As I’m sure you heard, the WA state legislature this week passed what is being called the “Millionaire’s Tax.” It is a tax of 9.9% on all income over a million dollars earned in a year.

Apparently that affects about 30,000 people in the state every year (maybe someday we’ll be one of them!).

I thought it would be fun to give you 3 of my initial thoughts on this new tax (as apolitical as possible, just FYI – my politics aren’t important here).

1. This is not a sure thing yet – it will be challenged in court.

I’m sure you’ve heard of the court case from the early 1900’s that describes income in some particular way that makes income taxes illegal in WA state.

That court decision, whether a good one at the time or not, will be challenged, and the result will likely affect whether or not this new law remains law.

And, in case you were wondering, I have no idea which way that’s going to turn out.

2. This is definitely a slippery slope kind of law.

I know those in office right now are guaranteeing this tax will never be reduced down, and I believe them.

You know who I don’t believe? Those who are in office in the future. :)

These taxes never stay where they are. It’s just the way things are. And again, this is politically agnostic.

3. There will be 3rd order consequences to this.

No one can see the future. Things like this always have unintended consequences.

For example, I just saw an article in the Seattle Times that mentioned the Seahawks are going to lose a bargaining chip with players since pretty much anyone they recruit to the team will have to factor in paying this new tax in their salary math.

(Now, you may not care about this, and that’s okay, but the fact is, this law is influencing that business, which has trickle down effects in other places).

People will move out of the state to avoid this tax.

Businesses will consider other locations because of this tax.

Whether you think all of these are rich people problems is irrelevant. If wealth leaves the state is generally not a good thing.

There you go. Three quick takes.

Now, do I think this is a good thing (because I know you’re dying to know)?

I don’t. But only because I think our state and national political institutions are some of the most poorly run fiscal institutions that have ever existed (again, all parties are terrible here).

I’d prefer to see legislation requiring the government to open the books of all of these programs, and to make it a requirement to all of the companies they hire to also open their books, before I see another tax increase.

Just my quick thoughts. Would love to hear yours if you’re so inclined!

Hope you have a great week!

Sincerely,

Christopher Small
Owner
CMS Law Firm LLC

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