- Washington State legislators have proposed a 1% tax on billionaires.
- Four billionaires, who collectively own $US480 billion, would account for most of the tax revenue.
- But to avoid paying up, they just need to live elsewhere for 183 days a year, according to a tax group.
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Departing Amazon CEO Jeff Bezos would pay almost $US2 billion a year under Washington state’s wealth tax proposal.
State legislators have proposed a 1% tax on people who have more than $US1 billion in wealth. The tax would only apply to nontangible financial assets, such as publicly traded options, futures contracts, and stocks and bonds.
But only around a dozen people would have to pay the tax, and four of them would account for 97% of the tax’s revenue, The Tax Foundation‘s Jared Walczak reported, citing Forbes data.
Between them, Jeff Bezos, Bill Gates, Steve Ballmer, and Mackenzie Scott own around $US480 billion, per Forbes data, meaning they would pay around $US4.8 billion a year if the tax passes.
The tax would tackle growing wealth inequality in the state, which doesn’t have an income tax, a group of 26 Washington representatives wrote in the bill read at the state’s House Committee on Finance last week.
“Washington’s status as an economic and social leader is threatened by growing wealth inequality and a tax structure that perpetuates it,” they wrote in the bill.
The state’s poorest residents have to pay around six times more in taxes as a share of their income than the state’s highest income households, which includes some of the wealthiest individuals in the world, the legislators noted. This makes its tax system “the most upside down and regressive in the nation,” they wrote.
The revenues from the tax would be used to fund other “critical services,” they added. This includes education, childcare, public health, housing, and public safety.
Around 100 Washington state residents own more than $US1 billion, the legislators said, citing estimates from the state’s department of revenue.
The billionaires could avoid the tax simply by leaving the state, however, Walczak said. Of the four who would pay the most, only Bezos has a day-to-day corporate role in a Washington state-based company.
Bezos, Gates, Ballmer, and Scott could still spend 182 days in Washington while avoiding the tax, by demonstrating their other location was their primary place of residence, Walczak said.
“This would not only foil the wealth tax but would deprive the state of other revenue as well,” he added.
CNBC first reported on the news.
Lawmakers have increasingly come under pressure to introduce taxes on the world’s richest people during the pandemic as wealth inequality deepens.
An Oxfam report found billionaires’ wealth increased by $US3.9 trillion between March and December 2020. The increase for the world’s 10 richest billionaires could pay for everyone to get vaccinated and stay out of poverty. In the second half of 2020, meanwhile, 8 million Americans fell into poverty.
Wealth taxes could be a good option to reverse this, Oxfam said. In December, academics published a study of 50 years of tax cuts for the wealthy which suggested “trickle-down” economics makes inequality worse and doesn’t lead to economic growth and employment.
Argentina became the first country to respond to the pandemic with a one-off “millionaire tax.” Fewer than one in 100 earners will pay the tax, which the government hopes will raise $US3.78 billion to help pay for its pandemic response.
Alongside Washington, some other US states are considering similar tax-raising measures. New York Gov. Andrew Cuomo warned last month that he may have to impose the US’s highest income tax rate on top-earning New York City residents in a “worst-case scenario” to help plug the state’s $US15 billion budget deficit which had been exacerbated by the pandemic.
And in July, 83 millionaires â€” including the Ben & Jerry’s cofounder Jerry Greenfield and the Disney heiress Abigail Disney â€” signed a letter asking for higher taxes on the super-rich to pay for COVID-19 relief.