With symbolic vote, WA Democrats say wealth-tax fight is not over

By Jim Brunner for The Seattle Times • April 29, 2025

OLYMPIA — An unusual scene played out during the final hours of the 2025 legislative session, as Democrat after Democrat rose to deliver passionate speeches about a bill that stood no chance of passing into law.

The show of support came for a controversial wealth tax proposal, Senate Bill 5797, which would tax stocks and similar “intangible financial assets” of Washington residents worth more than $50 million. The Senate passed the measure Sunday on a 26-21, mostly party-line vote.

That was a mostly symbolic gesture as the wealth tax was not built into the state budget lawmakers had just approved. Gov. Bob Ferguson had made it clear he would not sign a budget that relied on the tax.

No Republican bothered to even speak against the tax bill Sunday, with some wandering off the floor as Democrats continued to speak on the measure — another sign that the debate was for show. The bill didn’t get taken up in the House as the Legislature adjourned shortly after the Senate vote.

Still, backers of the wealth tax say the Senate vote was an important milestone for their efforts to pass such a levy on the state’s multimillionaires and billionaires.

House Speaker Laurie Jinkins, D-Tacoma, noted it took several years for the Legislature to pass the state’s capital gains tax, which was signed into law by then-Gov. Jay Inslee in 2021, and upheld by voters in November.

She said a similar multiyear campaign is underway for the wealth tax.

“I don’t know if we’re at the end of the beginning, the beginning of the middle, or the end of the middle. But we’re along the way in terms of engagement on the wealth tax. There is a lot of support in our caucus for it,” Jinkins said at a post-session news conference.

The wealth tax proposal voted on by the Senate differed somewhat from previous incarnations. It would have imposed a tax of 0.5% on the value of publicly traded stocks and similar financial assets worth over $50 million — affecting an estimated 4,300 people in Washington. It exempted retirement and college savings accounts and stock in privately held startup companies.

Sen. Noel Frame, D-Seattle, the bill’s prime sponsor, said tapping the ultrarich would be a better option than taxing smaller businesses and state residents more broadly.

“We do not ask our wealthiest among us to do their part. And frankly, we have asked too much of working people in our tax code,” Frame said during the debate on the bill, which she said could raise at least $1.5 billion a year.

Washington’s tax code has long been ranked as one of the most regressive in the country, due to its reliance on the sales tax and lack of an income tax, placing a comparatively higher burden on lower-income people.

While the wealth tax has been floating around the Capitol for years, Inslee helped supercharge the debate this session by endorsing the tax in a lame-duck budget proposal issued in December.

His move surprised and alarmed many in the business community, including Microsoft President Brad Smith who was incredulous after getting a heads-up from Inslee about the tax in December.

“What are you doing to us?” Smith told Inslee, as he recalled in an interview with The Seattle Times.

Microsoft and other businesses mounted a fierce lobbying blitz against the tax, as well as a proposed payroll tax on high salaries that legislative Democrats also proposed. Both taxes were nixed by lawmakers.

Critics of the wealth tax say it might be illegal, and would backfire by driving rich people to move outside the state. Seattle venture capitalist Nick Hanauer, a staunch Democratic ally and donor, blasted the plan as “boneheaded.”

Amid such opposition, the Legislature bailed on the wealth tax and trimmed its overall tax package. But they still boosted state spending and raised taxes by roughly $9 billion over the next four years, mainly through higher tax rates on a broad swath of businesses, with an extra surcharge for some of the state’s biggest corporations.

The Senate passage means the wealth-tax bill remains technically alive and can be quickly put in play when the Legislature returns next January — or even sooner if a special session is called later this year.

Seattle Times political reporter Jim Brunner covers state, local and regional politics.