When Washington legislators convene in Olympia every January, they expect to have some long sessions when they debate bills. But what happened this week in the House of Representatives was unusual, maybe even record breaking.
Lawmakers convened around 5:30 pm Monday to begin working through a Democratic bill to impose a state income tax on millionaires. They talked through the night. When I came to work Tuesday morning, they were still plugging away on a list of more than 80 amendments.They took a short break around lunchtime, but resumed after that.
Finally, sometime around 6 pm Tuesday, the final vote was taken. Fifty-one Democrats voted yes. Eight Democrats joined 38 Republicans in voting no.
The Senate later adopted the House version of the tax bill and sent to the governor's desk.
Here are excerpts from the debate:
DN: It’s Monday afternoon around dinnertime. The venue is the state House of Representatives’ chamber in Olympia.
Speaker: The House will take the following bill, engrossed substitute Senate Bill 6346.
DN: That’s the income tax for millionaires.
Clerk: An act relating to investing in Washington families and businesses to fund K-12 education.
Speaker: The good member from the 35th District, for what purpose do you rise?
Travis Couture: Thank you, Mr. Speaker. A motion to postpone the bill indefinitely.
DN: Thus begins the marathon debate on the so-called millionaire’s tax. Travis Couture is a Republican from Mason County.
Couture: Of course, as you know, we have roughly around a little over three days left in the legislative session here, and I would like to postpone this income tax bill indefinitely and reconsider it in a future session.
And, Mr. Speaker, short sessions are for supplemental budgets. They're for small tweaks. They're 60 days long. There was even a point in our history where we didn't have short sessions. But now we do, and we're considering now this generational seismic shift in tax policy erasing over 90 years of precedence, and that's not what short sessions are for, Mr. Speaker.
Speaker: Further remarks. The good member from the 34th District, Representative Fitzgibbon.
DN: This is Joe Fitzgibbon, a Democrat from West Seattle.
Joe Fitzgibbon: Thank you, Mr. Speaker. Rising to ask you to vote no on this motion. Mr. Speaker, Washingtonians have been contending with a regressive, outdated tax structure for 93 years, and I believe that we have postponed this tax reform for long enough. So I hope you'll join me in voting no. Thank you, Mr. Speaker.
Speaker: Further remarks? The good member from the 19th District, Representative Walsh.
Jim Walsh: Thank you, Mr. Speaker. Rising in support of the motion.
DN: This is Jim Walsh, a Republican from Aberdeen.
Jim Walsh: Mr. Speaker, while the title of this proposal is a tax, I believe strongly that the policy touches on more than just taxes. This policy will fundamentally change the culture, the business culture, the technology culture of the state of Washington. This is a proposal that changes substantially how people work and live and start businesses and grow businesses or don't in our state. This is not a small matter.
Speaker: The good member from the 2nd District, Representative Marshall.
DN: This is Matt Marshall, a Republican from Pierce County.
Matt Marshall: I see this bill as a power grab by the legislature. This is a direct slap in the face to the voters who just passed an initiative just years ago that banned a statewide income tax. This is in direct violation of our Constitution. Not only did the voters pass an initiative just recently that banned a proposal just like this, I think it's disingenuous to then have a proposal like this claiming that there is support for democracy and then completely eliminate the citizens' ability to challenge this via referendum. Right now our state is facing tons of new taxes, tax increases, fees, fees that are really taxes. The people have had enough.
DN: Ultimately, the majority Democrats voted down the effort to stop the debate. Then the body began the process of considering amendments to the bill, one by one, more than 80 of them. Most were proposed by Republicans.
Cyndy Jacobsen from Puyallup argued Washington’s tax burden is onerous enough and that the legislature hasn’t been honest about its intentions with past taxes.
Cyndy Jacobsen: Mr. Speaker, every time one of us runs for office, we talk about affordability. Every time the governor runs for office again, the governor candidates talk about affordability. But we continue to spend more and more and more. Every year, we spend more than we take in, and yet we talk about affordability. We just passed a bill in [the] Finance [Committee] that may come to this floor, where we're going to pull the wool out from under the data centers. We've promised them a tax break, and we're going to go back on that deal, Mr. Speaker. But the most broken promise that relates the most to this bill is that we, two years ago, voted 76 to 21 that we were not going to have an income tax. And now here we are on the floor debating one. The taxpayers are groaning. They do need relief.
I just paid my bills because I'd been gone for the session, and I had a big stack of bills to pay. I can tell you that my insurance has gone up. My property taxes have gone up. My electricity has gone up. Taxpayers are groaning. We do need to provide relief, but let's provide specific relief in the bill. Maybe even make this bill revenue neutral with all the relief that we're going to provide for middle-income and lower-income taxpayers. Thank you, Mr. Speaker.
DN: Stephanie Barnard is a Republican from Pasco. She spoke about her past work with the chamber of commerce there.
Stephanie Barnard: Every single year, I was there without fail and I did this survey more than once a year mind you every single year. It was taxes and specifically the B&O tax. This is something that I hear about every single day from constituents as well. We are overburdened this tax. This taxation is overburdensome. We can barely keep our doors open. We're unable to stay in the black. We're going to close if something, you know, if something happens in the legislature this year, we are not going to be able to keep our business open. So already I'm hearing this over and over and over from constituents’ businesses all over the Tri-Cities and not just the Tri-Cities. It's all over the state of Washington. I get a lot of emails from all over.
DN: Legislators from border communities, including Jenny Graham and Suzanne Schmidt from Spokane, argued Washington residents who work in Idaho and Oregon, would now have to pay income taxes in multiple states.
Speaker: The good member from the 6th district, Representative Graham.
Jenny Graham: Thank you, Madam Speaker. I'm rising in support of the amendment. I'm thinking about the people in my district who are close to Idaho. And I'm watching some of the people in my district struggle and suffer. And a lot of it, Madam Speaker, is a problem of our own making. Making it difficult for people to work in Washington state. And to be able to live in Washington state is starting to force people to have to make different decisions in their lives. Madam Speaker, I don't believe that double taxation is going to do anything to endure the people to Washington state that are suffering under that. I believe that this is going to be another tipping point to push them just that much further over the edge to look for other states that don't have that. I believe that we can do better, Madam Speaker. I believe that we should do better for our families. And I believe that we should work to fix the underlying problems that caused this to begin with. So for that reason, I'm urging a yes on this amendment.
Speaker: Further remarks? The good member from the 49th, Representative Stonier.
Monica Stonier: Thank you, Madam Speaker. You know, as a person who lives in Vancouver and has paid Oregon state income tax from my household, as an employee across the state, or even when I was living in Oregon and working in Washington, I watched this double taxation issue very closely. Not just for me, my household, but for my colleagues, my neighbors, and my constituents. This problem for Washingtonians is solved in the underlying bill. The amendment is not necessary. It is not a problem. Please vote no.
Speaker: Further remarks? The good member from the 4th District, Representative Schmidt.
Suzanne Schmidt: Thank you, Madam Speaker. I also live in a community that's close to Idaho border. And I actually hear from constituents on a very regular basis telling me that they are looking at moving their businesses to Idaho because of the double taxation and working in Washington State and also in Idaho. It would be much easier for them to move the business as well as their family to Idaho and then they could still continue, say it's a construction company, they could still continue working in Washington, but now they are going to actually live in Idaho. I think that we need to adopt this amendment to make it clear that there's not going to be double taxing because people are worried about that. They're worried about it and it's also very easy when it's only 12 miles away or five miles away to move their business and move their home.
DN: Republicans introduced an amendment that would exempt some of the more successful employees in the tech industries from an income tax. They included Chris Corry from Yakima.
Chris Corry: What's great about this amendment is it actually sets us up to potentially continue on our path for being a hub for innovators. We historically know that. You've heard it in this debate tonight about all the companies that have found success here, in large part due to our income tax. Now, part of it may be the cold, cold winters, but I think a lot of it has to do with an environment that says, you're going to take a lot of risk and you may get nothing or you may get a lot and we're going to reward you for that.
Here's the thing. Most of these tech innovations, most of these companies, this non-cash value stock, may not amount to anything. Success rate is not guaranteed. As a matter of fact, some of the statistics show it's about 18% of these companies will be successful.
So, what we're doing here, Madam Speaker, is setting up an incentivization that says, listen, we may be taxing in all these other areas, but this is one area where we're going to continue to have a competitive advantage over other states, that we're going to be able to say, you can come here, you can take risks, and we're not going to arbitrarily punish you.
Madam Speaker, I think of the former state senator from Seattle who said, if you want to have a good economy to tax, you've got to have businesses here to be able to tax them. And this amendment preserves that, Madam Speaker. This says that we can continue to be a hub for innovators. We can still get money, we can still get taxes from them and the business from them and the associated revenue from them, but we're going to let you keep a little bit more of your non-cash stock so that you will continue to take risks. Because we know they're going to innovate, Madam Speaker.
But the question is, are they going to innovate in Washington? Are they going to innovate in Tennessee? Or Florida? Or Georgia? Where the tax rates and the weather, I think, are a lot more favorable. So, for all those reasons, please vote yes on this amendment.
DN: Darya Farivar is a Democrat from Seattle.
Darya Farivar: Thank you, Madam Speaker. I'm asking you to vote no on this amendment. We are grateful for the wonderful tech job market that we have in Washington. And in fact, Madam Speaker, Washington is number five in the country for startup investment per capita. All of the states that are ahead of Washington all have an income tax. All of those states seem to be having a flourishing tech job market still.
Madam Speaker, this amendment makes a giant hole in this well-thought-out policy. I ask for you to vote no so that certain people with certain incomes are not exempted.
DN: Jeremie Dufault is a Republican from the Yakima area.
Jeremie Dufault: Thank you, Madam Speaker. I'm intrigued by the comments from the good lady from the 46th about where Washington State ranks. I can't remember if it was number five or number six. Madam Speaker, I predict that with the passage of this bill, Washington state will fall once it has an income tax. And Texas and Florida, which do not have income taxes, will continue to rise in those rankings.
Madam Speaker, this income tax will expand to everyone. And it won't just include wealthy tech people. It will also include regular folks who are paying taxes in this state in so many other ways. And now they'll have to pay an income tax. Please vote yes on this amendment and no on the bill.
DN: The House defeated that amendment and most of the others proposed by Republicans.
Speaker: There are no further amendments. With the consent of the House the rules will be suspended and Engrossed Substitute Senate Bill 6346 as amended by the House is advanced to third reading. Remarks. The good member from the 44th District, Representative Berg.
April Berg: Thank you, Madam Speaker. I came to the state in 1997. I came here specifically for a beautiful environment, great schools for my son and amazing job opportunities over the last decade.
In fact, a lot of folks have followed my lead and we've increased our population here by over a million people. With that increase in population there has been a strain on our services, a strain on our schools, health care, housing, public safety, as a state. We are struggling to fund these vital services and we are in desperate need of structural tax reform, foundational tax reform, and with that reform will come the ability to meet the needs of our growing population.
Currently these services are disproportionately funded by the those in our state who least can afford it. In fact, those in our state who can least afford it are paying four times more in taxes than the wealthiest among us despite recent gains and with capital gains and recent changes to our tax code, we are still 49 and most regressive tax code in our country. This is because we have rampant wealth inequality, because we have an upside down tax system that does not focus on folks’ ability to pay capacity and fairness.
The millionaires’ tax that's before you, Madam Speaker, is a way to change that. It’s a way to help our working families and to bring structural reform to our tax code. This will ensure that all Washingtonians are able to come and live here for the reasons I chose to live here, which is our beautiful environment, our great schools and our wonderful job opportunities.
DN: Ed Orcutt is a Republican from Cowlitz County.
Ed Orcutt: There's one place that I agree with the gentle lady from the 44th and that's that this will bring change. But I don't believe it's positive change. I think it's a negative change.
Madam Speaker, we have had one of the most stable revenue structures in the country and it's provided additional revenue revenues have grown every year. They have grown even without tax increases. They have grown with very few exceptions. Even now without any tax increases this year, we’re projecting between two and five percent annual revenue growth. It's very stable and it has provided ample funding for the critical services that we need to provide.
When capital gains income tax was passed a few years ago. We started down a path that makes it less stable with this. We go much further and much more rapidly down a path to instability.
I don't believe it will ever remain as a tax on millionaires. I believe over time it will be ratcheted down to where most everyone in the state will be subject to an income tax. And that is not what the people of the state of Washington want and I believe they deserve better than that. This tax is unpopular. It is unstable and it doesn't solve our underlying problem. Madam Speaker, there is no tax, there is no combination of taxes that can keep up with a budget that continually overspends its revenue and that's where the problem lies.
Joshua Penner is a Republican from Pierce County.
Joshua Penner: My opposition to this bill is rooted in my belief that this is not a tax on millionaires. This is a tax on all of us. It's just a matter of when we will be paying this tax. I believe it's a tax on all of us because within the plain text language of the bill is no restriction of any future legislature from making this tax apply to all of us. The plain text language of the bill right now has a standard deduction of a million dollars, but that can be changed by any legislature. So, while the title of the bill is a tax on millionaires, it's my belief this is a tax on Washingtonians. It just matters when it's going to apply to which Washingtonian.
Madam Speaker, should it pass this evening, we will have one of the highest B&O taxes in the nation, one of the most aggressive income taxes in the nation and one of the highest sales taxes in the nation.
The bill, for all the conversation around the bill, talks about relief for taxpayers. There were dozens of amendments offered tonight, many of them bipartisan, that would have provided direct relief for taxpayers, direct relief for those most impacted by so-called regressive taxes. Madam Speaker, none of those amendments were taken. There is a pittance of relief for the taxpayers of Washington State.
When this bill is implemented across Washington State in three years. Washington will have the highest of taxes in sales tax in B&O tax and now an income tax. This will never be enough. Please vote no.
Drew Stokesbary is a Republican from Auburn.
Drew Stokesbary: You might recall I stood in this very spot 57 calendar days ago, 56 legislative days ago, and on opening day, I said that this session marked an inflection point in Washington state, when the next generation looks back at where things went wrong. I think this session and today, in particular, is where they will identify as when things finally went wrong for us here in Washington state.
I've said before Washington is blessed beyond what we deserve. We took over a hundred years to build what we have. But this bill is set to destroy it in one fell swoop. We have one of the most robust social safety nets in the country. We have the highest average teacher salary of any state in the country. The most generous college financial aid package of any state in the country. One of the most generous Medicaid plans in both in terms of who we cover and what we cover, of any state in the country.
We can do that because this body has made correct decisions in the past. We can do that because those decisions have led companies like Boeing to call Seattle home a hundred years ago, companies like Microsoft to call Redmond home 50 years ago, Amazon called Seattle home 25 years ago.
But this tax is liable to destroy all things that we spent generations building. We are now rushing to pass something that has a catchy slogan. We haven't taken time to understand the second and third order effects. This bill is a signal to companies that if you're hiring, don't look to hire here in Washington. If you're an entrepreneur, don't look to build your idea here in Washington. If you want to build affordable housing or start a new company, don't do that here in Washington.
In a rush to pass this bill we failed to help those who need it the most. This bill barely makes a dent in the lives of the folks who need our help the most. Our constituents are facing among the highest prices in the country in terms of gas, groceries, childcare, housing. This bill gives them virtually nothing. Instead, it provides a series of pie crust promises, a promise that, trust us, we will fund school lunches in the budget, but not in this bill. Trust us, we will cut taxes for working families, maybe sometime next session. Trust us, we will never lower the exemption of $1,000,000 to apply to ordinary people. I'm sorry Madam Speaker. I don't trust us.
We sat here on this floor two years ago. You and I we both voted in favor of Initiative 2111, that would abandon income tax in Washington state. So I don't blame my constituents when they don't trust us either. Instead of following the clear instruction from the state Supreme Court, instead of listening to voters, instead of making life more affordable for those in need, we're going to make some rich guy in Bellevue write a bigger check. We're going to send our economy into a spiral and we're going to no longer be able to fund the things that make Washington great. It's not too late to save us, Madam Speaker, but it's about to be. Please vote no.
Speaker: Further remarks. The good member from the 34th District, Representative Fitzgibbon.
Joe Fitzgibbon: Thank you, Madam Speaker. I’m rising to ask you to vote yes on this bill. It has been a long journey here to this moment, not just the over 24 hours that we've spent on this floor debating this proposal, but the 93 years that that Washingtonians have struggled with a grossly outdated tax structure, a tax structure that relies too much on the sales tax and which falls by far the heaviest on the lowest income Washingtonians.
Madam Speaker, I am proud to to live in a state and to represent constituents in a state in an economy where wealthy people have chosen to live and where they have chosen to start their businesses and grow their businesses and to raise their kids here.
I don't believe that that means that we need to be the Cayman Islands of the United States. I don't believe that wealthy people and successful businesses move here because they want to live in a tax haven. They move here because the quality of life is high and I believe that we all do better when we all do better, that the wealthiest among us are all better off when we have a strong social safety net, great education and a sustainable budget.
With this bill. Madam Speaker, we are asking the 21,000 wealthiest Washingtonians, that's a quarter of 1% of Washingtonians who are doing the very best financially of any of us, who currently pay far less to support our shared needs than the poorest among us do to chip in so that we can expand the working families tax credit, so that we can exempt essential products like diapers and Tylenol and soap from sales tax, so that we can fund universal school meals for Washington school kids.
We can help more families access child care. We can invest in our K-12 schools in our colleges and our universities so we can protect health care for people on Medicaid and provide better reimbursement for health care providers and move away from taxes that aren't working for our businesses and to a tried-and-true policy that 41 states already have in place. But will be the only one of those states to limit it just to income over $1 million per year.
Washingtonians have waited too long. 93 years too long for a tax code that works for all of us. Hope you'll join me in voting yes.
Speaker: Further remarks? Seeing none, the question before the House is final passage of Engrossed Substitute Senate Bill 6346 as amended by the House. An oral roll call has been requested.
DN: And so the vote was taken.
Clerk: Madam Speaker, there are 51 yeas, 46 nays, one excused.
Speaker: Having received a constitutional majority engrossed substitute Senate Bill 6346 as amended by the House is declared passed.
DN: That was Tuesday evening. On Wednesday, the Senate, which had already approved a similar bill, passed the House version. The bill now goes to the governor’s desk. He’s expected to sign it.
Our thanks to TVW for providing the recording of this debate.
