AN ACT Relating to restoring the taxation of intangible property to provide additional funding for public schools; amending RCW 84.36.070, 84.36.110, and 6.13.030; adding a new chapter to Title 84 RCW; creating a new section; repealing RCW 84.04.150 and 84.36.600; and providing for submission of this act to a vote of the people.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

(2) The legislature finds that our underlying problem is we have the most regressive tax structure in America due to excessive reliance on sales taxes. This tax structure places an unfair state tax burden on our poor and our middle class, with these groups paying more than ten percent of their net income in state taxes, while the wealthy in our state pay less than three percent of their income in state taxes. Those who are most able to pay are paying the least, while those least able to pay are paying the most.

(3) The legislature finds that this great disparity in taxes is contrary to Article VII, section 1 of the state Constitution, which requires a uniform system of taxation. Our state supreme court has consistently recognized that tax uniformity is a central component of Washington's tax system. In 1984, our state supreme court declared: "One fundamental premise pervades the constitutional limitations on the exercise by the legislature of the power of taxation. This premise is that the distribution of the burdens of taxation should be uniform."

(4) This chapter makes the distribution of state taxes more uniform by eliminating the intangible property exception which disproportionately benefits the wealthiest one percent of our citizens at the expense of our middle class, our poor, and our school children.

(5) The legislature finds that the only way we will be able to meet this constitutional duty to fully fund our public schools and to provide for a uniform system of taxation is through enacting a fairer tax structure. This chapter will bring us closer to the national average in terms of the percentage of state taxes collected and the distribution of state taxes collected. Since any change in our tax structure requires a vote of the people, we propose to place this referendum before the people.

(6) The legislature finds that intangible wealth, such as stocks and bonds, now represents over half of all property wealth with a taxable location in this state. The legislature further finds that the present system of taxing only tangible property and of exempting all intangible property from taxation is regressive, in that such a system benefits the richest residents and businesses in Washington who have sufficient wealth to own substantial intangible property. The legislature further finds that while the transfer, sale, or use of tangible property is subject to various excise taxes in the state of Washington, no comparable taxes are imposed on intangible property. We can no longer afford to have the wealthiest citizens of our state not paying their fair share of state taxes. Moreover, having the wealthiest citizens pay their fair share of state taxes would not harm them financially as they can deduct their state taxes from their federal taxes.

(7) The legislature further finds that subjecting tangible property, such as homes, to the state property tax but not subjecting intangible property, such as stock market speculation, to the state property tax, discouraged home ownership and encourages speculation in the stock market. Currently if you have three hundred thousand dollars invested in stocks or bonds, you pay no state property tax on that investment. However, if you invest the same three hundred thousand dollars in a five hundred thousand dollar home, you have to pay property tax not just on the three hundred thousand dollars that you invested, but on the entire five hundred thousand dollar value of the home! This penalizes home ownership. Eliminating the property tax exemption on intangible property would lead to a fairer tax structure because our middle class typically invests nearly all of their financial assets in tangible property (their family home). Meanwhile, millionaires typically invest less than half of their assets in tangible property putting the majority of their assets into stocks and bonds.

(8) Elimination of the exemption for intangibles from state property tax will lead to a fairer tax system by raising the amount of state tax paid by millionaires from the current three percent to about four percent. They would still pay much less in state taxes than our middle class, which pays about twelve percent. This would generate about several billion dollars in additional state revenue per biennium without any substantial increase in taxes on our middle class. State taxes are deductible from federal taxes. Thus, millionaires are not likely to be financially harmed by these taxes. This chapter simply transfers billions of dollars per year from the federal tax rolls to the state tax rolls to bring school funding in our state back up to the national average.

(9) This chapter is also made necessary because the information technology revolution has meant a significant shift away from tangible property towards intangible property.

(10) Finally, the dramatic shift in wealth that has occurred in the past fifteen years with the rich getting richer while everyone else falls behind means that the most stable type of property is intangible property of the very wealthy.

(11) This chapter also creates a fairer tax structure by allowing an exemption of up to two hundred thousand dollars in personal tangible property per person and two hundred thousand dollars in intangible property per person. This chapter also exempts all retirement accounts.

(12) The legislature declares the purpose of this chapter is to subject intangible property to a tax on the privilege of ownership of the property, subject to the exemptions contained in this chapter for the limited intangible holdings of individuals, in order to provide a more equitable and fair system of taxation of both tangible and intangible wealth in this state.

(13) Data indicates that less than ten percent of our state's residents would owe anything under this tax, and ninety percent of those who would pay this tax have assets in excess of one million dollars.

(14) The legislature further finds that:

(a) Article VII, section 2 of the state Constitution permits taxation of both tangible and intangible property;

(b) Our unfair tax system is partially the result of our state's exemption of intangible property (such as stocks and bonds) from state property taxes; and

(c) Taxing intangible property would lead to a more uniform tax system.

(15) The legislature finds that this chapter is required by Article IX, section 1 of the state Constitution, which states that adequately funding public schools is the paramount duty of the legislature. The legislature further finds that it will be impossible for the legislature to meet its duty to fully fund public schools without eliminating tax breaks on intangible property from property taxes.

(16) Therefore, it is the intent of the legislature that the exemption of intangible property from state property taxes be eliminated.

(17) The legislature also finds that it is the intent of this chapter to provide for the levy of a tax on certain intangible property, define the types of intangible property subject to tax, provide tax exemptions, and provide for the administration of the tax.

(18) The legislature further finds that since 1980 the legislature has approved a series of tax reform bills that have had the net effect of reducing per pupil funding in our state from eleventh in the nation to forty-second in the nation. As a result, we have some of the lowest funded, most overcrowded schools in America. The legislature intends in this chapter to specifically define adequate school funding as being per pupil funding, which is at least at the national average.

(1) "Company" or "association," when used in reference to a corporation, includes successors and assigns of the company or association.

(2) "Financial organization" means any bank, trust company, savings bank, industrial bank, land bank, safe deposit company, private banker, savings and loan association, building and loan association, credit union, currency exchange, cooperative bank, small loan company, sales finance company, or investment company, and any other corporation at least ninety percent of whose assets consist of intangible property and at least ninety percent of whose gross income consists of dividends or interest or other charges resulting from the use of money or credit.

(3) "Fiscal year" means an accounting period of twelve months ending on the last day of any month other than December.

(4) "Income" means:

(a) Interest received upon intangible property;

(b) Dividends and other distributions, whether in the form of cash or property, to the extent that they represent the yield of intangible property; and

(c) All other earnings or yield, including capital gains, of intangible property regardless of the name by which designated. For the purpose of computing the tax imposed under this chapter, the gross income, including taxes, charges, and other deductions that may be made therefrom, must be the basis upon which the tax is measured.

(5) "Intangible property" includes, without limitation, moneys on hand or on deposit or in transit; shares of stock, and other units of interest, in corporations, joint stock companies, and other associations conducted for profit, business, or investment activity; securities such as bonds, certificates of indebtedness, debentures, and notes receivable; land contracts receivable, real estate and chattel mortgages receivable, conditional sales contracts receivable, and other obligations for the payment of money; whether such intangible property is secured or unsecured; shares or units of companies or trusts including mutual funds, money market funds, unit investment trusts, and exchange traded funds; notes; bonds; debentures; accounts receivable; certificates of deposit; cashier's and certified checks; bills of exchange; drafts and similar instruments; bank accounts and other obligations for the payment of money; publicly traded options; futures contracts; commodities contracts; certificates of interest in gold and other precious metals or gems; and similar financial instruments. "Intangible property" does not include computer software or any rights with respect to real property, including oil, gas, and mineral interests and royalties, leases, interests in condominiums, or timeshare interests in real property. "Intangible property" also does not include the interest of a partner under a partnership agreement.

(6) "Nonresident" means a person who is not a resident.

(7) "Own" means a beneficial ownership as distinguished from legal title.

(8) "Owner" means any person who:

(a) Has both the entire legal and equitable interest in intangible personal property or both a legal and equitable estate therein which entitles him or her to the present enjoyment thereof;

(b) Holds intangible personal property as an administrator, executor, personal representative, receiver, trustee in bankruptcy, or assignee for the benefit of creditors; or

(c) Is the beneficiary of an inter vivos or testamentary trust to the extent that the trust embraces intangible personal property. If there is more than one beneficiary, the person who is entitled to the present enjoyment of the trust property is the "owner." If more than one beneficiary is entitled to the present enjoyment of the trust property, all the beneficiaries so entitled are the "owners" according to their respective interests. If there is more than one beneficiary, only some of which are entitled to the present enjoyment of the trust property, those beneficiaries who are so entitled are the "owners." If a trustee of a trust may accumulate the income thereof, the trustee is the "owner" to the extent that the income is so accumulated. A beneficiary domiciled in this state is taxable irrespective of the state or other jurisdiction of the creation or administration of the trust.

(9) "Partnership" means a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not a trust, an estate, or a corporation; and the term "partner" means a member in the syndicate, group, pool, joint venture, or organization.

(10) "Person" has the same meaning as provided in RCW 82.04.030, except the term does not include any municipal corporation, the state of Washington or any political subdivision of the state of Washington, or the United States or any instrumentality of the United States.

(11) "Resident" or "domicile" means:

(a) An individual who is domiciled in this state unless the person maintains no permanent place of abode in this state and does maintain a permanent place of abode elsewhere and spends in the aggregate not more than thirty days of the taxable year in this state; or who is not domiciled in this state but maintains a permanent place of abode in this state and spends in the aggregate more than one hundred eighty-three days of the taxable year in this state;

(b) The estate of a decedent who at the person's death was domiciled in this state;

(c) A trust created by a will of a decedent who at the person's death was domiciled in this state;

(d) An irrevocable trust, the grantor of which was domiciled in this state at the time the trust became irrevocable. For purpose of this subsection (11)(d), a trust is considered irrevocable to the extent that the grantor is not treated as the owner thereof under 26 U.S.C. Secs. 671 through 678 of the federal internal revenue code; and

(e) When referring to a corporation, the commercial domicile (the principal place from which the corporation conducts its business).

(12) "Situs" or "location of intangible personal property" means the domicile of the owner of the property, except that any intangible personal property, not otherwise exempt under the laws of this state, owned by a person having a domicile outside of this state but owned or used in connection with the conduct of the person's business in Washington, or placed in the hands of a manager or agent in Washington to the extent that the intangible personal property is invested in a course of repeated transactions in obligations of persons residing in Washington or secured by property located in Washington has a situs at the place of business, or where the manager or agent resides, as the case may be, within this state; however, in the case of intangible personal property owned or used in connection with the owner's business both within and outside the state of Washington, all such property has a situs in this state to the extent of the percentage of the whole of the property as determined by the allocation formula set forth in this chapter.

(13) "State," when applied to a jurisdiction other than this state, means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States.

(14) "Subchapter K entity" means a partnership, including a limited partnership, limited liability partnership, limited liability limited partnership, limited liability company, or any other entity subject to subchapter K of the internal revenue code, 26 U.S.C. Secs. 701-761, not including a single member limited liability company.

(15) "Tax" means all taxes, interest, or penalties levied under this chapter.

(16) "Tax year" or "taxable year" means:

(a) The calendar year, or the taxpayer's fiscal year when permission is obtained from the department to use the taxpayer's fiscal year as the tax period in lieu thereof; or

(b) In the case of a return made for a fractional part of a year under this chapter, the period for which the return is made.

(17) "Taxpayer" means any individual subject to the tax levied by this chapter, or, in the case of a joint return, both individuals.

(a) Obligations or evidences of debt of the United States and obligations of United States government agencies and corporations established by acts of the congress of the United States to the extent required by federal law to be exempt from ad valorem taxation by the states;

(b) Obligations or evidences of debt of the state of Washington and its political subdivisions and agencies and instrumentalities of the state of Washington and its political subdivisions (including municipal bonds);

(c) Interests in retirement plans including, without limitation:

(i) Pension, profit-sharing, annuity, or stock bonus plans exempt from federal income tax under 26 U.S.C. Sec. 401 of the federal internal revenue code;

(ii) Annuity contracts or custodial accounts described in 26 U.S.C. Sec. 403 of the federal internal revenue code;

(iii) Individual retirement accounts or individual retirement annuities exempt from federal income tax under 26 U.S.C. Sec. 408 of the federal internal revenue code;

(iv) Employee stock options, whether or not the options are subject to 26 U.S.C. Sec. 421 of the federal internal revenue code, and stock that would be received upon exercise of such options, unless the employee stock option, or stock to be received upon exercise, has been included in the taxable income of the holder of the employee stock option;

(v) Eligible deferred compensation plans described in 26 U.S.C. Sec. 457 of the federal internal revenue code;

(vi) Retirement plans provided by the federal government for its officials and employees including, without limitation, the civil service, foreign service, and armed forces;

(vii) Retirement plans provided by quasi-governmental agencies of the federal government for their employees;

(viii) Unfunded deferred compensation arrangements created and maintained by employers for employees unless the contributions to such arrangement have been included in the employee's income;

(ix) Retirement plans organized or created under the Washington state teachers' retirement system or public employees' retirement system; and

(x) Retirement plans, including any "supplemental" plans, organized or created by any Washington state county or municipal government for its officials and employees;

(d) Obligations of an employer to an employee for services rendered including, without limitation, deferred compensation not described in this subsection (1)(d) and fringe benefits;

(e) Cash and cash equivalents including, without limitation, checking accounts and demand deposits with banks and other financial institutions;

(f) Interests in charitable remainder trusts, charitable lead trusts, pooled income funds, and charitable annuities;

(g) Intangible personal property owned by or irrevocably held in trust for the exclusive benefit of a religious, educational, or charitable institution, no part of the net profit from the operation of which inures to the benefit of any private person;

(h) Assets representing mandatory reserve requirements imposed, by statute or otherwise, on depository financial institutions subject to the tax on intangible property;

(i) Stock of the federal reserve bank, the government national mortgage association, the federal national mortgage association, and other corporations and associations established by acts of congress of the United States;

(j) Mandatory deposits with the federal reserve bank or others required by statute or regulation;

(k) Federal or correspondent funds sold and securities and other intangible assets purchased under agreements to resell to the extent they are offset by federal or correspondent funds purchased and securities and other intangible assets sold under agreements to repurchase;

(l) Customer's liabilities to depository financial institutions on acceptances outstanding to the extent they are offset by liabilities of depository financial institutions on acceptances executed and outstanding;

(m) Receivables arising from the lease of tangible personal property provided that tangible property tax is due upon such property;

(n) Intercompany loans or advances from a parent corporation to a subsidiary, or vice versa, or from one subsidiary to another subsidiary, provided that the parent corporation owns, either directly or through other subsidiaries, more than ninety percent of the common voting stock of any subsidiary which is a party to any such transaction;

(o) Intangible personal property owned by an international banking agency or domestic international banking facility licensed to do business in this state;

(p) Interests in an estate or a trust, but not including a grantor trust as defined in subpart E, subchapter J of 26 U.S.C. Secs. 671 through 679 of the federal internal revenue code;

(q) Life insurance and annuity policies;

(r) Interests in qualified tuition plans, as defined in 26 U.S.C. Sec. 529 of the federal internal revenue code, and education savings accounts, as defined in 26 U.S.C. Sec. 530 of the federal internal revenue code; and

(s) Cash resulting from a line of credit on tangible property, collateral security loans, and long-term notes secured by real estate as these assets are already being taxed as tangible property.

(2) Processing of intangible property does not constitute control of that property and therefore is not taxable under this chapter.

(2) A husband and wife who file a joint intangibles tax return are allowed an exemption not to exceed four hundred thousand dollars with respect to intangible property owned by either of them or by them jointly.

(3) Custodians under transfers to minors acts, conservators, and guardians are allowed to claim the exemption provided in subsection (1) of this section on behalf of the minor or person on whose behalf the intangibles are held.

(4) No individual is entitled to more than one exemption under this section.

(2) Property must be valued under the general rule of subsection (3) of this section, unless provided otherwise in this section.

(3) The fair market value of property is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.

(4) Shares of stock of corporations or interests in subchapter K entities or options based on such shares or interest in subchapter K entities that are listed on any public stock exchange or are regularly traded over-the-counter must be valued at their closing prices on the exchange where the primary trading in the shares, interests, or options takes place. When closing quotes are not available, the bid price is considered the fair market value.

(5) Shares or units of companies or trusts registered under the federal investment company act of 1940, as amended, including mutual funds, money market funds, and unit investment trusts must be valued at the net asset value of such shares or units.

(6) Bonds regularly listed on any public stock exchange or regularly traded over-the-counter must be valued at their closing bid prices on the exchange where the primary trading in the bonds takes place.

(7) The fair market value of shares of stocks, bonds, or similar instruments of corporations, interests in subchapter K entities, and options based on such shares or interests that are not listed on any public stock exchange and are not regularly traded over-the-counter are presumed to be their book value, determined in accordance with generally accepted accounting principles.

(8) Accounts receivable must be valued at their face value less a reasonable allowance for uncollectible accounts.

(9) The fair market value of all notes and other obligations is presumed to be their unpaid balances.

(10) In determining the value of an interest in a subchapter K entity or a regulated investment company, there is deducted the value of any property that section 4(1)(a) or (b) of this act exempts from the tax levied by this chapter.

(11) Either the taxpayer or the department may present evidence to rebut the presumptions stated in subsections (7) and (9) of this section and establish a different fair market value of the property under the rule provided in subsection (3) of this section.

(2) If the sum of the fair market values of the taxpayer's intangible property that is not exempt under section 4 of this act exceeds the exemption to which the taxpayer is entitled, the taxpayer must file a return containing all the information required to compute the tax levied by this chapter including, without limitation:

(a) A detailed description of all intangible property owned by the taxpayer as of the last day of the calendar year ending with or within the taxpayer's taxable year for income tax purposes;

(b) The fair market value of each item of intangible property;

(c) A statement either that the fair market values have been determined in accordance with section 6 (4) through (9) of this act or that the taxpayer elects to rebut the presumptions in section 6 (7) through (9) of this act or elects to make the deduction allowed by section 6(10) of this act; and

(d) Other information required by the department as provided by rule or regulation.

(3) Payment of the tax levied by this chapter is due at the same time as payment of the taxpayer's income tax, without regard to any extension of time for filing the return.

(4) Taxpayers, who file a joint income tax return, may file a joint return with regard to all intangible property held jointly or individually by them. They must then be jointly and severally liable for the payment of the tax levied by this chapter.

(5) The person who is required to file a tax return for a minor or other incompetent must return the minor's or incompetent's intangible property and pay the annual tax on it.

(6) Except as provided in subsection (5) of this section, the principal must file a return with respect to property controlled or managed by an agent and must pay the annual tax on it. Any person including, but not limited to, an agent holding money belonging to others may make returns for the other persons and may pay the tax on the money as provided in this chapter when so authorized by the person owning the money.

(7) Any bank or trust company organized under the laws of this state or of the United States and having on deposit money subject to taxation under this chapter may make a return to the department of the aggregate amount of money on deposit with the bank owned by a taxpayer and may pay the tax on the money on the taxpayer's behalf when so authorized by the taxpayer. A return by a bank or trust company must state the aggregate amount of money it has on deposit which is subject to taxation under this chapter and which is owned by the taxpayer authorizing the bank to make the return. If a bank or trust company elects to make a return and pay the tax, any person having money on deposit on which the bank has made a return and paid the taxes are deemed to have made a return of his or her money for taxation if he or she states in his or her return the name of the bank or trust company authorized to make a return of his or her money for taxation and to pay the tax on the money. The amount of tax paid by any bank for a taxpayer must be charged to the account of the taxpayer.

(8) The taxpayer must transmit the return to the department with the taxpayer's remittance covering the tax payable for the preceding tax year. The department, for good cause shown, may, on the application of any taxpayer, extend the time by not more than ninety days for making the return but interest at twelve percent per annum must be added to the amount of tax due for the period of the extension. In collecting the tax levied under this chapter, the department may in special circumstances prescribe a different return. In addition to all other penalties and interest provided by law, every taxpayer failing to return for taxation all intangible personal property that is the taxpayer's duty to return as required by this chapter must pay a penalty, as part of the tax imposed by this chapter, in an amount equal to ten percent of the original tax on property not returned.

(2) On or before March 1st of each year, each corporation doing business in Washington state must file with the department a copy of any written notice to stockholders required by subsection (1) of this section.

(3) On or before March 1st of each year, each subchapter K entity doing business in Washington state must give a written notice reflecting the value of each class of its partnership interests as of the last business day of the preceding calendar year to each owner of an interest in the subchapter K entity of record whose mailing address as of such day was within Washington state.

(4) On or before March 1st of each year, each subchapter K entity doing business in Washington state must file with the department a copy of any written notice to partners required by subsection (3) of this section.

(2)(a) Once revenue generated as a result of the provisions in this chapter permits total per pupil funding in Washington state to meet or exceed the national average in per pupil funding:

(i) The legislature must provide school funding sufficient to bring average actual class sizes down to the national average for actual class sizes;

(ii) The legislature must provide school funding sufficient to permit school districts to provide full day kindergarten; and

(iii) The legislature must provide school funding for each school district sufficient such that the lowest funded school district in the state has per pupil funding within at least ninety percent of the average per pupil funding in the state (fully funding levy equalization).

(b) The objectives in (a)(i) and (ii) of this subsection, once fully funded, must become part of the definition of basic education.

(c) Once these three objectives are fully funded, any remaining funds must be placed in a special trust account to create the Washington state public bank. The primary purpose of this public bank must be to pay for the construction and repair of public schools at low or no cost to local school districts and local taxpayers, recognizing that the paramount duty to fund public schools includes not only funding the operating costs of public schools but also the construction and repair of public schools and further recognizing that our state suffers a school construction and repair backlog in excess of twenty billion dollars and leaving more than one hundred thousand students attending school in temporary portable shelters.

(a) All personal intangible property, up to two hundred thousand dollars per person, which is exempt from taxation;

(b) All retirement accounts that are exempt from taxation;

(c) All other intangible property that is exempt from taxation as specified in this chapter; and

(d) All other intangible property that is not exempt from taxation as specified in this chapter.

(2) All such intangible property is taxed at a uniform rate of one percent of fair market value as of the end of each calendar year.

(1) RCW 84.04.150 ("Computer software" and related terms) and 1991 sp.s. c 29 s 2; and

(2) RCW 84.36.600 (Computer software) and 1991 sp.s. c 29 s 3.

Sec. 17.  RCW 84.36.070 and 1997 c 181 s 1 are each amended to read as follows:

(1) Intangible personal property up to two hundred thousand dollars per person is exempt from ad valorem taxation.

(2) "Intangible personal property" means:

(a) All moneys and credits including mortgages, notes, accounts, certificates of deposit, tax certificates, judgments, state, county and municipal bonds and warrants and bonds and warrants of other taxing districts, bonds of the United States and of foreign countries or political subdivisions thereof and the bonds, stocks, or shares of private corporations;

(b) Private nongovernmental personal service contracts, private nongovernmental athletic or sports franchises, or private nongovernmental athletic or sports agreements provided that the contracts, franchises, or agreements do not pertain to the use or possession of tangible personal or real property or to any interest in tangible personal or real property; and

(c) Other intangible personal property such as trademarks, trade names, brand names, patents, copyrights, trade secrets, franchise agreements, licenses, permits, core deposits of financial institutions, noncompete agreements, customer lists, patient lists, favorable contracts, favorable financing agreements, reputation, exceptional management, prestige, good name, or integrity of a business.

(3) "Intangible personal property" does not include zoning, location, view, geographic features, easements, covenants, proximity to raw materials, condition of surrounding property, proximity to markets, the availability of a skilled workforce, and other characteristics or attributes of property.

(4) This section does not preclude the use of, or permit a departure from, generally accepted appraisal practices and the appropriate application thereof in the valuation of real and tangible personal property, including the appropriate consideration of licenses, permits, and franchises granted by a government agency that affect the use of the property.

Sec. 18.  RCW 84.36.110 and 2006 c 281 s 2 are each amended to read as follows:

The following property ((shall be)) is exempt from taxation:

(1) All household goods and furnishings in actual use by the owner thereof in equipping and outfitting his or her residence or place of abode ((and not for sale or commercial use, and all personal effects held by any person for his or her exclusive use and benefit and not for sale or commercial use.

(2) The personal property, other than specified in subsection (1) of this section, of each head of a family liable to assessment and taxation of which the individual is the actual and bona fide owner to an amount of fifteen thousand dollars of true and fair value.)) and all personal effects up to two hundred thousand dollars of personal tangible property and two hundred thousand dollars of personal intangible property, including but not limited to, personal tangible and/or intangible property used in part for a small business.

(2) This exemption ((shall)) does not apply to any private motor vehicle or mobile home. If the county assessor is satisfied that all of the personal property of any person is exempt from taxation under the provisions of this statute or any other statute providing exemptions for personal property, no listing of such property ((shall be)) is required. However, if the personal property described in this subsection exceeds in value the amount allowed as exempt, then a complete list of ((said)) the personal property ((shall)) must be made as provided by law, and the county assessor ((shall)) must deduct the amount of the exemption authorized by this subsection from the total amount of the assessment and impose taxes on the remainder.

Sec. 19.  RCW 6.13.030 and 2007 c 429 s 1 are each amended to read as follows:

A homestead may consist of lands, as described in RCW 6.13.010, regardless of area, but the homestead exemption amount ((shall)) may not exceed the lesser of (1) the total net value of the lands, manufactured homes, mobile home, improvements, and other personal property, as described in RCW 6.13.010, or (2) the sum of ((one hundred twenty-five)) two hundred thousand dollars in the case of lands, manufactured homes, mobile home, and improvements, or the sum of ((fifteen)) two hundred thousand dollars in the case of other personal property described in RCW 6.13.010, except where the homestead is subject to execution, attachment, or seizure by or under any legal process whatever to satisfy a judgment in favor of any state for failure to pay that state's income tax on benefits received while a resident of the state of Washington from a pension or other retirement plan, in which event there ((shall be no)) is not a dollar limit on the value of the exemption.

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