance Committee heard testimony – both for and against – on three tax increases proposed by majority party Democrats in the Washington State Legislature.
B&O Tax
House Bill 2045 would add a 1% business and occupation tax surcharge on businesses with taxable income over $250 million; financial institutions that already pay a surcharge, along with manufacturers, would be exempt. It would increase the B&O tax surcharge from 1.2% to 1.9% on financial institutions.
Bill sponsor Rep. Joe Fitzgibbon, D-West Seattle, explained his rational for the legislation.
“It increases the B&O tax on 370 of the highest grossing businesses in Washington state,” he told the committee. “These businesses benefit from us having quality public schools, colleges and universities, a social safety net, nursing homes for the elderly, public safety, transportation. None of those businesses would be able to succeed in Washington if we did not have all of those things, particularly a well-educated workforce.”
Rep. Cyndy Jacobsen, R-Puyallup, asked Fitzgibbon if he’s concerned about capital flight, referring to businesses that may seek to avoid the higher tax by relocating out of state.
“I think we do have to be cognizant of potential impacts of tax policy on where businesses choose to grow, and that is why I think it makes sense to focus this on services and wholesale and retail activities that, unlike manufacturing, are unlikely to leave because their business is based on proximity to customers,” he answered.
Treasure Mackley with Invest in Washington Now testified in support of the bill.
“This asks some of our most profitable corporations to give back to communities that have made them so successful,” she said. “You have a choice this session to make devastating cuts to childcare, education, and healthcare services for seniors and people with disabilities, or ask those with the most who have benefited with investments in schools, roads and more to pay a bit more.”
Julia Gordon on behalf of Washington Hospitality Association testified against the bill.
“For many single parents, picking up food from a restaurant means extra time with their kids, and we request the committee exempt wholesalers and retailers of food so that we don’t increase the cost of food,” she explained.
Wealth Tax
House Bill 2046 proposes a tax on financial intangible assets exceeding $50 million, with the revenue earmarked for the education legacy trust account.
Although Gov. Bob Ferguson earlier this week said he will not sign any budget that includes a wealth tax, Democrats are banking on a wealth tax in their budget proposals.
Further complicating matters is the fact that the governor also said the latest revenue forecast adds another billion to the projected operating budget shortfall over the next four years, bringing the total gap to $16 billion.
House Committee Chair April Berg, D-Mill Creek, is the sponsor of HB 2046.
“This gap by working families and the wealthiest in our state has resulted in not enough funding for our schools, and the average Washingtonian is struggling to make ends meet,” she said.
Brian Kerschner, who said he works in the field of artificial intelligence, testified in support of the bill.
“We’ll be producing new millionaires faster than they can move away … so please legislators, seize the day,” he advised.
Anti-tax activist Tim Eyman urged lawmakers to reject the bill.
“It just seems nuts to me,” he said. “Jeff Bezos gone. Ken Fischer gone. In this situation you’re talking the government taking money away from the people who earned it and giving it to those who didn’t.”
Amazon Founder Bezos moved to Florida from Washington state in 2024, avoiding paying a capital gains tax on stock sales. Fisher Investment relocated its headquarters from Camas, Wash., to Texas after the Washington State Supreme Court ruled in 2023 that a capital gains tax is constitutional.
Property tax
House Bill 2049 would raise the state and local property tax growth limit to population growth plus inflation, capped at 3% per year, with the money generated going to education and public safety funding.
Rep. Steve Bergquist, D-Renton, is the bill’s prime sponsor.
“We’re just letting our communities fall behind,” he said. “I feel like I’d want to spend that extra 2% to go towards my kids and my community. We’re looking at staying within inflationary numbers and I think at least talking with my neighbors, they feel the same way.”
A large number of people signed in to testify in opposition to the bill, including Jan Himebaugh with the Building Industry Association of Washington.
“Right now, only 20% of Washington families can afford the median prices house in Washington state,” she said. “That’s atrocious and adding to property taxes factors into the ability to qualify and own a home and build wealth across our state. We think that should be a bigger opportunity for more people.”
One of the final citizens to testify against the bill was Jeff Pack with Washington Citizens Against Unfair Taxes.
“I don’t know what the hell you folks are proposing here,” he said. “Your party’s own governor just scolded you for taxing too much. It sure sucks to be a homeowner in this state. We’re just walking ATMs to you people. You just push the button and out pops the money.”
