Ever since he founded Amazon in a garage office 29 years ago, Jeff Bezos has called Seattle home. But that’s all set to change in just a few weeks now that the world’s third-richest man – worth $161 billion – says he plans to relocate to Miami, Florida, one of seven states that boasts no income tax.
More importantly, perhaps, is the fact that Florida also does not impose any taxes on capital gains. That stands in stark contrast to Washington state, where a new 7% tax on capital gains income over $250,000 was approved by the state supreme court earlier this year, despite a crystal clear constitutional prohibition on any such income tax.
Although Washington’s 7% wealth tax continues to face legal challenges, Bezos won’t be sticking around. The former Amazon CEO would be hit particularly hard under the new tax regime with every additional sale of stock. Indeed, between 2020 and 2021 alone, Bezos sold more than $15 billion worth of Amazon shares.
Now that its hefty new tax is officially on the books, Washington state is about to lose much more than its treasured status as a no-income-tax state. Bezos and all of his billions will soon vanish from the Evergreen State for good. Those dollars will instead be invested in the businesses and people of the Sunshine State, in addition to swelling Florida’s sales tax coffers every time he buys a mansion or a yacht.
Naturally, any tax that targets a few highly wealthy individuals will drive many of them to a friendlier tax climate, making the tax itself increasingly counterproductive. In fact, without Bezos, Olympia’s ill-fated and unconstitutional wealth tax will lose most of its bite. According to a Tax Foundation analysis of his holdings, Bezos would have paid nearly $1.5 billion every year in capital gains taxes to Washington, equivalent to 45% of the total collections that state officials originally expected to collect from the new tax.
It’s not just the rich who have a financial incentive to flee states with crushing high-tax regimes. Hardworking families and small businesses, too, have been leaving blue states in droves over the last decade, especially over the last few years as conservative legislatures race to reduce their income tax rates. And as Washington abandons the group of no-income-tax states, at least 10 states are already vying to take its place.
Washington state legislators have spent years in committee touting a plethora of wealth tax proposals. But with their dream 7% wealth tax finally on the books, it’s becoming clear that Bezos and his wealthy neighbors have a remarkably easy way to defend themselves – moving to a low tax state, where they won’t be punished for their entrepreneurial success.