The proposed bill establishes a one percent wealth tax in Washington State, targeting individuals with taxable worldwide wealth exceeding $100 million, specifically focusing on financial intangible assets such as stocks and bonds. This tax aims to generate revenue for the state's general fund, which supports essential services like education, healthcare, and public safety, while addressing the regressive nature of the current tax system that disproportionately impacts middle-income families. Approximately 3,400 individuals are expected to be affected by this tax. The bill also includes various administrative provisions, such as definitions, filing requirements, exemptions for the first $100 million of financial intangible assets, and relief from joint liability for individuals unaware of tax discrepancies caused by their partners.

In addition to the wealth tax, the bill introduces amendments related to tax relief and enforcement, particularly concerning joint tax liability and asset transfers between spouses or domestic partners. It requires individuals seeking relief from tax deficiencies to demonstrate the allocation of deficiencies, prohibits relief for taxes on wealth derived from "disqualified assets," and establishes a presumption against asset transfers made within 12 months prior to the tax year for tax avoidance purposes, with exceptions for divorce-related transfers. The legislation also imposes penalties for substantial valuation understatements and mandates audits of registered taxpayers starting in 2027, while ensuring that certain tax avoidance transactions are disregarded for tax purposes. Overall, the bill aims to create a more equitable tax system and maintain the integrity of the act through a severability clause.

Statutes affected:
Original Bill: 82.32.160, 43.135.034, 84.36.070