Lu Hill: What’s in it for us? Digging into the millionaires tax and what it means for 99% of us
Most of us aren’t millionaires now and statistically we’ll never make a million dollars in one year. It means we won’t pay the new millionaires tax. In fact, fewer than 800 people in the Spokane area will pay the tax; it will apply to 22,000 households in the entire state who earn more than $1 million every year.
So what’s in it for the rest of us? Plenty! There are lots of benefits for the 99% of us who won’t pay the tax. That’s what I’ll cover in this column.
First, let’s rewind. I’ve written about our upside-down tax code many times. If you’ve missed it, here’s a quick recap: Our state tax code has been rigged to favor those with the most. For decades, we haven’t been asking the wealthy few to pay what they truly owe in taxes. That means that low-income earners pay about 14% of their income in state and local taxes. Median-income earners pay a rate of 8% to 11%. Those making the most, with incomes $878,000 and over, contribute just 4% in state and local taxes. Our tax code became more balanced after the passage of the capital gains tax and the Working Families Tax Credit in 2021. With this year’s passage of the millionaires tax, our tax code is set to become even more equitable. The Institute on Taxation and Economic Policy has indicated that our tax code will improve even more when the millionaires tax goes into effect.
Funding from the millionaires tax will expand the Working Families Tax Credit so that over 1 million people are newly eligible for this annual cash boost, benefiting 1 in 5 Washington households. The WFTC is a tax refund program that puts up to $1,330 – a portion of sales tax people have already paid – back in the pockets of working people. If you’re not eligible for the WFTC, chances are you have friends and neighbors who can use it to help make things more affordable.
Parents will also see additional benefits from the millionaires tax. For example, a working mother who has a toddler and a school-age child and who earns $65,000 a year will no longer be charged sales tax on diapers, baby wipes and other supplies, saving her more than $200 each year. The millionaires tax will make all school meals free, which saves this mom another $1,300 in annual food costs for the school-age child. At the same time, the millionaires tax will preserve funding for the Working Connections Child Care program, which allows this parent to access programs and benefits that will save the family over $30,000 a year in childcare costs.
It’s not just parents who will get a break on sales tax on diapers and wipes for their kids. There are sales tax exemptions for a variety of over-the-counter medications and hygiene products like deodorant, soap, toothpaste and shampoo starting in 2029.
Small businesses are both the hearts and financial engines of Spokane and communities across the state. That’s why I’m excited that the millionaires tax will also help them thrive. The Millionaires Tax delivers the biggest tax cut in state history to small businesses by eliminating B&O tax for those with less than $250,000 in revenue. Take a sole proprietor running a small retail business with $250,000 in gross revenue. This year, they owe $998 in net B&O tax after a modest $180 credit. But under the millionaires tax, the filing threshold rises to $250,000 – meaning this business would owe nothing in B&O taxes starting in 2029. That’s $998 in annual savings.
What’s harder to measure than all of these benefits is something that’s just as important: the millionaires tax means a state tax code that is more just and equitable and that better funds our state budget. Our state budget is a moral document. It reflects the values of the people who live here.
Most of us believe in working together, taking care of each other, and leaving things a little better than we found them. The taxes we pay are our contribution to each other and our community. When everyone pays what they truly owe – including millionaires – our neighbors can access the services and programs they need to build a good life. That’s the kind of place I want to live. Thanks for joining me to create it.
Read the full story by Lacrecia “Lu” Hill in The Spokesman-Review
