The Department of Revenue presented its statutorily required 2024 study on wealth taxes to the House Finance Committee on Jan. 14, concluding that Washington could administer a wealth tax but that valuation, compliance and enforcement present significant challenges.

Steve Ewing said the DOR report surveyed other U.S. proposals (California, New York, Illinois, Hawaii) and foreign examples (Argentina, Spain, Switzerland and others), and that several countries have repealed wealth taxes in recent decades. The department received responses from several countries and Swiss cantons emphasizing valuation difficulty for nonmarketable assets and tax evasion as a major enforcement challenge.

DOR advised that valuing publicly traded financial assets (stocks, bonds, ETFs) is straightforward, but valuation of nonmarketable assets—closely held businesses, certain private investments, collectibles or some cryptocurrencies—requires formulaic or expert methods the department has little experience with today. The report recommends codifying valuation methods in statute or rule, building sufficient audit and enforcement capacity, beginning with electronic filing and a high exemption threshold to reduce administrative burdens and minimize liquidity problems for taxpayers.

Ewing emphasized that several jurisdictions reported enforcement and compliance risks and that revenue reliability for a new wealth tax would depend on statutory design, audit resources and enforcement tools. DOR concluded it could administer a wealth tax if the Legislature enacted clear statutory parameters and provided adequate resources, but warned the policy raises significant implementation questions.

Committee members asked about administrative costs, whether wealth taxes would be treated as property taxes in Washington’s framework and the potential for taxpayer mobility; DOR noted specific fiscal and staffing estimates depend heavily on the precise policy design and referred members to bills considered in 2023 for more detailed fiscal notes.