Jeff Bezos’ latest plans to sell more Amazon stock underscore his departure from Washington state and fuel ongoing debates about its capital gains tax.
A recent regulatory filing reveals that Bezos intends to sell 25 million Amazon shares worth approximately $5 billion. This follows his sale of 50 million shares, worth around $8.5 billion, earlier this year.
Bezos announced in November that he was leaving Seattle, Amazon’s longtime home, and relocating to Miami. This move raised questions about Washington state’s capital gains tax, implemented in 2021, which imposes a 7% tax on any gains over $262,000 from the sale of stocks and bonds. In contrast, Florida has no capital gains tax.
CNBC reported in February that by moving to Miami, Bezos saved more than $600 million in taxes from his earlier stock sale. With the additional sale of 25 million shares disclosed this week, Bezos’ total savings approach $1 billion.
This considerable tax saving means a significant loss of revenue for Washington state. The capital gains tax, which went into effect in 2022, generated $786 million in its first year, surpassing projections. More than half of this revenue came from just 10 individuals. The first $500 million collected goes towards education and childcare programs, with the rest allocated for school construction projects.
However, the tax’s second year saw a decline, generating $433 million from about the same number of returns (3,850), as reported by the state’s revenue office in May. Lawmakers expected some unpredictability with the new tax, according to the Washington State Standard.
The tech industry has been particularly vocal against the tax, arguing it targets stock-based compensation, a common form of payment for many startup founders and employees. Critics warned it could drive companies and individuals out of the state.
Washington Sen. Noel Frame, a proponent of a state wealth tax, dismissed the notion that wealthy individuals move to avoid high taxes, citing research to the contrary. Economist Cristobal Young’s 2016 study found most wealthy people don’t relocate to avoid taxes. However, his 2022 study noted that pandemic restrictions led households to reassess living in high-cost, high-tax states.
We contacted Sen. Frame for comment and will update this story upon response.
In his Instagram post announcing his move from Seattle, Bezos mentioned a desire to be closer to family in Miami and his Blue Origin space venture, omitting any reference to taxes.
Jared Walczak of the Tax Foundation remarked that Bezos’ move likely dismayed a Washington state revenue official. Walczak highlighted the risks of relying heavily on a few high-earning taxpayers for revenue.
Washington, which lacks personal and corporate income taxes, relies primarily on sales, property, and business and occupation (B&O) taxes. Critics argue this system disproportionately affects low-income residents.
Opponents of the capital gains tax have argued it functions as an income tax, violating the state constitution’s restrictions, while supporters claim it is a legal sales tax. The tax faced legal challenges, but the U.S. Supreme Court declined to hear an appeal against a Washington state Supreme Court ruling that upheld the tax.
Initiative 2109, which seeks to repeal the tax, recently qualified for the November ballot in Washington state.
As of a February proxy statement, Bezos controlled about 10.8% of Amazon’s outstanding stock. Bloomberg reports he will retain nearly 912 million shares, or about 8.8%, following the latest sale.
Amazon’s stock has surged over 30% this year and more than 50% in the past 12 months, reaching a $2 trillion market capitalization for the first time.
Bezos, who did not sell Amazon stock in 2022 or 2023, is now the second richest person on the Bloomberg Billionaires Index, with a net worth of $222 billion, up $44.7 billion year-over-year.
Bezos’ ties to Seattle have waned in recent years. He and MacKenzie Scott divorced in 2019, and he stepped down as Amazon’s CEO in 2021, though he remains chairman. His focus has shifted to Blue Origin and addressing recent controversies and declining revenue at The Washington Post, which he purchased in 2013.
