U.S. markets closed
  • S&P 500

    +44.31 (+1.01%)
  • Dow 30

    +238.15 (+0.68%)
  • Nasdaq

    +152.39 (+1.04%)
  • Russell 2000

    +10.17 (+0.46%)
  • Crude Oil

    +0.26 (+0.36%)
  • Gold

    -3.30 (-0.18%)
  • Silver

    -0.14 (-0.56%)

    -0.0003 (-0.02%)
  • 10-Yr Bond

    +0.0210 (+1.66%)

    -0.0013 (-0.10%)

    +0.3950 (+0.36%)

    +74.02 (+0.22%)
  • CMC Crypto 200

    -7.40 (-0.93%)
  • FTSE 100

    +59.28 (+0.85%)
  • Nikkei 225

    +159.80 (+0.58%)

Washington State Rep. Noel Frame proposes 'billionaire tax' on ultra rich

Noel Frame, Washington State Representative (D-36), joins Yahoo Finance's Kristin Myers to break down her wealth tax proposal.

Video Transcript

KRISTIN MYERS: I want to head over now to the state of Washington. One lawmaker there is hoping to change the tax code to make sure that the state's wealthiest residents pay their fair share. We're joined now by Noel Frame, Washington state representative representing the 36th district.

So rep, I'm wondering this tax code that you have, it would impact about 100 residents, I was reading, inside of the state of Washington, taxing money earned and also some intangible assets over $1 billion. Now that seems pretty targeted for such a small group. What do you say to those that think that the wealthy inside your state are being singled out?

NOEL FRAME: Thank you so much for the opportunity to be with you today. And what I would say is, this proposal really isn't about Washington's wealthiest residents. It's about working Washingtonians because Washington state, unfortunately, has the distinction of having the nation's most regressive tax code, meaning that we ask the lowest income households to pay six times more in taxes as a share of their income compared to our wealthiest residents, who are paying 3% or less.

So it's not really targeted in that sense. It's really just asking our wealthiest residents to share equitably in the responsibility of funding community investments, particularly as we think about economic recovery.

KRISTIN MYERS: So, as you mentioned, regressive tax that you have there in Washington state, and Washington does not have income tax. So how much would this tax in terms of the incomes and the other assets or the assets of the ultra wealthy inside the state? How much would that add to the state's coffers?

NOEL FRAME: You got it. And to be clear, this really is a tax on assets, and specifically, intangible financial property. It's a property tax. And so, as designed, this bill would raise $2.5 billion per year.

And as we've said in the legislation, we've pointed to ways that we could use those funds, including potentially funding our Working Families Tax Credit proposal, House Bill 1297 from my colleague, Representative My-Linh Thai, which is modeled after the Earned Income Tax Credit, and another proposal, House Bill 1494 by Representative Kirsten Harris-Talley, that would look at a reduction on the real property tax for primary residences. So this is really an issue about reform and bringing equity and parity to Washington state's tax code.

KRISTIN MYERS: Why not create an income tax, a state income tax? Bill Gates has advocated for that in the past, and it would make all residents have to pay a portion of their earnings. Why not take that route?

NOEL FRAME: You got it. So, I'm the chair of the House Finance Committee and also wear a different hat. I am co-chair of the Tax Structure Work Group and have thought a lot over the years about how we could restructure our code and have looked at other states. And really, what I have found is that even states that have an income tax are seeing their state revenues decouple from economic activities.

And the reality is, it is because of wealth concentration at the very, very top in our state and in this nation. In our state, we just happen to have some of the wealthiest people in the world, so it's particularly profound. And so for us, as we think about how we restructure our code and how to make sure it is a match to our modern economy, we are looking at wealth because that is, in fact, how our economy is brought out right now.

KRISTIN MYERS: So the money that's earned from this tax, where would it go? I was reading that there's no one place that these funds are going to be directed as yet. I'm curious to know why this tax-- as you mentioned, the current tax code really disproportionately impacting your low income workers the most. Why aren't the funds being funneled back to some of the poorest inside the state?

NOEL FRAME: So we're really early in the conversation, but as I mentioned earlier, the bill really points to the idea that we could fund credits against tax paid. And I mentioned those specific proposals. The Working Families Tax Credit, House Bill 1297, and the anti-displacement property tax exemption for that property tax exemption on one's primary residence in House Bill 1494 from my two colleagues, Representatives Thai and Representative Harris-Talley respectively are good examples of how we could do that.

The Working Families Tax Credit really tries to target that sales tax piece. Washington state's code is so regressive because we are-- about 45% of our state revenue is from sales and excise taxes. And you can imagine for a household making less than $24,000 a year, those daily expenses for their home and their family, it adds up really, really quick. Thankfully, we do not have sales tax on food.

But we do have sales tax on about everything else. And that's how it quickly adds up to be about 18% of their income if they're a family less than $24,000 a year. But frankly, even our families that are more middle class that are making closer to $70,000 a year, they're still paying four times more in taxes as a share of their income compared to those wealthiest and highest earning households.

KRISTIN MYERS: So let's bring this back full circle to what we were chatting about right before we got into this conversation with Jessica Smith, which is actually on stimulus and what she was mentioning, raising that minimum wage to $15 an hour. Now that's an initiative that we all know Seattle has done. However, the state has not yet done, although your state's minimum wage is still much, much higher than the federal minimum wage that we currently have. How welcome is an initiative like that, raising the minimum wage to $15? How welcome is that inside of the state of Washington?

NOEL FRAME: So I have a bit of a correction. We did adopt a $15 minimum wage, and we are well on our way to getting it. It was done through a ballot measure here in Washington state.

And I'm so glad that you connected these dots because here's the thing about Washington state. We are a bold economic and social leader on a global stage. We always have been. $15 minimum wage is a great example. That started in the city of SeaTac, a small suburb of Seattle, and then in the city of Seattle, I think back in 2013. And now you see that being promoted at the national level.

I think the wealth tax is another example that it is time that we step forward and start to right the wrongs of the tax code first here in Washington state, but I hope in other states and nationally as well. So we are very supportive of the minimum wage. We passed it here in Washington state. And I hope people will see the connection and have Washington state really maintain its platform on a global stage of being that bold social and economic leader.

KRISTIN MYERS: Now Democrats have said that they are going to try to pass stimulus, even if they do not have bipartisan support. And one of the sticking issues in the past in Congress has been aid to state and local governments when it comes to those stimulus packages. What else do Washingtonians-- I believe it's Washingtonians. I'm not actually truthfully sure if the residents are called Washingtonians, but I'm going to say that. So what else do Washingtonians need from a stimulus package? How badly do the residents inside your state need economic relief?

NOEL FRAME: They really do need it. And I will tell you that the example of the Working Families Tax Credit and getting at least $500 back into the pockets of working Washingtonians, we've got evidence that that's going to work and stimulating our economy and helping us recover, rebuild, and really reimagine our economy.

As the chair of the House Finance Committee, we hear from the Economic and Revenue Forecast Council here in Washington state. And in a presentation in November, we were looking at how our revenue was starting to bounce back. And I asked our chief economists, hey, does that maybe have something to do with those federal stimulus checks? And he said absolutely true.

We know good economics is if you get money back into the hands of people who need it-- not sit on it, but need it to cover household expenses-- they will spend it immediately. That money goes right back into the community to support small businesses. So we really appreciated the dollars that came in from the federal packages last year. In Washington state, we have-- we are rapidly moving a $2.2 billion step one economic recovery package that really draws down on those federal dollars. We've done that immediately to get that relief to our tax-- our constituents right away.

And my moment and my message to my colleagues is, we are lucky that the federal government was there to help really rescue us because if we had been left to our own devices, the tools that we have that are so regressive-- we should not be recovering on the backs of low income people. The question is, who will pay for us to recover, rebuild, and reimagine our economy? And with Washington state having truly some of the wealthiest people in the world in our state, we are asking them to help us do that work of economic recovery and share equitably in the cost of doing that work.

KRISTIN MYERS: I wanted to quickly ask you here, I have about 30 seconds left, but you mentioned how you want your state to really lead when it comes to the tax code. I'm curious to know what you hope to see on a federal or a national level in terms of changes in the tax code to make sure that some of the wealthiest residents, not just inside Washington state, but inside the entire nation, pay their fair share.

NOEL FRAME: You know, we are really lucky here in Washington state that we have wealthy individuals who have been themselves bold leaders on social and economic change, and Bill Gates being one of them and his father Bill Gates, Sr., who just passed away, but was a passionate advocate. It is time, and Washington state can and should go first. But we do hope that the nation will take a step in righting the wrongs of the tax code more broadly and help our working Americans really get back to work and have a more equitable economic recovery.

KRISTIN MYERS: All right, Washington state representative Noel Frame, thank you so much for joining us today to talk a bit about that legislation.