In a move that could shape Washington's fiscal landscape for years to come, Democratic leaders from the House and Senate have put forth a bold revenue program aimed to tax the wealthy and large corporations more heavily. The package is expected to garner nearly $12 billion over the next four years, funds that are earmarked for public education and vital state services. "This progressive revenue proposal raises taxes on some of the biggest, most profitable corporations worldwide and the wealthiest few individuals," Sen. Noel Frame told House Democrats.
The legislation includes tweaks to the Business & Occupation (B&O) tax that have not been seen since 1993. Specifically, it raises the base rate for wholesaling and manufacturing from 0.484% to 0.5%, and for retailing from 0.471% to 0.5%. It also targets service businesses over $1 million with a rate increase from 1.75% to 2.1%. Furthermore, surcharges on big banks are set to rise from 1.2% to 1.5%, and on advanced computer services from 1.22% to 5%, with the cap being lifted from $9 to $50 million, according to details provided by House Democrats.
Complementing these corporate tax hikes, the proposal takes a progressive axe to personal taxation, revising both the capital gains and estate taxes. SB 5813 and HB 2082 would instigate a 2.9% surcharge on capital gains profits exceeding a million dollars annually. Estate tax rates, meanwhile, would climb for larger fortunes, reaching up to 35% for the most substantial estates while exempting those under $3 million, an amount that will henceforth be adjusted for inflation, as per House Democrats.
Tasked with identifying deficiencies within the current tax exemptions, SB 5794 aims to repeal exemptions that haven't met their public policy objectives, or where such objectives are no longer discernible; the bill also repeals those that have become obsolete. The reforms don't stop there, with property tax revisions under SB 5798 and SB 5812 lifting the growth limit from the static 1% to a cap of 3%; this links to population and inflation metrics, albeit with a strategy to mitigate impacts on vulnerable groups such as seniors and those with disabilities, by enhancing certain tax exemptions and deferral programs.
Sales tax isn't left untouched, with SB 5814 and HB 2083 modernizing the system to include certain computer-related activities and removing exceptions for automated digital services. There's also a new tobacco tax, aimed at Zyn packs, in the offing. The comprehensive revenue package, with various components scheduled for discussion in their respective committees in the coming days, must be finalized by April 27 when the legislative session concludes, as mentioned by House Democrats.
