Sorry I keep writing about US taxes but they are going quite crazy with tax changes… and the craziest I have seen is the proposed Washington State Wealth Tax. It only applies if you have more than $1 billion in wealth and the tax each year is 1% of your wealth.
But according to the Forbes, it appears there are only 4 billionaires in the state, two from Amazon (Jeff Bezos and Mackenzie Scott) and two from Microsoft (Bill Gates & Steve Ballmer) – There might be some others who just make the billionaire club but it is estimated that 97% of the wealth tax in the state would be paid by these four people.
So this is a tax that is directed (at least 97% directed) at just four people. That would make auditing for compliance of the wealth tax easy.
But there is a problem. To avoid paying this tax they just need to change their residence to another state. If you spend more than half the year in another state, then you are taxed in that state. And it would be worth it for each of these 4 to spend 183 days living in another state each year.
Mackenzie Scott is worth $60 billion, already owns a massive house in California as well as in Seattle and as an author can work anywhere. So if she moves to California for more than 182 days a year, she saves $600 million in Washington State Wealth Tax each year. Of course California is proposing its own Wealth Tax but the rate is only 0.4% but maybe she should follow Elon Musk on this one (https://taxrambling.com/2021/01/17/there-is-no-connection-between-these-two-at-all/ .
Steve Ballmer is worth $84 billion and owns the LA Clippers. Moving closer to his basketball team saves $840 million in Washington State Wealth Tax each year and only be taxed less than half this by the Californian Sate government.
Given the fact that Bill Gates is giving all his $124 billion away, if he moves out of Seattle, moving the Bill & Melinda Gates foundation with him, he will have an extra $1.24 billion to help people with each year.
Only Jeff Bezos ($184 billion) has a day-to-day corporate role in a Washington state-based company, but given he has a large residence in Washington D.C., not far from his company’s second headquarters in Northern Virginia, if he spends less than 182 days a year in his Seattle home, then he will save $1.84 billion in this tax each year.
As a result of these four actions, the Wealth Tax for the State of Washington could raise almost nothing, but rather move the head office of Amazon and the head office of one of the largest charity out of the state… Nice work!