economy
'Marriage penalty' in Washington state's new millionaire tax stirs debate
Washington state's first-ever income tax would impose a 9.9% tax on income of more than $1 million a year.
TL;DR
- Washington state is set to implement its first-ever income tax at a rate of 9.9% on income exceeding $1 million annually.
- The tax includes a substantial 'marriage penalty,' where married couples face the same $1 million income threshold as single individuals, unlike most states that double the threshold for joint filers.
- Experts state Washington's marriage penalty is the most significant in the U.S., potentially leading to a 9.9% tax difference for couples compared to single individuals earning the same income.
- Proponents, including state legislators, defend the consistent $1 million deduction for administrative simplicity and taxpayer ease, arguing many high-earning couples will still not be significantly impacted.
- Critics, including tax experts and a conservative PAC, argue the tax is mischaracterized and unfairly targets dual-income families, suggesting some may even consider divorce for tax purposes.
- The new tax follows a national trend of Democratic states seeking to increase taxes on the wealthy, but Washington's policy is being closely watched for its potential impact on wealth migration, with past examples of high-profile entrepreneurs leaving the state for tax reasons.