In a push to tackle the $15 billion budget shortfall and school funding shortages in Washington, House Democrats have laid out a series of proposed revenue bills aimed at recalibrating the state's tax system, currently criticized for its bias against working families and in favor of the rich. House Finance Committee Chair Rep. April Berg (D-Mill Creek) stressed the need for change, asserting, "Washington’s tax system, built nearly a century ago, is failing to meet the needs of our rapidly growing state and is increasing income inequality," according to a House Democrats press release.
One of the proposals put forward is the Financial Intangible Assets Tax (FIT), which involves an $8 per $1000 assessed value tax on certain financial intangible assets such as stocks and bonds, yet the tax exempts the first $50 million to safeguard fairness, with additional exemptions for pensions and education savings accounts, as detailed by Washington State House Democrats. The measure is expected to rake in roughly $2 billion per year from an estimated 4,300 wealthy residents, starting in fiscal year 2027, Rep April Berg championed the FIT by claiming "this bill helps bring equity to our state’s tax code by taxing the tools by which millionaires and billionaires build wealth," ensuring they bear some of the load in funding quality education.
Another bill, sponsored by Rep. Steve Bergquist (D-Renton), seeks to address the state's paramount duty to fund education and enhance public safety by modifying property tax authority and revising the school funding formula to allow for property tax increases pegged to inflation and population changes, capped at 3 percent; this initiative predicts an infusion of $50 million in fiscal year 2026 and $150 million in fiscal year 2027 – Rep. Bergquist insisted on the urgency by stating to House Democrats official website, "Capping property tax at one percent hamstrings our schools, our public safety, and our response to behavioral health needs," urging an end to the constraints.
Lastly, a 1% Business & Occupation (B&O) tax surcharge on corporations with taxable incomes exceeding $250 million is on the table, excluding small businesses and shielding working families from the impact. Majority Leader Rep. Joe Fitzgibbon (D-West Seattle) introduced this legislation, which is also set to bump the surcharge on certain financial institutions with over $1 billion in annual net income from 1.2% to 1.9%. Collectively, these businesses amount to roughly 600 across the state and could generate close to $2 billion by fiscal year 2027. "By applying a surcharge on the Business & Occupation Taxes the biggest businesses in our state pay, we can protect Washingtonians from harmful cuts to education, public safety, and the safety net," Fitzgibbon contended on Washington State House Democrats.
With the proposals out in the open, the operating budget, which will be funded by these revenue measures, is due for release on Monday, March 24, with the House and Senate needing to descend into agreement on the budget and revenue plan before the close of the legislative session on April 27.
