The Department of Revenue presented a staff report on wealth taxes, telling the House Finance Committee that while the agency believes it could administer a state-level wealth tax, such a tax would present significant valuation and enforcement challenges that affect compliance and revenue reliability.

Steve Ewing said the DOR review — required by proviso in the last operating budget — surveyed international experience and recent U.S. proposals and concluded the primary administrative challenges are (1) valuing nonmarketable assets, (2) preventing evasion and planning-driven avoidance, and (3) ensuring sufficient audit and enforcement capacity. The report noted many countries that levy wealth-like taxes rely on market valuations for publicly traded assets but employ formulaic or other methods for harder-to-value holdings.

Why it matters: Wealth-tax proposals have reappeared in several U.S. states and federal proposals; DOR told the committee that Washington’s constitutional and statutory framework would likely require a wealth tax to be structured as a property tax and that implementing legislation would need clear valuation methods, filing requirements and adequate enforcement resources.

Details and committee discussion

- Jurisdictional experience: DOR surveyed countries and subnational jurisdictions that levy wealth taxes (Argentina, Belgium, Italy, Spain, several Swiss cantons) and noted many jurisdictions have repealed or suspended wealth taxes in recent decades; respondents flagged valuation, evasion and compliance as primary administrative issues.
- Valuation and compliance: Publicly traded securities and mutual funds are straightforward to value; privately held interests, nonmarketable assets and certain collectibles pose greater valuation difficulty. Several responding jurisdictions recommended electronic filing and strong audit programs; reported compliance rates ranged from about 82% to 98% where reported, but DOR cautioned those figures may not translate directly to a U.S. state context.
- Administrative feasibility: DOR concluded it could administer a wealth tax if the legislature enacted clear parameters (asset definitions, valuation methods, filing rules) and provided sufficient audit and enforcement resources. The agency offered to provide fiscal notes for specific bill parameters; cost and staffing needs would depend on design choices.

Committee questions and context

Representative Cindy Jacobson asked whether any U.S. state had enacted a wealth tax; DOR staff answered no. Representative Josh Penner asked about estimated administrative costs; DOR said estimates depend on statutory design and referred members to prior 2023 bills (House Bill 1473 and Senate Bill 5486) for earlier fiscal-note work. Lawmakers raised concerns about mobility and potential taxpayer relocation; DOR said those are real risks and that exemptions and high thresholds are common design features internationally to limit liquidity problems and avoidance.

Ending

DOR said the department can administer a wealth tax but urged careful statutory design, clear valuation rules and investment in enforcement to ensure revenue reliability. The written report was made available to committee members in EBB.