In a recent letter to the Renton Reporter, Enumclaw resident Eugene Clegg voiced concerns about Washington State’s newly approved 9.9% income tax on households earning more than $1 million annually. While the tax was promoted as a way to make the system more progressive, Clegg points out two structural problems that could undermine that goal.
Flaw #1 – The tax may broaden beyond its original target
Clegg notes that history shows tax rates often drift away from their initial purpose. He cites the federal income tax, which began in 1913 at a flat 1% on incomes above $3,000 – a threshold that captured only the top three percent of earners at the time. Over the decades, the top rate rose to 90% during World War II and later fell to 37% after lobbying by wealthy interests. “Taxes never remain on those originally intended,” he writes.
Washington’s new tax applies only to earned income, leaving unrealized gains such as stock appreciation untaxed. Clegg argues this creates a loophole that could allow the state’s first trillionaire, Elon Musk, to avoid taxation on a large portion of his wealth. He warns that once the tax begins to affect more households, the original intent of targeting only the ultra‑rich could be lost.
Flaw #2 – No inflation indexing
The second issue Clegg raises is that the $1 million threshold is not indexed for inflation. He points out that in 1913, 97% of Americans earned less than $3,000, and today most people earn far less than $1 million. However, without an inflation adjustment, the bracket could gradually encompass a larger share of the population as wages rise.
He draws parallels to other nations – Argentina, Brazil, Greece, Malta, Venezuela, and post‑World‑War‑I Germany – where fixed tax thresholds became ineffective as inflation eroded purchasing power. Clegg’s personal experience illustrates the point: when he began his career in 1968, his salary was $6,000; today a comparable entry‑level salary would be about $105,000 after accounting for inflation. He warns that without indexing, many families could find themselves taxed at the higher rate despite earning “worthless” dollars.
Local perspective and broader implications
While the letter is an opinion piece, it reflects a broader concern among Washington residents about the potential unintended consequences of the new tax. Clegg’s remarks echo a common conservative principle: tax policy should be clear, predictable, and limited to its intended target to avoid penalizing middle‑class families.
State legislators and the Washington State Department of Revenue have not yet responded to these specific concerns. The tax is set to take effect next year, and its impact will be closely watched by both policymakers and taxpayers.
What’s next?
Critics like Clegg hope that lawmakers will consider adjustments, such as indexing the threshold to inflation or expanding the tax base to include unrealized gains, to ensure the policy remains truly progressive. As the debate continues, Washington residents will be watching to see whether the tax achieves its stated goal of targeting only the wealthiest households without spilling over onto the broader public.
Original reporting: Renton Reporter — read the source article.
