Governor Ferguson signs Millionaires’ Tax into law

Senate Bill 6346 taxes income over $1M to help make life more affordable for millions of Washingtonians

OLYMPIA -Today Governor Bob Ferguson took historic action to make Washington more affordable by signing the Millionaires' Tax into law.

Less than one half of one percent of Washingtonians will pay the tax, but it will make life more affordable for millions.

The bill does not apply to:

• Income under $1 million,
• the first $1 million of income on individuals who will owe the tax, or
• assets, such as homes or property.

In its first full year of implementation, the Millionaires' Tax will send more than 41.3 percent of revenue raised back to Washington families and small business owners. The next year, that increases to 47.3 percent.

Governor Ferguson signed the bill at a ceremony in the State Reception Room in Olympia. Video of the event is available here, and photos are available here.

Governor Ferguson said: "Adoption of the historic Millionaires' Tax makes our tax system more fair, and means free meals for K-12 students, the largest tax break in state history for small businesses, eliminating the sales tax for baby diapers, and sending a check to nearly 500,000 working families to make life more affordable."

Senate Bill 6346, sponsored by Sen. Jamie Pedersen (D - Seattle), creates a tax on income over $1 million in a single year. Rep. Joe Fitzgibbon (D - West Seattle) sponsored the companion bill, and Rep. April Berg (D - Mill Creek) proposed an amendment critical to the success of the bill.

"With this bill, we're going to begin to right a historic wrong that has plagued our state for nearly 100 years, and made our tax system one of the worst and most regressive in the entire country," Sen. Jamie Pedersen said. "We've asked Washington's working families for far too long to shoulder far too much of the tax burden for the things we care about, and we have not asked enough of our wealthiest neighbors. The Millionaires' Tax represents hope and change for people in communities like mine, and across the state."

"The Millionaires' Tax is historic tax reform that will make Washington more affordable for working people and businesses in our state," said Rep. Joe Fitzgibbon. "We removed sales tax on essential products, cut taxes for the majority of businesses in our state, expanded tax credits for working families, and provided free school meals to every child, while investing more in things that benefit everyone, like our public schools, health care and childcare. Washington is not afraid to do hard things to make our state a better place, and big tax reform like this will be felt widely in the years to come."

"The Working Families Tax Credit made a real difference for my family, like many other parents," said Athena Dunn, a single parent of three. "Because of the stability, I've been able to stay on track with my education. I'm proud to say I'll be graduating this June with my bachelor's degree."

"Anyone in that community of small business owners can tell you that when starting a small business, a new one at that, there are challenges that keep us from standing on strong financial legs," said Terrence Jeffrey Santos, a small business owner in both the food & beverage and creative industry. "With this Millionaires' Tax, I have hope that all of us in Washington can get to a place where our ideas and our work bring us to a place of not just surviving, but thriving.

Significant revenue back to families, small business owners

The final bill passed by the Legislature sends significant revenue back to Washington families and small business owners. A few examples:

• Funding for free breakfast and lunch for every K-12 student. This has been a priority for Governor Ferguson since before taking office, and was the subject of his first governor-request legislation. This funding puts money back into families' pockets and helps ensure kids are ready to learn.
• Expansion of the Working Families Tax Credit to 460,000 new working families. The Working Families Tax Credit is an existing program in which qualifying families receive a check from the State for an amount between $300 and $1,300. SB 6346 more than doubles the number of families who qualify.
• Reduce or eliminate the B&O tax for an additional 138,000 small businesses. Small businesses are the backbone of our economy and our communities. They drive economic growth and create jobs. This bill gives them much-needed relief.
• Investing in affordable childcare: SB 6346 invests more than $320 million of the revenue into affordable childcare in the first full biennium. Washington ranks fifth nationally for the highest childcare costs.
• Providing significant funding dedicated to support affordable childcare will provide relief to families.
• Eliminate sales tax on diapers, over-the-counter drugs, and hygiene products. That benefits all Washingtonians, potentially saving families hundreds of dollars per year.

Washington consistently ranks in the top 10 states in the nation for quality of life. This is in large part due to state investments in affordable healthcare, long term care, and quality K-12 education. Millionaires' tax revenue will go directly back into those areas that make Washington state one of the best places to live, work and do business.