Does WA's Millionaires Tax apply to union retirement pensions?
TLDR: No. The Millionaires Tax can’t apply to union pensions, no matter what some are claiming, because no one in a union is getting $84,000/month pension checks. Just 0.6% of Washingtonians are getting that kind of income and they are more likely to busting unions than joining them.
Say it again: 84,000 per month is what a retiree would have to get from their retirement to hit the $1,000,000 threshold for Washington’s new Millionaires Tax. A teacher "would have to work for 278 years to earn $1 million in annual pension benefits – this is impossible,” writes the Economic Opportunity Institute (EOI) in its analysis.
So why doesn’t the Millionaires Tax explicitly exclude pensions and retirement accounts? Because the 23,000 super-rich who should be paying the Millionaire Tax could use that as a loophole to defer income and avoid paying what they owe. We know that they already exploit tax loopholes to avoid paying their share, putting bigger responsibilities on the rest of us.
Writes EOI:
An incredibly small fraction of Washington households has retirement distributions AND income sufficient to pay the Millionaires Tax.
Just 0.6% of tax filers (23,370 households) in Washington have annual income over $1 million dollars. Of those households, only 3,870 have taxable individual retirement income and just 2,870 have taxable pensions and annuities.
This means out of all the households in Washington state, 0.1% have retirement income and 0.08% have pensions plus additional income that brings total annual AGI over $1 million. Households with over $1 million in adjusted gross income are making an average of $2.6 million per year, with only $104,543 (on average per year) derived from retirement income.
In other words: the average tax filer with over $1 million in AGI who will be subject to the Millionaires Tax receives nearly all their income in the form of wages, business income, dividends, and/or capital gains – not retirement accounts.
Source: https://investwanow.org/iwn-updates/millionaires-tax-cant-apply-to-union-pensions
