Committee Hearing Testimony against Democrat Income Tax Bill

[0:00] Thank you for the opportunity. My name is Brian Haywood. And yes, this income tax would hit me personally. But like many in my position, I've got options. I can change my domicile. I can move my business. I can restructure my income to avoid it. That's the truth. And even this person that just testified has every option to do that. In fact, just the past two weeks, I've heard from directly or listened or heard about over 50 couples who have already in the process of or soon to be changing their domicile out of this state, including one that you all have heard about. [0:30] Probably the loudest Democrat in Seattle named Nick Hanauer, who's changing his domicile. The people who truly get crushed, though, are Washington's 657,000 small business owners, farmers, contractors, doctors, tech founders who run past throughout companies. A great year, a big sale or even a one time payout pushes their personal income over $1 million, triggering a 10% hit they can't easily avoid. But if everyone in this room were forced to testify under a truth machine somehow, and we could all just sort of hear what was the honest thing, what we know is this is not [1:01] about tax. Thank you, Mr. Haywood. Your time is up. Thank you, Chair Robinson. I'm Rob McKenna, former AG of Washington. Under our state constitution, we can have a state income tax if it follows the rules for property taxes. It must be uniform and no higher than 1% per year. This is because Washington's voters amended our constitution long ago to define property and what the Supreme Court called the broadest terms imaginable. Quote, everything, whether tangible or intangible, subject to ownership. Voters adopted the sweeping definition [1:30] to subject intangibles like stocks, bonds, and money to property taxes. Four times since then, [1:37] Washington's legislature has sent constitutional amendments to the voters to exclude income from [1:42] this expansive definition. Those legislatures did that because they and the state Supreme Court [1:48] understood the constitution's plain meaning. If this legislature wants progressive income tax, [1:53] it should send an amendment to the voters for their decision. It shouldn't pretend that the [1:58] constitution is not clear unless every legislator who votes for this bill is prepared to explain [2:03] why taxpayers don't have a property. Thank you, Mr. McKenna. Thank you, committee members. It's [2:08] impossible to overstate how destructive an income tax will be for Washington state. I've started [2:12] four successful businesses in our state, including Smartsheet. These companies only succeeded because [2:16] the thousands of people in them were incredibly hardworking and owners in the business. Their [2:21] motivation and their choice to work hard and take risks was always for the promise that if we built [2:25] something truly useful and innovative, that someday we'd be able to make a difference. [2:28] Washington state is taking away that incentive from people that power this economy, and these [2:33] people will go elsewhere to keep what they've earned. I'll never forget the pained look on one [2:37] of our employees' faces when she discovered that the reward she was about to get after 19 years of [2:41] grinding work was going to be cut 43.8% with federal and state taxes. With this bill, along [2:47] with the ones that were passed in the last couple years, that will confiscate over half. There's no [2:52] reason to start a business in Washington state anymore. Our hard work is just going to wasted [2:56] spending. My company is going to waste. I'm going to waste. I'm going to waste. I'm going to [2:58] Thank you, Mr. Frye. Will you please identify yourself for the record? [3:06] Uh I'm Brant Frye. I'm the um um foundering Chairman of TerraClear. [3:11] Thank you Senator Frame, Chair Robinson, Patrick Connor, with NFIB [3:14] to discuss our concerns with Senate Bill 6346 and if I be still trying to analyze this [3:20] complex bill, particularly as it applies a sole proprietorships and other pass through entities. [3:25] We're concerned that sole proprietors aren't even mentioned in the bill. [3:28] Not one, and most of them aren't mentioned in the bill, two or three of them aren't mentioned either. [3:28] once, leading us to worry that these individuals will be taxed on business earnings, not on [3:33] wages or salaries. [3:35] The inclusion of undistributed income or retained earnings as taxable dollars, along with the [3:39] prohibition on loss and B&O credit carryovers, could sorely restrict a small business' cash [3:45] flow, threatening its ability to pay wages or other operating expenses, especially while [3:49] awaiting customer payments. [3:51] This bill mentions small business tax relief. [3:53] While some is delivered through an increase in the B&O tax credit and threshold, we were [3:57] surprised to say the least that the biggest small business tax relief is for businesses [4:03] earning $250 million a year or more. [4:08] We would appreciate the opportunity to continue working with sponsors to address these very [4:12] serious concerns. [4:14] Madam Chair, members of the committee, for the record, Brent Ludeman here today on behalf [4:17] of the Building Industry Association of Washington, testifying con because of the negative impact [4:23] that this legislation will have on reaching our state's housing supply needs. [4:27] Specifically, I want to call out a couple of provisions of the bill. [4:31] First, that it does not allow for the carry-forward of losses. [4:35] Developers might lose money over multiple years before making a profit. [4:39] Restricting carry-forward losses does not provide an accurate picture of the economic [4:42] reality of a housing development. [4:44] Two, it does not allow for averaging over the period where income is generated. [4:49] Developer might generate $1.5 million in profit in a single year, but that development might [4:55] have been created over five years. [4:57] Third, we believe this income should be averaged over the life of the project to more accurately [5:01] reflect the income generated over time. [5:04] We urge you to not move forward with this legislation, but if you do, we believe these [5:08] issues must be addressed. [5:09] Thank you. [5:10] Chair Robinson and committee members, I'm Michelle Wilms with the Associated General [5:13] Contractors and AGC as opposed to this bill. [5:16] This bill is described as a tax on millionaires, but in reality it's a tax on businesses organized [5:20] as LLCs, partnerships, and S-Corps. [5:22] For pass-through entities such as construction, that revenue is actually working capital, [5:27] not personal wealth. [5:28] Contractors use those funds as a rainy day fund for payroll, materials, new equipment, [5:34] bonding, insurance, and to help pay when owners do not pay in a timely manner. [5:39] A CPARB study shows that 80% of contractors experience delay in payments means that they [5:44] don't have the funds to pay their employees so that they need to float themselves alone. [5:50] This bill will make it harder for small and mid-sized contractors, including many DBEs, [5:55] to remain competitive in Washington state. [5:57] Please oppose this bill. [5:59] Thank you, Chair and members of the committee, for the opportunity to testify with concerns [6:03] on Senate Bill 6346. [6:05] For the record, my name is Andrea Ray and I'm here on behalf of the thousands of restaurants [6:09] and hotels in every district across our state that employ hundreds of thousands of your [6:14] constituents. [6:15] These are family-owned restaurants and small hotels run by people who live in the communities [6:20] they serve, your friends, your neighbors. [6:23] These are not corporations with reserves, these are small business owners deciding whether [6:28] they can keep staff through the slow season or make payroll without going into debt. [6:33] Most hospitality businesses are LLCs or S-Corps, and what appears as income is often money [6:39] held to cover payroll and survive volatility. [6:42] This proposal taxes that retained business revenue while leaving large corporate compensation [6:47] structures untouched. [6:49] We respectfully ask the committee to pause and work with us towards a fairer solution. [6:53] Yes, my name is Troy Schmiel, Chair and members of the committee. [6:56] I'm a locally-owned business owner. [6:57] I've been in the business industry for a long time. [6:58] I've been in the business industry for a long time. [6:59] I'm a family-owned home building company. [7:01] I'm justifying the pose because as written, business tax law would destroy local and family-owned [7:07] businesses and reduce my ability to deliver housing units. [7:11] Most concerning in the bill is the bill's treatment of carry-back, carry-forward provisions. [7:17] The average product I do takes three to five years before we make a profit. [7:20] I often leave the profit in the company for growth. [7:23] As written, it would penalize long-term investment. [7:25] Equally concerning is how the marriage penalty would impact my family-owned business. [7:29] In my case, both my wife and I work in a company. [7:33] If the business made a million dollars, 500,000 each would be subject to the tax. [7:37] With the marriage policy, this is really a $500,000 tax, not a millionaire's tax as advertised. [7:43] Additionally, the charitable contribution limit would impact my ability to support local nonprofits. [7:48] Please do not pass this legislation as it has serious unintended consequences. [7:53] Thank you. [7:54] Vice Chair Frame, Rake Member Gildon, members of the committee, for the record, [7:57] Max Martin here on behalf of the Association of Washington Business in opposition to Senate Bill 6346. [8:02] While this proposal is framed as targeting high earners, [8:05] we're concerned about the real-world impacts on small and medium-sized businesses [8:08] organized like S-Corps, LLCs, and other pass-through entities. [8:12] In practice, a tax aimed at individuals could become a new tax on employers, [8:16] including businesses that may have a strong year on paper [8:18] but need cash to reinvest into their business or weather volatility. [8:22] This is coming at a time when many employers are still absorbing last session's [8:26] operating costs increase. [8:27] We appreciate the business tax relief included here, [8:30] but we believe Washington can do more to support small and medium-sized businesses, [8:35] strengthen competitiveness, and expand economic opportunities. [8:39] For those reasons, we respectfully oppose Senate Bill 6346 [8:42] and look forward to working with lawmakers. [8:44] Thank you. [8:45] Tim Eyman from Kirkland. [8:46] The most obscene thing about the bill is it takes money away from people who earned it [8:51] and gives it to people who didn't earn it. [8:55] This is the jealousy bill. [8:57] The covet bill. [8:59] Eleven times the voters have said they do not want an income tax. [9:04] It would have been 12 if not for Initiative 2111 being considered [9:10] and passed by this legislature just two years ago. [9:13] And Senator Peterson said he voted for it because he said any income tax [9:18] would require a constitutional amendment. [9:20] What's he counting on? [9:22] A corrupt court system that's going to end up saying we're going to allow it to be done by statute. [9:26] Most obscene is the secret pact between the Democrats and the business community [9:31] in exchange for not imposing a payroll tax. [9:35] Instead, you will let them go neutral when it comes to this. [9:39] Policy of this country is do not negotiate with terrorists. [9:43] Why would the business community think that the Democratic Party, political terrorists, [9:49] would not do the same thing and not keep their word? [9:52] Jeff Pack, Russian and Citizens Against Unfair Taxes. [9:55] We are vehemently opposed. [9:56] Under this state's single-party rule, you folks are going to do whatever you want to do. [10:02] You've already done so many times in the past. [10:05] $30 tabs, carbon taxes, parental rights, and more. [10:08] Your statements to the press scoff at the People's Initiative banning an income tax. [10:12] The pie-crest one. [10:14] Soft but easily broken. [10:15] We've already voted a state income tax down 11 times. [10:19] You don't care. [10:20] Meanwhile, you've already enacted three income taxes. [10:23] Capital gains, Washington cares, and paid family leave. [10:26] In the end, you've already decided what you're going to do. [10:29] And nothing said here will stop it. [10:31] My hope is that the fools that continue to re-elect you will finally wake up and realize this one truth. [10:37] When this tax eventually hits them too. [10:39] Why do you continually ignore the will of the people? [10:42] Why? [10:43] Because that's what tyrants do. [10:45] Undone. [10:46] Hi, my name is Laurie Lane. [10:48] And this bill undoes Initiative 2111. [10:53] And it goes after millionaires. [10:56] Many who have businesses who are our bread and butter. [11:00] And you know, I'm getting kind of tired of people asking them to pay their fair share. [11:07] You know what? [11:08] They pay more than many of us honestly realize. [11:11] And I wish more people honestly cared about how they impact the voters in this group. [11:18] It's really quite disturbing. [11:20] And I, too, am done with it. [11:23] Thank you. [11:24] Hi there. [11:25] My name is Carrie Kennedy. [11:26] And I'm going to bring a little bit different perspective that I think has been totally misguided. [11:33] As a military wife and daughter, we have a large veteran population in this state. [11:42] And I can assure you that the majority of people, the veterans that have decided to live here, [11:48] base that on no state income tax. [11:52] I know people right now, personal friends that are in the position. [11:56] That they can move at any time and almost all of them are getting ready to leave my 86 year old mother, who was the widow of a veteran packed up and left 2 years ago to go to Idaho. [12:10] You all need to listen to the people that are opposing this 11 times the citizens of this state have said no, and you all continue to go down a very dark path. [12:24] Thank you for your time. [12:25] Thank you, Chair Robinson. [12:30] And members of the committee. [12:31] My name is I am a co owner of America's phone guys in Vancouver, Washington. [12:37] My business is a pass through entity that could be swept up in this millionaire tax, even though my husband and I certainly don't earn a 1Million dollar salary far from it on paper and annual revenue can be close to a 1Million dollars. [12:52] But that number can be misleading. [12:55] Most of it goes right back out the door to employee wages and benefits and parts and services. [12:59] For clients, taxes and day to day operating costs what what remains helps us manage cash flow and yes, that's where our pay comes from because we're past serenity or business income flows through to our personal tax return and that's what has us worried. [13:17] We're still trying to understand how the bill would work, but it appears we need to add many of our expenses back into the AGI, which would inflate it well above the actual take home pay. [13:29] Thank you. [13:30] Thank you, Lois applies to W two income. [13:33] Thank you, Lois. [13:34] I appreciate your testimony. [13:35] Receipts. [13:36] Thank you. [13:36] Thank you. [13:37] Okay, I strongly oppose SB 6346 supporters claim this bill will raise significant revenue, but it's not true. [13:47] France's famous solidarity wealth tax is a warning introduced in the 1980s. [13:53] It's taxed a global net wealth about 1.3 million euro at just a 0.5 to 1.5 cent. [14:00] Far lower than the 9.9% proposed here. [14:03] The result was wealthy residents left French figures showed about 1 millionaire living per day on average, also major capital flight, about a 200 billion between the late 1980s and mid 2000. [14:17] Meanwhile, the tax never produced even 1% of the total revenue and often cost more in lost income capital gain and the sales tax that it's raised. [14:27] Friends learned the hard way. [14:29] There are Chinese saying kill the chicken to get the X. [14:33] This bill will take a quick game, but destroy the future. [14:37] Please reject it. [14:38] Thank you. [14:39] Thank you. [14:41] My name is Eric Pratt. [14:43] I am from the 24th Legislative District, and I am here to speak like the 61,000 people that have signed in against this bill in opposition to 6346. [14:57] This is not a bakery. [15:00] This is. [15:01] This is serious business, and the people have spoken numerous times in rejection of an income tax in 2024. [15:10] We adopted the this body took on the initiative to prevent income tax in the state. [15:18] That is, we are to have faith in your motions to do that, and we are being basically cast aside in this. [15:28] Our interests are public interests in our opposition are being cast aside. [15:32] We are not being allowed the proper time to consider this. [15:37] If we are going to bake a pie, do it together. [15:42] Don't pull it out of the oven in advance for your not money a pie. [15:47] Thank you. [15:48] My name is Anthony Mixer. [15:49] I represent myself speaking in opposition. [15:50] This violates the uniformity clause stated in the state constitution. [15:55] Income is considered property under the Supreme Court ruling in 1933. [15:59] So that means income must be uniform across the base. [16:03] Not just targeting. [16:04] One sector, but as I understand from vice chair frame, the language is somewhat similar to the capital gains policy that survived the Supreme Court ruling. [16:13] So if so, because you have already lowered the threshold once on capital gains, what makes you not want to lower the threshold on this income tax bill when it's passed through? [16:26] This is why 61,000 people have signed in con on this bill. [16:30] It is officially the most unpopular bill in state history. [16:34] But you don't have to ask, you don't have to take my word for it. [16:37] Ask Larry Springer in the house. [16:39] This is a pie crust promise easily, easily promised that this will be a millionaire's tax today, but easily broken tomorrow when you and I are paying it. [16:48] Good afternoon, chair and members of the committee. [16:50] And thank you for the opportunity to speak. [16:52] My name is Julie Whitley, and I'm here today as an independent voter with concerns about Senate Bill 63 46. [16:58] I understand the intent behind this proposal, but I'm worried that it's going further than it's being presented. [17:04] It's marketed as a millionaire's tax. [17:06] SB 63 46 creates a new income tax structure that could reach far beyond the ultra wealthy because it applies to pass through income. [17:15] Many small businesses will be affected. [17:18] This tax will hit entrepreneurs who are reinvesting in employees, equipment and growth. [17:23] I'm also concerned about the precedent. [17:25] The $1 million exemption could easily be lowered in the future, expanding the tax to many more Washingtonians over time. [17:32] Washington's economy. [17:34] It depends on innovation and investment. [17:36] And I worry that SB 63 46 sends the wrong message. [17:40] For these reasons, I respectfully urge the committee to reconsider. [17:44] Thank you for your time. [17:45] Thank you, Madam Chair and members of the committee. [17:47] Article 7 of the Washington State Constitution states that all taxes shall be uniform upon the same class of property. [17:55] My name is Chris Elder. [17:57] I'm a Snohomish resident, veteran, realtor, small business owner and college student. [18:02] And I strongly oppose this. [18:03] This tax isn't limited to millionaires. [18:06] It applies to household earnings over $1 million, including small businesses and pass-through high earner incomers. [18:12] It also raises constitutional concerns, will likely face litigation and does not replace sales or property or B&O taxes. [18:23] It adds another layer. [18:25] As a realtor and veteran, I am hearing from families weighing if they're going to even live in Washington State because of policies like this. [18:35] Washington's challenge isn't only revenue. [18:37] It's spending priorities. [18:39] This is where it takes bipartisan leadership to work together to create laws that make sense. [18:46] Thank you. [18:48] Thank you. [18:49] My name is Randy Berry. [18:50] I'm testifying in opposition to Senate Bill 646 I call the Piracy Bill. [18:55] Legislature by code is to rule at the will of the governed. [18:58] Instead, interacting with legislature feels like requesting parlay with the Pirates of the Caribbean. [19:03] Legislative code is easily broken like a pie crust. [19:06] And legislative oaths. [19:10] The code is not honored. [19:12] Like pirates looting from others, this bill proposes to take from the citizens of Washington State. [19:17] The state-sponsored piracy violates the will of the governed and the Constitution. [19:21] The legislature needs to honor the code, stop the bill, restore the power to the peoples required by our Constitution. [19:27] Thank you. [19:28] Good afternoon, Madam Chair, members of the committee. [19:31] For the record, Paula Fillmore-Sardinas with the WBBA testifying on behalf of small businesses. [19:36] Job creators here in Washington State testifying respectfully con. [19:39] We approach this bill through the lens of equity. [19:42] Over the past decade, Washington's budget has grown from $40 billion to $78 billion. [19:46] The question before us is not whether or not the state can raise revenue, but whether or not those dollars are being invested with intention, accountability, and fairness. [19:53] We know in Washington State a small business has less than 500 employees and roughly between $1 and $7.5 million in annual receipts. [20:01] This income range includes general contractors, franchise owners, and those with pass-through businesses paying payroll. [20:07] And using that additional cash as their operating capital, not accumulated wealth. [20:11] Small businesses remain undercapitalized, disproportionately burdened by regressive taxes. [20:17] And without permanent codification to the CRP at $100 million per biennium, targeted B&O tax relief for all Washington State small businesses, and expansion of the working family tax credit, we cannot in good conscience support this measure. [20:31] Thank you. [20:34] Good afternoon, Chair and members of the committee. [20:36] My name is Daniel Bannon speaking on behalf of the Rental House Committee. [20:39] I'm a member of the Housing Association of Washington and over 6,000 members across the state. [20:43] We are signed in today as con to Senate Bill 6346 for many of the reasons stated by others, but specifically due to the tax on rental income outlined in Section 405. [20:54] We've seen time and time again when there is a direct increase in the cost to provide housing, there is a direct increase in the cost of rent. [21:01] If passed, this bill would cause one of the most direct increases in the cost to provide housing that the state has ever seen. [21:07] This is now the tax on millionaires. [21:09] It is a pass-through tax on everyone in the state. [21:11] This bill will drive investment out of the state, raise prices to provide goods and services across the board, and open the door to taxing lower levels of income for years to come. [21:24] Please vote no on this tax, or at the very least, amend the bill to remove the tax on rental income. [21:29] The citizens of Washington State do not need their housing prices to increase due to this policy. [21:33] Thank you. [21:34] My name is Kyle Shearer with the American Coalition for Equality. [21:37] I applaud this bill. [21:38] This bill is billed as a billionaire tax, but it creates something Washington has never had. [21:50] A full personal income tax model requires annual filing and enforces compliance with penalties and criminal charges. [21:59] We have seen this move before. [22:02] The federal income tax started as a temporary tax on the wealthy. [22:09] The politicians promised it would stay small. [22:12] It did not. [22:14] Today, nearly every American pays it. [22:18] Once the government builds a machinery definition, filing rules, enforcement, the only thing left to change is the number. [22:26] And that's always political. [22:29] Washington voters have said no to income tax again and again. [22:34] Senate Bill 6346 ignored the clear message. [22:37] Thank you for your testimony today. [22:39] I'm hoping people won't notice. [22:40] Hi. [22:43] I have a small business in Renton, Washington. [22:47] I'm submitting my opposition to the proposed millionaire's income tax. [22:52] I'm not a millionaire myself. [22:54] I'm concerned about the continued increase in taxes and administrative burdens placed on small businesses and large. [23:04] Small businesses like mine already pay B&O tax and many other costs of operating in this state. [23:10] Additional taxes create uncertainty and make it harder for businesses to grow, hire, and remain in Washington. [23:18] I appreciate companies that continue to operate here and provide jobs. [23:22] I'm concerned policies like this could push businesses to reduce investment or leave the state altogether. [23:29] I respectfully ask that this bill be set aside until the impacts on existing businesses are better addressed. [23:36] Thank you for your consideration. [23:39] Hello. [23:40] My name is Rebecca Faust. [23:42] I oppose Senate Bill 6346. [23:44] Washington State already has many taxes and regulations. [23:48] And I think our state needs a break so that there can be affordability and the government's not taking all that more money and more money. [23:57] I'm very concerned about tax creep and that this would eventually affect people who aren't millionaires. [24:03] And I'm concerned about the trend of adding taxes and more taxes. [24:06] It needs to stop. [24:08] But I oppose the bill in general. [24:10] Noticed in particular Section 309 seems to be anti-marriage in that it, like, if you're cohabiting or dating, you each can earn up to a million dollars without having to pay the tax. [24:22] But if you're married, then you can only earn a million for the two of you put together. [24:27] And that doesn't seem to make sense to me either. [24:30] So thank you for hearing my testimony. [24:32] And please oppose this bill. [24:35] Hello, everyone. [24:36] My name is Anna Burke. [24:37] I work from the 2nd District. [24:39] And I'm strongly opposed to Senate Bill 6346. [24:43] Washingtons have rejected the state income tax ten times in the last 90 years. [24:48] I'll sound like I'm repeating other people. [24:50] But how many times do we have to say no before you listen? [24:53] Even though this bill claims it's only for millionaires, history shows these limited taxes expand, like the capital gains tax. [25:00] Not as an income tax at some percent in 2021. [25:04] Yet now high to 9.9% on gains. [25:07] Over a million dollars. [25:09] How is this not the next step voters keep rejecting? [25:12] Taxes and fees have piled on relentlessly. [25:15] Watching care deductions, sales tax on services, gas carbon fees, car tab hikes, and more. [25:21] Yet reports show no fix for our multi-billion dollar deficit or relief for families. [25:26] Pushing this is a slap in the face to every voter here in Washington State. [25:30] As the saying goes, it's lipstick on a pig. [25:32] I urge a no vote. [25:33] Good afternoon, Chair Robinson and members of the committee. [25:37] My name is Ryan Neufeld. [25:38] I'm a resident of Seattle. [25:40] I'm a proud immigrant from Canada, raised by a single mother from Brazil. [25:43] I worked my way through school to build a career and earn credentials to come to the United States. [25:47] I started my American dream in California, but my partner and I moved to Washington three years ago for better economic opportunities and no income tax. [25:54] In Canada, combined income tax is over 50%, stifling dreams for everyone. [25:58] It's impossible to get ahead. [25:59] California wasn't much better, but Washington rewards hard work. [26:02] Senate Bill 6346 starts this down dangerous path. [26:06] It targets hirers now. [26:07] But history and my own life experience show these taxes always expand to the middle class. [26:11] It overrides Initiative 2111 and ignores the will of voters. [26:14] Why would immigrants like me put down roots in this state if it becomes what I fled twice? [26:19] It will drive away talent, jobs, and opportunity. [26:21] Vote no on Senate Bill 6346 and keep Washington a beacon for dreamers. [26:25] Thank you. [26:26] Good afternoon, Chair and members of the committee. [26:28] My name is Rafina Nord, a single mom who works her butt off. [26:30] I'm here today to strongly oppose Senate Bill 6346. [26:34] While the intent to fund government services may sound appealing, [26:36] this bill is flawed and unconstitutional. [26:38] I urge you to reject it. [26:40] First, this bill violates the Washington State Constitution. [26:42] Article 7, Section 1 clearly states that all taxes must be uniform upon the same class of property. [26:48] Second, proponents claim it only affects a tiny fraction of wealthy individuals. [26:52] But in reality, this hits small business owners, family farms, and retirees hard. [26:56] Finally, this is a slippery slope. [26:58] History shows that income taxes start narrow but inevitably expand to burden the middle class. [27:02] This is not real reform. [27:03] It's just a massive tax hike disguised as failure. [27:06] For the sake of our families, businesses, and future prosperity, [27:09] I respectfully ask to vote no on this bill. [27:11] Thank you for your time and consideration. [27:13] And to the kid who didn't know federal tax bracket, [27:15] you'll be paying $506,000 on $1.5 million. [27:18] But don't forget to add income tax. [27:20] Hello, Mike Nickrum here, Bellevue, Washington. [27:22] Last month, I was at a ranch-warming party of a friend of mine [27:26] who had just left the state and moved to Montana. [27:31] He had about 20 couples there who gave him a housewarming party. [27:34] The couples were... [27:36] former taxpayers and people who signed the face of a paycheck [27:40] in Washington State but no longer. [27:42] They have moved their investments out of Washington State to Montana, [27:46] and they are happily welcomed this family into their fold. [27:52] I'm also sitting on the board of the Leadership Council [27:54] of the National Association of Home Builders. [27:56] I've got a meeting coming up next week. [27:58] We meet three times a year. [27:59] Every single time I meet with builders across the nation, they thank me. [28:03] They thank me for the cows. [28:05] Okay? [28:06] They thank me for feeding the economies outside of the state of Washington. [28:10] Cal stands for California, Oregon, and Washington. [28:14] All right? [28:15] You pass this tax, the people that signed the face of the paycheck, [28:18] so the folks behind me, they're gone. [28:22] Hi, my name is Josh Johnson. [28:24] I'm one of the 61,000 people who signed in con to this bill. [28:29] When I signed up to testify, [28:31] I looked through the list of the other people registered to speak. [28:34] On the opposition side, I saw the individuals and organizations [28:36] that would be immediately and directly affected. [28:38] by this bill. [28:39] Not only the people that we are told are evil [28:41] for no other reason that they have wealth, [28:43] but also a ton of small business owners. [28:45] For support, I saw major Democratic donors. [28:47] People were expecting a windfall from this passage. [28:50] In just the last few days, like they said, [28:52] over 60,000 residents have signed in against this bill [28:54] compared to about 19,000 in support. [28:56] And just like that testifier list, [28:58] much of the support is directly tied to organizations [29:00] that plan to line their pockets with more tax dollars as this bill passes. [29:04] Organizations that were directing their members to sign pro [29:06] but hide the fact that they were affiliated [29:08] with them. [29:09] Washingtonians are starting to wake up. [29:11] We're tired of these pie-crust promises, [29:13] the 180,000 signatures you're choosing to ignore, [29:15] the $30 car tabs, [29:17] the CCA that would only cost pennies [29:19] with the exemptions for farmers that never fully materialized, [29:22] the Parents' Bill of Rights you all gutted. [29:24] Thank you for your time. [29:25] Sorry about that. [29:26] I'm a lifelong resident of Washington State, [29:28] a retired attorney, [29:30] and I wanted to go back to one of the very first people [29:33] who testified, Rob McKenna, [29:35] Attorney General for Washington State. [29:37] And what he had to say about the constitutionality of this bill. [29:42] It looks like there's an effort to try to prevent people [29:45] from being able to vote on this new idea of an income tax. [29:50] But I'd like to remind people that you not only can vote [29:55] at the ballot box, but you can vote with your feet. [29:58] And I'm afraid that what will happen when this bill passes [30:02] is that we'll find a lot of people who leave the state, [30:05] more important, a lot of people who won't come into the state. [30:09] We've done very well attracting people [30:11] from California, from Silicon Valley, [30:14] to Microsoft, Amazon, and others. [30:18] And I'm afraid that that's going to leave, [30:22] and people are going to be thinking of heading to the states [30:25] that don't have an income tax. [30:27] So listen to Rob McKenna, [30:29] have him on for a longer period of time, [30:32] and think about the long-term consequences. [30:36] Thank you. [30:37] I am Jared Walczak. [30:38] I am a senior fellow at the Tax Foundation. [30:40] In the absence of an income tax, [30:42] Washington has imposed high taxes on businesses. [30:45] That's the BNO at increasingly high rates, [30:47] the sales tax that covers an unusual number of business inputs, [30:50] and a range of other state and local taxes on business [30:53] that are disproportionate to the tax burdens faced in other states. [30:56] Meanwhile, Seattle has two significant payroll taxes on high earners. [31:00] So if this bill should pass, [31:02] Washington's new 9.9% rate on the highest earners [31:05] would yield a top rate of more than 18% in Seattle, [31:08] counting both the employer and the employee side taxes, [31:11] both of which are borne by individuals in the long run. [31:14] And this would happen without any meaningful adjustment [31:16] to the state's business taxes. [31:17] Now, $1 million is a lot of money, [31:19] and few people earn that, [31:20] especially in non-capital gains income. [31:22] But you wouldn't be considering this bill [31:23] if there weren't affected taxpayers. [31:25] Most of them are highly compensated tech workers, [31:27] some of them who might receive restricted stock units [31:29] in a given year, [31:30] even if their ordinary compensation is well below $1 million. [31:32] The rest are mostly small business owners [31:34] for whom this higher tax will affect their ability [31:36] to hire and grow their businesses. [31:38] 26 states have cut rates since 2021. [31:41] With this bill, [31:42] Washington would move sharply in the other direction [31:44] at a time when there's more options and more flexibility. [31:47] The risks here are lower economic growth [31:49] and Washington-based companies choosing to locate [31:51] their new hires out of state. [31:53] Thank you, Chair Robinson, members of the committee. [31:55] For the record, my name is Ryan Frost. [31:56] I'm the Director of Budget and Tax Policy [31:58] at the Washington Policy Center. [31:59] We oppose Senate Bill 6346. [32:01] State spending has doubled since 2015, [32:05] outpacing population and inflation growth by 50%. [32:08] In 2017, the legislature faced a shortfall and raised taxes. [32:12] In 2019, a larger shortfall and more taxes. [32:15] In 2021, again, in 2025, same story. [32:18] Between the capital gains tax, [32:21] the long-term care payroll tax, [32:22] B&O increases, and other new taxes, [32:24] the legislature is collecting tens of billions in new revenue. [32:27] Every dollar of that was spent, [32:29] then billions more beyond that, [32:31] culminating in last year's $12 billion shortfall [32:33] and the largest tax increase in state history. [32:35] Each round of tax increases has funded [32:38] new permanent spending commitments [32:40] that have outpaced revenue, [32:41] produced the next deficit, [32:43] and became the justification for the next tax increase. [32:46] While 23 other states are cutting taxes, [32:48] Washington is raising them at a record pace. [32:50] And despite that, we are still facing more [32:52] multi-billion dollar deficits. [32:54] How are you guys? [32:56] Thank you, Chair. [32:57] My name is Corinne Farnham, [32:58] and my position for the record is concerned. [33:01] I'm not opposed to funding education, healthcare, [33:04] or essential services. [33:05] I'm here because I'm concerned about how this is being done. [33:08] I read the bill in its entirety, [33:10] and as it stands, it doesn't seem to be protecting [33:12] Washingtonians and small businesses. [33:14] There are no guardrails in place or protections. [33:17] There are loopholes, [33:18] and proposed distribution of tax revenue is interesting. [33:21] Washington has long been told [33:23] a personal income tax requires voter approval. [33:26] This bill tries to get around it [33:28] by calling it an excise tax on income. [33:30] But in practice, it still taxes personal income [33:32] calculated from federal income. [33:34] If lawmakers are confident this is what the voters want, [33:37] I don't understand why it isn't being put [33:39] directly before the people. [33:40] The bill itself admits [33:41] Washington has a request, [33:43] one of the most aggressive tax systems in the country. [33:46] I agree with that. [33:47] But this bill does not fix it. [33:49] It does not replace sales tax, excise, or BO tax. [33:52] It just adds another tax on top. [33:54] This creates a permanent new tax system [33:56] without real protection for non-millionaires, [33:58] families, or small business owners. [34:00] I respectfully ask legislators to slow down [34:02] and let people in Washington have a say. [34:04] Good luck!