On Friday three bills constituting an overhaul of Washington State’s tax system were introduced – two in the Senate (SB 6713 and SB 6714) and one in the House of Representatives (HB 3070). The Senate bills were introduced at the request of the Washington State Department of Revenue by Ways and Means co-chair Senator Rodney Tom and co-sponsored by several of his colleagues in committee.

Senate Bill 6713 effectively ends exemptions on sales of certain livestock equipment, as well as on the compensation of certain corporate officers, which the bill does not recognize as a legal exemption, but as “a widespread misunderstanding among corporate directors that the business and occupation tax does not apply to the compensation they receive for serving as a director of a corporation.” The bill proposes to clear up this misunderstanding by holding corporate officers responsible for their obligation via the Department of Revenue.

Senate Bill 6174 promises to close tax loopholes on real estate transactions and the use of certain digital materials (including downloads, software and online video services). The closing of these loopholes will be facilitated by an interest rate on all unpaid taxes.

House Bill 3070 levies an tax on the income of individuals in the State of Washington by way of a graduated scale based on earned income and marital status. Unlike previous proposals that sought to only tax incomes in the six figures, HB 3070 levies a tax on all eligible earners. The following tables break down the tax proposal:

For married taxpayers filing jointly:

If taxable income is:. . . . . . . . . . . . . . . . . . . . . . . . The tax is:
Not over $49,900 . . . . . . . . . . . . . . . . . . . . . . . . 2.2% of taxable income
Over $49,900 but not over $120,650 . . . . . . . . . . . .$1,098 plus 3.5% of the excess over $49,900
Over $120,650 . . . . . . . . . . . . . . . . . . . . . . . . . . .$3,574 plus 6.0% of the excess over $120,650

For “head of household:”

If taxable income is:. . . . . . . . . . . . . . . . . . . . . . . . The tax is:
Not over $37,425 . . . . . . . . . . . . . . . . . . . . . . . . 2.2% of taxable income
Over $37,425 but not over $90,488 . . . . . . . . . . . . $823 plus 3.5% of the excess over $37,425
Over $90,488 . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,681 plus 6.0% of the excess over $90,488

And for single or married filing separately:

If taxable income is:. . . . . . . . . . . . . . . . . . . . . . . . The tax is:
Not over $24,950 . . . . . . . . . . . . . . . . . . . . . . . . .2.2% of taxable income
Over $24,950 but not over $60,325 . . . . . . . . . . . . .$549 plus 3.5% of the excess over $24,950
Over $60,325 . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,787 plus 6.0% of the excess over $60,325

Each of the bills was referred to fiscal committees – Ways and Means in the Senate and Finance in the House.