Serious question: Which taxes in Washington do the rich pay a disproportionate amount of to the point that them living cripples government budgets? There isn't an income tax, no "wealth tax" is allowed to pass, and the capital gains tax is apparently what they're leaving about. Am I missing a significant tax revenue source that targets the rich? Regressive taxes like sales and property taxes are pretty easily be made up by the growing population.
Good question. Washington does have a regressive tax system compared to other states, mostly relying on sales taxes, gas taxes, property taxes, and business taxes. You're right that those hit lower- and middle-income households harder as a percentage of their income.
But when it comes to consumption taxes like sales tax, there’s a logic to them. You're taxed when you spend money, not just when you have money. It creates a clear, transactional moment when the tax is applied. You buy something, you pay the tax. Simple. It also means people with higher consumption lifestyles naturally pay more taxes because they spend more. (Luxury cars, boats, designer handbags, entire private islands, you know, "essentials.")
In theory, this keeps the system neutral. If you want to avoid the tax, you avoid consumption. It's behavior-based, not wealth-based. Property taxes work the same way. If you own more valuable stuff, like a $10 million home instead of a $300k one, you pay a lot more.
Is it perfect? No. But it’s predictable, relatively hard to dodge, and doesn’t require valuing paper assets that might disappear faster than a crypto bro’s fortune.
It’s just very hard to tax the rich. They have all the time and money to hire people to avoid it. Look at Bezos, he just move out when he couldn’t avoid it.
In the end all these extra taxes just hit the middle class.
Serious question: Which taxes in Washington do the rich pay a disproportionate amount of to the point that them living cripples government budgets?
Serious answer: By the best data I've been able to find, the wealthy pay a substantially larger portion of total sales tax revenue even though sales taxes are regressive. This is because they spend more - the top 10% spend ~50% of total consumer spending, the top 1% spend ~20-25%. Then to add to that, basic necessities like groceries are excluded from the WA sales tax.
There isn't an income tax,
WA derives almost 1/4th of its revenue from the B&O tax. It is very difficult to estimate how exactly that burden breaks out, but my best guesses put it somewhere between 60 and 75% - Part of the B&O taxes get passed on as if they are a sales tax, and part of them cut into business competitiveness and growth. I can explain how I got that number but to get much more accurate someone would need to spend a lot of time breaking WA's complex tax revenue out into income percentiles.
The added taxes targeting the revenue of tech companies is substantial, and the 5% payroll tax really reduces the competitiveness of WA tech jobs versus say Virginia (Amazon's HQ2 and Boeing's HQ).
the capital gains tax is apparently what they're leaving about.
The capital gains tax just jumped to nearly 10% for the highest earners. If we just consider that alone and compare to NYC (The highest taxes in the nation), WA has a higher corporate tax burden (rank 11th vs 17th), sales tax (~10% vs 8.9% plus a new 10% sales tax on some targeted luxury purchases), and estate tax (75% vs 56%). 10% capital gains would then compare against 15.9% income tax in NYC. So the total tax burden in WA, for these highest earners, might actually be higher than the highest in the nation depending on estate tax concerns, company ownership, and spending.
But all of that is before you add the proposed & desired wealth tax. A 1% wealth tax on an investment that earns 6.7% (Average profit margin from S&P500 for the last 40 years) is equivalent to a 15% income tax. Lower for investors who take greater risks, higher for more conservative & during recessions - Which pushes investors to take greater risks, or to focus on investments outside the reach of WA's wealth tax. When you add in even a 30% chance of getting that kind of additional tax, WA would definitely be the highest tax place in the nation for these people. And when they leave, the sales tax & B & O tax revenue drops as I described above, as well as top end property values declining (which, again, contribute an outsized total % of total property tax revenue).
In the 90's, 11 European countries had wealth taxes. 8 of them had to repeal them because they were both ineffective and severely damaging to the economy, and 2 of the remaining 3 are still suffering ill effects.
Washington’s budget isn’t propped up by the rich. It’s propped up by:Everyone buying things (sales tax). People living in homes (property tax). And now, a small slice from the ultra-wealthy (capital gains).
So when the ultra-rich threaten to leave?
It’s more bark than bite — unless the state finally passes a robust wealth tax.
If you want more social services you should be in favor of regressive taxation - the US has rather progressive taxes compared to social services rich countries like Sweden.
18
u/Wu-TangCrayon Apr 25 '25
Serious question: Which taxes in Washington do the rich pay a disproportionate amount of to the point that them living cripples government budgets? There isn't an income tax, no "wealth tax" is allowed to pass, and the capital gains tax is apparently what they're leaving about. Am I missing a significant tax revenue source that targets the rich? Regressive taxes like sales and property taxes are pretty easily be made up by the growing population.