News from Snohomish

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A WEALTH TAX? SHOULD YOU BE WORRIED? NOPE!

(First a note about our picture here.  If you were worried about our herons, they seem to have relocated to Ebey Slough.  This rookery is visible from I-5 heading north.)

Recently the Washington State Legislature passed a wealth tax on high income earners; high earners being defined as individuals earning over $1 million per year. The proposed tax rate for the first dollar and ever subsequent dollar over $1 million would be 9.9%. If that number looks familiar, it should, it is very close to the sales tax rate on goods (excluding food) and services that everyone pays when shopping. This tax is expected to affect less than 0.5% of earners, but will raise over $3 billion dollars annually. Those revenues will help reduce the regressivity of Washington’s tax structure which now rests heavily on our state’s lowest earners.  

Here’s what you should be worried about:

Guaranteed this will be an issue in the coming November election. Our two representatives, April Berg and Brandy Donaghy are going to be challenged from the far right, and those challenges will come with really large campaign donations from PACs and wealthy donors.

Now to the queries and data:

The following is the result of research questions asked of Claude, the AI program by Anthropic. You could ask the same questions of Chat GPT, or Perplexity. I hear it is wise to stay clear of X AI. I wanted to know about Washington state’s tax structure and who bears the heaviest burden.

I will provide my question, in bold, followed by the response. You should be able to get similar, though likely not identical, results in your own queries.

Which states’ tax based revenue programs are considered regressive hitting lower income residents hardest?

Tax economists generally consider a state’s overall tax system regressive when lower-income residents pay a higher share of their income in taxes.

Most Regressive States Overall

The Institute on Taxation and Economic Policy (ITEP) regularly publishes a “Terrible Ten” or similar ranking. Consistently near the top:

1. Washington — No income tax; relies heavily on sales tax (6.5% + local) and excise taxes, which hit low earners hard

2. Florida — Same pattern: no income tax, high reliance on sales and property taxes

3. Texas — No income tax; high property and sales taxes

4. South Dakota — No income tax, heavy sales tax reliance

5. Nevada — No income tax; heavy sales, gaming, and excise taxes

6. Tennessee — No income tax on wages; high sales tax (among the highest in the nation at ~9–10% combined)

7. Pennsylvania — Has income tax but at a flat 3.07% with no progressive brackets, plus high reliance on local taxes

8. Illinois — Flat income tax (4.95%) with no graduation by income level

9. Arkansas — Sales tax and relatively low income tax progressivity

10. Arizona — Sales tax reliance and limited progressivity

Why These Systems Are Regressive

Sales taxes are the primary driver. Lower-income households spend nearly all of their income on goods and services, so sales taxes consume a larger percentage of their budget. A wealthy household might save or invest 40% of income — that portion is never sales-taxed.

Property taxes can also be regressive when renters bear the cost indirectly through rent, and lower-income homeowners hold most of their wealth in their home.

Flat income taxes are considered mildly regressive compared to progressive systems because everyone pays the same rate regardless of income.

Most Progressive States (for contrast)

States with steeply graduated income taxes and low sales tax reliance tend to be most progressive:

• California, New York, Vermont, Minnesota, New Jersey — high top marginal rates, lower burdens on low earners

Please summarize Washington State’s method of taxing its citizens, its pros and cons, and what the new wealth tax will do to improve revenue collection

The Washington State Paradox

Washington is a particularly striking case given its progressive reputation politically. Despite voting heavily Democratic, its tax structure is consistently ranked most regressive in the nation by ITEP. The capital gains tax passed in 2022 was partly an attempt to address this, but it affects a small slice of residents and doesn’t fundamentally change the picture.

This is a live debate in Olympia — and relevant to your neck of the woods, since Snohomish County residents feel the sales tax burden acutely.

Please summarize Washington State’s method of taxing its citizens

Washington State’s Tax System: Structure, Tradeoffs, and Reform

How Washington Taxes Its Citizens

Washington’s tax system rests on four main pillars:

1. Sales & Use Tax — The dominant revenue source. The state rate is 6.5%, with local additions pushing combined rates to 9–10.5% in many jurisdictions, including most of Snohomish County. Applied broadly to retail goods and some services.

2. Business & Occupation (B&O) Tax — A gross receipts tax on business revenue, not profits. Unique to Washington among states. Businesses pay regardless of whether they’re profitable, which critics argue punishes small and struggling businesses disproportionately.

3. Property Tax — Levied on real estate and some personal property. Subject to constitutional uniformity requirements and the 1% levy limit, though various levies stack on top of each other in practice.

4. Excise Taxes — Including the capital gains tax (7% on gains over ~$270,000), real estate excise tax (REET), fuel taxes, tobacco and liquor taxes, and various others.

Washington has no personal income tax on wages — a defining structural feature for nearly a century.

Pros of the Current System

Economic competitiveness — No income tax has made Washington attractive to high-earning tech workers and executives, particularly from California. This helped fuel the growth of Amazon, Microsoft, and the broader Seattle tech economy.

Simplicity for wage earners — Workers don’t file a state income tax return, reducing compliance burden for most residents.

Stable base revenue — Sales tax revenue is relatively predictable and broad-based, funding state services consistently.

Business attraction — Combined with no income tax, Washington has positioned itself as a destination for entrepreneurs and corporations, though the B&O tax partially offsets this advantage.

Cons of the Current System

Deep regressivity — The fundamental flaw. Lower-income households spend nearly all their earnings on taxable goods, paying 8–10% of their income in sales taxes. Wealthy households save and invest large portions of income that escape taxation entirely, paying a far smaller effective rate.

Volatility — Sales tax revenue drops sharply in recessions when consumer spending falls, creating boom-bust cycles in state funding precisely when services are most needed.

B&O inequity — Taxing gross receipts rather than profits hits small businesses and startups hardest. A business losing money still owes B&O tax.

Inadequate public investment — The regressive, consumption-heavy structure chronically underfunds education, healthcare, and infrastructure relative to states with more robust progressive revenue systems.

Constitutional rigidity — The Culliton framework has locked Washington into an increasingly archaic tax structure, forcing creative and legally fragile workarounds rather than straightforward reform.

What the Millionaires’ Tax Changes

If it survives legal challenge, SB 6346 restructures the burden in several meaningful ways:

New revenue from the top

A 9.9% tax on income above $1 million, affecting less than 0.5% of residents, is projected to raise over $3 billion annually — a substantial new revenue stream from those with the greatest ability to pay.

Direct relief at the bottom

The law pairs the new tax with targeted cuts designed to reduce regressivity:

• Sales tax eliminated on diapers, hygiene products, and over-the-counter medications

• Working Families Tax Credit expanded to ~460,000 additional households

• B&O tax exemption for businesses grossing under $300,000 — covering roughly 65% of all Washington businesses

• Free meals for all K-12 students

Structural significance

Beyond the dollars, the millionaires’ tax represents Washington’s first serious breach of the no-income-tax wall. If the courts uphold it — particularly if they accept the excise tax framing for wage income — it opens the door to a more fully progressive system over time. Proponents see it as a historic first step; opponents fear exactly that.

Limitations

Even if fully implemented, the millionaires’ tax alone doesn’t fundamentally transform Washington’s regressive structure. Sales tax remains the dominant revenue source, and the B&O tax still burdens small businesses. It’s a meaningful improvement at the margins — redistributing some burden from the bottom — but not a systemic overhaul.

The Bottom Line

Washington’s tax system reflects a century-old political bargain: broad consumption taxes that everyone pays, in exchange for no income tax that benefits high earners and attracts business. That bargain has delivered economic growth but chronic inequity. The millionaires’ tax is the most serious challenge to that bargain in modern history — modest in scope if viewed in isolation, but potentially transformative as a legal and political precedent.

Sometimes, it’s a lot, this little town of ours. 

First, let me retell a bit of history. For most of its past, from its founding until 1971, the city of Snohomish was governed by a strong mayor with council. Times were hard in 1971 and the mayor and council were desperate to draw business into town. So desperate they were willing to follow Marysville’s lead: raze and redevelop the old downtown business sector on First Street. You can visit Marysville’s mall. You will not be impressed. Routing Highway 2 through Snohomish, rather than to the north, also got a hearing. Driving Hwy 2 through Monroe, you will see the divide it created there. Like the civic version of a mullet and just as disturbing.

Seeing what Snohomish’s strong mayor and infighting council had in mind, the city voted to change its form of government to Council/(professional) Manager in 1971 for one overriding reason: Snohomish residents recognized what they had in their tatty jewel of a town and chose to preserve and protect it. With the change in form of government, political volatility went down, and the town built a prosperous foundation based on home and business restoration, tourism, small town quirk and steady governance. The leadership for Snohomish’s transformation came from the residents, steady, responsive city governance supported those efforts. It is the residents who are this city.

In 2017, with John Kartak and Proud Boy Bill Betten leading the campaign, and riding a wave of Trumpism, Snohomish voted to go back to a strong mayor form of government. Then they voted in John Kartak. (Folks who have been here awhile will recall Kartak’s vigilante Oath Keepers, 3 Percenters and Proud Boys coming armed to town to protect against a delusional Antifa invasion. We made national news). We are now in our 9th year of strong mayoral leadership, three elections, three very different mayors with massive staffing changes each time. Snohomish is rapidly becoming the town where you can have a 4 year career; likely not more. Get what you can while you can. Ken Klein certainly is.

So who is our new mayor, Mayor Hoffman? We continue to learn. If you read his social media posts, you will learn he will never vote for a Democrat; his antipathy appears visceral. Which is to say not rational. And while he voted for Trump presumably three times, he is now finding Trump difficult to defend. Though he did give Trump a pass for 34 criminal convictions and a finding of liability for sexual abuse and defamation. Apparently Trump was going to be good for business, which appears to be all Mayor Hoffman cares about. Trump’s corruption is blatant, with a very long historical tail. But I suspect none of this is a problem for Hoffman if Trump’s good for business. Turns out he’s not.

Shari Ireton, our last staffing loss, was told to resign or be fired, for not implementing the city’s strategic initiatives. There were initiatives under Redmon, but clearly Hoffman’s are different. Because strategy comes after a clear statement of vision, and assessment of the current state of the environment and gaps between vision and current state, none of which has been done or communicated, there are no strategic initiatives. At the April 7 City Council Meeting, Councilperson Terry Lippincott, publicly asked the question why the firing on behalf of all constituents. Mayor Hoffman replied, as mayor, he didn’t need a reason; staffing decisions are entirely his prerogative.

We do have a new SEED hire to take Ireton’s place. She is a December grad from a CALState Master’s program in communication. She won this job without virtue of a public job posting, evaluation of competing applicants, or applicant interviews. She apparently does have family connections and friends in the PNW and is excited to move here. One of her very first jobs will be to develop those strategic initiatives currently MIA. My caution, don’t forget those first two steps, and the one implied: providing public forums for Snohomish residents to voice their input for our city’s future direction. Without that preliminary work, you will fail. Don’t assume Aaron Hoffman’s desired direction is aligned with the residents. I repeat, it’s the residents who are the city.

When Karen Guzak, who I suspect Hoffman knows is a Democrat, wrote a letter to the Tribune which was printed, Hoffman took to social media to attack her and her argument.  The letter’s subject, one that is guaranteed to get more traction in the coming months: returning to the Council/Manager form of government. So what is it about listening, which Aaron Hoffman promised to do during his campaign, that he finds so hard that it requires a defensive crouch and angry rebuttal?

So does Mayor Hoffman have anger management issues? Swaddled in his father-in-law’s small fishing/real estate business (at this point, I can no longer resist the nepo-baby label) he really hasn’t had to deal much with the public in all its rich diversity. He may not have known there are as many varied voices in Snohomish as there clearly are.  He  really didn’t have to promise to listen in his campaign, he is going to hear from residents regardless.

Meanwhile, the unfamiliarity Hoffman and City Administrator Ken Klein have with city issues is beginning to show. They went to Olympia seeking funding for repairs to the Bickford Bridge. Snohomish officials were told last year by the state the old bridge is incompatible with the plans to widen Hwy 9. There are multiple alternate ways to access Bickford Avenue, and likewise Bickford can be bypassed in accessing Snohomish. The state’s message was clear, patch it as best you can; but the bridge will be coming down eventually, as Hwy 9 widening continues north. Major improvements to the old Bickford bridge are seen as money down a rat hole. Best start lobbying for funding a new bridge when we have four lanes of Hwy 9 to cross.

Finally, a heads-up: City Council will be approving the Pride Parade permit for the coming year at their April 21 meeting. Show up, by all means. The mayor needs to learn the lesson, perhaps repetitively, that an inclusive community is really good for business. And we residents, in all our diversity, really are the city. I can’t say it enough.