Bezos bolts, billions lost: Is Washington’s wealth walking out the door?

Jeff Bezos didn’t just change his address — he may have just changed Washington’s tax future.

Here’s a couple of figures in mind as you read this.

According to the Forbes Real-Time Billionaire list, every 0.5% change in Amazon’s stock price results in roughly a $1 billion swing for its founder, Jeff Bezos. Bezos ranks second behind Elon Musk on Forbes’ wealthiest list, with a net worth of $204.6 billion compared to Musk’s $388.6 billion.

As I’m writing this, Amazon stock dropped 0.57% for the day, wiping about $1.2 billion off Bezos’s fortune. Did he notice? Probably not. But the state of Washington might have — and you could almost hear the collective groan.

Washington Democrats increased capital gains tax

Over the weekend, state lawmakers approved the Democrat-led Senate Bill 5813, which raises the state’s capital gains tax on large investment sales — like stocks and bonds — from 7% to 9.9%. It’s part of a larger tax package to fill in what the Office of Financial Management says a $16 billion deficit for the operating budget over the next four years.

When the original tax was passed in 2021, critics warned it would drive tech billionaires and millionaires to friendlier states like Florida, where there’s no capital gains or estate tax. According to Edgar Online, which tracks corporate insider stock sales, Bezos stopped selling shares in 2021. Coincidence? Maybe not.

Washington’s capital gains tax started at 7% on gains over $262,000 from stock and bond sales. Pending Governor Bob Ferguson’s approval, the new plan hikes that tax to 9.9% on gains exceeding $1 million.

Jeff Bezos ditched Washington for Florida

At the end of 2023, Bezos announced he was packing up and leaving Seattle for Florida where there are no similar capital gains and estate taxes.

In an Instagram post, Bezos said he wanted to be closer to his parents and his Blue Origin rocket operations. He did not mention taxes – or tax avoidance.

In June 2023, Bloomberg reported that Bezos bought a $79 million mansion in the ultra-exclusive Indian Creek neighborhood near Miami. When exactly he declared Florida his official residence isn’t crystal clear, but if he managed to switch it before 2024, here’s how the math works out: SEC records show Bezos sold 78,541,922 shares of Amazon stock in 2024 — likely his first full year as a Florida resident — at prices bouncing around $200 a share. That would amount to a gain of about $15.7 billion.

If he had still lived in Seattle? Here’s the pain:

• At the old 7% rate, after exempting the first $262,000, he would’ve owed Washington about $1.1 billion in taxes.
• Under the new 9.9% rate, his tax bill would’ve jumped to $1.55 billion.

Let’s put that in perspective:

• That’s more than the entire annual budget of the Washington State Department of Natural Resources.
• It’s more than the $1.3 billion the state hoped to save by furloughing every state worker for 13 days — a cost-cutting idea that Governor Ferguson floated and then ditched.
• It’s 17% of the controversial $9 billion in new taxes the legislature approved to patch the much-discussed budget deficit.
• It’s about 70% of all the money collected statewide in 2024 under the Climate Commitment Act — a law many blame for the extra 40 to 50 cents per gallon tacked onto gas prices.

Bezos saved big in move to Florida

Bottom line: One man saved a mind-blowing amount of money, and one state lost it — exactly the kind of “wealth flight” supporters of the capital gains tax said wouldn’t happen.

Meanwhile, a proposed wealth tax — aimed at roughly 4,300 people with assets over $50 million — fizzled just days before the session ended. Governor Ferguson, who used to be Attorney General, warned it would be legally risky and said he would reject it.

Speaking at a press conference, Democratic leaders of the House and Senate vowed to bring the proposal back for another shot next year.

But lurking in the tax package awaiting the Governor’s approval is a pair of taxes that critics say can have the same effect on the state as the capital gains tax. It includes a big increase in the Business and Occupation (B&O) tax and a new sales tax on services in the high-tech sector.

Combined the taxes make up more than half of the proposed $9 billion tax plan to balance the budget.

Once again, critics are warning: tax the tech golden goose too hard… and you might just watch it fly south, the same way Jeff Bezos did.

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