Feb 09, 2021 01:00 AM EST
If Washington imposes the proposed wealth tax, there are naturally wealthy people who are going to feel the impact. Jeff Bezos, the world's richest man, naturally will. This, unless he decides to leave Washington to avoid the tax.
According to legislators, Amazon's CEO would owe about $2 billion a year in state income taxes under Washington's proposed wealth tax, as explained by CNBC.
If that happens, then it just means the wealth tax is doing what it is intended. Washington state legislators in particular, want to see this tax imposed so that inequality can be reduced between the rich and the poor. They are proposing a 1% levy on wealth higher than $ 1 billion. They calculated that by imposing such a tax, around $2.5 billion a year can be raised in revenue and would only apply to so-called nontangible financial assets, or financial investments like stocks or options.
On the other hand, tax experts claimed that the impact of the wealth tax can only really be felt by four megabillionaires who view Washington as their state home. These are notably, Jeff Bezos, Bill Gates, Steve Balmer, and Mckenzie Scott.
Jared Walczak of the Tax Foundationa asserted that as high as 97% of the revenue from the tax would come from those four billionaires only.
If indeed the tax pushes through, Bezos, currently worth around $200 billion, would owe about $2 billion a year under the new tax.
Gates, worth about $135 billion, would be obligation to pay $1.3 billion, while Ballmer would owe about $870 million.
Scott, Bezos' ex-wife, is calculated to pay $600 million a year if the wealth tax pushes through.
The more important question is, will the four megabillionaires even stay in the Washington once that happens? When they have the means to just leave and the wealth tax is only going to be imposed on Washington, can they just transfer states?
Since none of Washington's Big Four have any day-to-day corporate roles, they certainly could.
There are some state tax experts, who already believe Jeff Bezos is already on the verge of leaving, since he already stepped down as Amazon CEO.
Walczak added that any of the four could move to another state, and make this new state their primary residence. In addition, they could spend a total of 182 days a year in Washington state and avoid the tax if they already left the state.
That said, if the four moved, then Washington stands to suffer.
"This would not only foil the wealth tax but would deprive the state of other revenue as well," Walczak said. "These wealthy residents still pay a disproportionate share of state and local taxes and contribute substantially to the local economy. Chasing them out would have serious consequences beyond the failure of a new tax."
Wealthy people, despite having the means, do not necessarily like coughing up tax money. Elon Musk, the world's second-richest man today, moved from California, the state with the highest tax rate, to Texas, allegedly because there are no income taxes there.
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