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Washington governor pans wealth-tax proposal amid legal doubt

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Washington Governor Bob Ferguson said he wouldn’t sign a budget that relies on the wealth tax proposed by his fellow Democrats in the state legislature. 

House and Senate budget proposals “both rely on a wealth tax which is novel, untested and difficult to implement,” Ferguson told reporters in Olympia Tuesday. “They need to immediately move budget discussions in a different direction.”

Ferguson said the state is facing a $16 billion budget deficit over the next four years, which will be exacerbated by cuts in federal funding by the Trump administration. Democrats in the Washington State Senate proposed a 1% tax on the stocks, bonds, exchange-traded funds and mutual funds held by people with more than $50 million of those assets. House Democrats are considering a similar measure. 

That would make Washington the first state in the U.S. to tax its residents’ wealth. The bill’s sponsors say that including only publicly traded assets would address some of the concerns that the state’s Department of Revenue raised in a November report regarding the difficulty of calculating and collecting such a tax. Washington doesn’t have an income tax. 

Ferguson did leave open the possibility of a small wealth tax that raises no more than $100 million, just to test the legality of the proposal. 

“We cannot rely on a revenue source with a real possibility of being overturned by the courts,” Ferguson said. 

Some wealthy people have already left Washington since the state passed a 7% tax on capital gains, which was first collected in 2023. Tax attorneys and wealth managers say that even the discussion of a new tax on financial holdings is already encouraging more people to leave the state. 

Speaking in a state Senate hearing on Monday, Rian Watt, executive director of Washington progressive advocacy group Economic Opportunity Institute, said the possibility of capital flight is “worthy of consideration, but in our view it is not worthy of concern.”

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Accounting

A great time to cheat on your taxes

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I didn’t want to say this before tax season ended, but my guess is this has to be the best time in all the history of the income tax and the Internal Revenue Service to cheat on your taxes.

(Not that anyone should cheat, of course. They definitely shouldn’t; taxes are the price we pay for living in a civilized society, and all that.)

But think about it: The IRS, already weakened by a decade or more of budget cuts that saw their top talent bleeding away through attrition, has lost a tenth of its workforce in just the past few months, and now that tax season is over, all the fired employees who were held over until April 15 will actually be leaving. Its leadership is in shambles, with five commissioners in as many months, and the confirmation hearings for the man who is supposed to take on the job full-time only happening this week, as well as a number of senior leaders resigning over policy differences with the Trump administration and its Department of Government Efficiency.

(Again, I’m not saying that you should cheat on your taxes — you definitely shouldn’t — but if you wanted to, purely hypothetically speaking, you could hardly pick a better time to do it.)

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Audit rates, which were already ridiculously low, can only drop as experienced staff retire or are driven out, leaving no one to train new employees, which is fine because many of those new employees were themselves driven out right at the start of the current purge. Unless you fill out your return in human blood or ask for your refund to be direct-deposited to a numbered Swiss account, the likelihood of your being audited is almost negligible.

(Still, you totally should not cheat on your taxes.)

Now hypothetically, you might be worried that, even though there aren’t enough human staff to come after you, the IRS might be use technology to catch you, but all those staff cuts are hampering the agency’s IT projects too, and much of the money they were supposed to get from the Inflation Reduction Act to help improve their tech has been clawed back, so I wouldn’t worry too much about it.

(Seriously, though, please don’t cheat on your taxes.)

It’s just that it really does seem like a once-in-a-lifetime opportunity to cheat. The one agency that can stop you — also the one that delivers almost all of the government’s revenue — has been hobbled so comprehensively that if you were actually planning to create an environment for tax evasion, you could hardly do better. It’s OK to talk about this now, of course, because tax season is over and it’s not like any of the people on extension would want to cheat, or like anyone would try to cheat on their quarterly estimates or on the payroll taxes their company is supposed to hand over because they thought the IRS was so weak it wouldn’t catch them.

No one would do that, right?

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Accounting

Tariffs collide with taxes in Trump bill

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The tax reconciliation bill making its way through Congress is expected to add trillions of dollars to the national debt, but the Trump administration hopes to offset the cost through income from tariffs. Accountants are helping worried companies deal with the possible fallout.

“Obviously, tariffs create a lot of uncertainty,” said Tom Alongi, a partner and U.S. national manufacturing practice leader at UHY, a Top 50 Firm based in Farmington Hills, Michigan. “But with uncertainty for U.S. manufacturers, it creates a lot of opportunity. And for those that are contract manufacturers that use a lot of offshoring, it creates a tremendous amount of angst, especially among the auto industry that really over the last three decades has turned into a global supply chain as we’ve been in a race to the bottom to reduce costs.”

UHY has been helping CFOs deal with the changing tariff policies coming out of the White House. “A lot of companies don’t even realize how deep some of their supply chain and where some of their raw material and purchased components ultimately originate,” said Alongi. 

That involves quantifying the impact, understanding the origin of components and raw materials, and where that fits in the Harmonized System that’s administered by the International Trade Administration, making sure everything is classified correctly. 

The Trump administration hopes to convince more companies to relocate their manufacturing operations to the U.S. But companies are also looking at changing their sourcing to other countries if they’ve been relying too heavily on Chinese-made supplies amid the ever-changing tariff pronouncements.

“That uncertainty does create challenges within our clients of allocation of capital,” said Alongi. “Do I make big bets to transition if I have a huge amount of risk that is isolated in a certain country? What do we potentially do to mitigate that risk?”

Auto manufacturers need to look at the proposed changes to tax credits in the tax bill, including reductions in electric vehicle tax credits and other tax incentives for renewable energy.

“I always knew that it is a great alternative source that fits certain consumers, but I never believed that it was going to take over the world,” said Alongi, who has been driving an EV for over seven years. “The tax credits create a behavior, and they incentivize people to drive electric.” 

The shortcomings in the national infrastructure for charging EV batteries disincentivize broader takeup, and the disappearance of the tax credits would make the vehicles even less affordable.

CBIZ, a Top 10 Firm based in Cleveland, launched an Integrated Tariff Solutions program earlier this month for its clients nationwide, offering support across finance, operations, supply chain strategy, tax and compliance. 

“Like so many other middle-market companies, certainly the larger companies, in this environment, there’s more demand for advice on mitigating exposure,” said Mark Baran, managing director of CBIZ’s National Tax Office. “Tariffs have been relatively low for a long time, and now the supply chain, pricing, vendor relationships and locations of where goods are manufactured need a fresh look.”

Different industries are looking for help, including manufacturing, construction and import. “They’re really looking at how to mitigate these costs, which don’t appear to be slowing down,” said Baran. “It could be temporary, but it’s not right now. So we have developed a number of different avenues to assist our clients, whether it’s evaluating inventory and how to properly account for inventory, whether it’s seeking to help them find locations in the U.S. if they want to bring their manufacturing back to the U.S. and do that in a tax efficient manner. We’re looking at intercompany transactions and layering transfer pricing concepts onto customs, seeing if we could help with savings in that regard. Depending upon what a client does and their structure, there’s probably a number of ways you can tackle tariffs and get ahead of it. “

Customs valuations are important. “It’s really ensuring that you have an accurate customs valuation, and oftentimes that wasn’t looked at accurately, and there are savings that can result from that,” said Baran. “These are considered an intercompany framework, oftentimes on the businesses that are most impacted by this. Looking at that structure is another way of doing this, not just not just transfer pricing, but location-based analysis. It’s taking what has been decades of international tax knowledge and layering on customs, and that’s providing a framework that’s been tested and works and is valuable.”

Baran has also been keeping a close eye on developments with the overall tax legislation. House Republicans have come under pressure from President Trump to finalize the bill this week, but that won’t be the end of the story. “What’s waiting for them at the Senate tells me that this bill may not look the same because there’s already opposition from the Senate, and the Senate has a lot of rules that they need to follow,” said Baran. “The Senate has concerns, and the Senate instructions in the budget reconciliation concurrent resolution are very different than the House, so you may have a House and a Senate that’s producing two completely different bills. While it’s nice to report and discuss all of the changes that are coming out of the House, I think people should just keep in mind that the Senate is next, and do not assume that they will follow suit. So the ultimate bill that’s eventually produced is going to look a lot different than it does now.”

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Accounting

Fastest-growing accounting firms spend double on marketing

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The fastest-growing accounting firms spend twice as much on their marketing budget than all other firms, according to a new study.

The Association for Accounting Marketing, in collaboration with the Hinge Research Institute, surveyed over 87 firms — representing 1,037 offices and 66,000 employees — about the drivers behind the marketing performance of the fastest-growing firms. 

High-growth firms invest two-thirds more in employer branding and recruiting, and they budget more for conferences and events, the data found. 

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When it comes to marketing budgets, the fastest-growing firms spent 2.1% of their revenue versus low-growth firms, which spent 1%. Some of that money is invested in marketing teams. High-growth firms have a higher ratio of marketing staff to full-time equivalents (1:49) compared to other firms (1:57). However, the average salary of a high-growth firm team member is 27% less than at the slowest-growing firms. 

“When it comes to marketing, the accounting industry tends to be risk averse and invests less than most other professional services industries,” Liz Harr, managing partner at Hinge, said in a statement. “But the data shows that those that spend more on marketing are getting superior results.”

High-growth firms also spend 66% more on recruiting talent and developing their employer brands — the reputation, culture, employee experiences and marketing that entices potential hires to choose their firm over another — than low-growth firms. 

(Read more: “The 2025 Fastest-Growing Firms”)

Finally, the fastest-growing firms spend 21% more of their marketing budget on conferences and other in-person events than their peers, with high-growth firms allocating 30% of their budget versus low-growth firms allocating 25%. 

“Today’s high-performing accounting firms are taking a somewhat more balanced approach to marketing,” AAM president Laura Metz said in a statement. “Digital and content marketing budgets are on the rise, but perhaps more than anything, high-growth firms are focused on nurturing relationships in person, whether at industry conferences or their own client appreciation events. These gatherings aren’t just line items, they’re growth strategies where the strongest connections, best leads and boldest brand moments take shape.”

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