Former Gov. Inslee proposed a wealth tax as part of his 2025–27 operating budget proposal, along with business and occupation (B&O) tax increases. Similarly, revenue options from the Senate Democratic Caucus that were made public last month include two versions of a wealth tax. (For previous posts on the revenue options, see here and here.)

Former Gov. Inslee’s wealth tax proposal has been introduced as HB 1319. Beginning Jan. 1, 2026, the bill would impose a 1% tax on the taxable worldwide wealth of each Washington resident.

Effectively, “taxable worldwide wealth” would mean the fair market value of financial intangible assets (cash, financial investments, units of ownership in a partnership, units of ownership in an S corporation, and other similar assets) exceeding $100 million that are owned or controlled by the resident.

Revenues would be deposited in the state general fund. The tax owed on calendar year 2026 wealth (as measured on Dec. 31) would be due April 15, 2027.

Under current law, the state and local governments are prohibited from imposing any tax on intangible property. (This prohibition was put in place as part of I-1053 in 2010.) HB 1319 would amend that statute to allow the state—but not local governments—to impose taxes on intangible property.

Economic Impacts

There is no fiscal note for HB 1319, but Inslee’s budget proposal assumed that the wealth tax would increase revenues by $3.380 billion in 2025–27 and by $6.911 billion in 2027–29. If these estimates are realized, the wealth tax would increase revenues from funds subject to the outlook (NGFO) by 9% in 2027–29 (compared to the current forecast for the biennium).

Similarly, the revenue options from the Senate Democratic Caucus include two options for a 1% wealth tax on financial intangible assets. First, if $50 million is exempt, they estimate the tax would increase revenues by $4.3 billion in 2025–27 and by $9.0 billion in 2027–29. Second, if $250 million is exempt, they estimate the tax would increase revenues by $2.3 billion in 2025–27 and by $4.8 billion in 2027–29.

However, the revenue estimates for any version of a wealth tax should be treated with considerable skepticism.

The Department of Revenue (DOR) completed a wealth tax study in November, as required by the 2023–25 operating budget. DOR notes that creating a fiscal model for a wealth tax is “difficult” given the limited data available. Further, even for wealth tax proposals that exclude nonfinancial intangible assets, “identifying the situs and value of taxable worldwide assets will still pose significant challenges.”

Additionally, DOR writes,

Importantly, even with updated income, forecasts, and other data points, the fiscal model cannot predict the exact revenue a wealth tax in Washington would generate. . . . [D]ata on true wealth is limited. It will also be difficult to accurately assess compliance rates and behavioral responses. While these have been researched for other wealth taxes, this research is often based on country-level wealth taxes as opposed to state-level wealth taxes.

Indeed, a state-level wealth tax would be easier to avoid than a country-level wealth tax—it’s easier to move from one state to another than to a different country. As DOR notes, “One of the major hurdles to consistent and reliable wealth tax collections is the mobility of intangible assets and the mobility of people.”

Moreover, DOR writes that although potential wealth taxpayers could overlap with current capital gains taxpayers, “the behavioral responses that would impact the compliance rate are significantly different between the two taxes as the tax liability for a wealth tax may be much higher, which could lead to more extreme behavioral responses.”

Ultimately, according to DOR,

It is also unclear how reliable of a revenue source a wealth tax would be in, at least, its early years. While the costs for administering a wealth tax might be possible to estimate, it is difficult to estimate revenues from a proposed wealth tax due to insufficient data, capital flight risk, and the novel nature of the tax.

Although such a tax might not raise revenues by as much as is estimated, it would have significant, negative economic impacts on Washington. A 2024 Tax Foundation report looked at wealth taxes around the world. According to the report, “Wealth taxes disincentivize entrepreneurship, leading to less innovation and less long-term growth. A wealth tax reduces wages, destroys jobs, and reduces the stock of capital. All income groups are worse off under a wealth tax due to decreased economic activity.”