Lawmakers in Washington State have agreed to create an income tax on high earners, called a “millionaires’ tax” by its supporters, that could generate close to $4 billion annually if signed by Gov. Bob Ferguson, a Democrat who has said he backs the bill.
Critics worry it could lead to a wealth exodus — a concern underlined this week when one of Seattle’s wealthiest residents, the former Starbucks chief executive Howard Schultz, said on social media that he was moving to Florida, following the Amazon founder Jeff Bezos, who left Washington in 2023.
The measure to create the state’s first income tax passed on Wednesday evening, one day before the end of the 2026 session. It would impose a 9.9 percent annual tax on personal earnings over $1 million, which is projected to affect about 20,000 households.
Washington is one of just nine states that does not tax income, and economists have consistently ranked the state’s current model, which relies on sales and business taxes, as among the most regressive in the country.
The tax structure also has not kept up with spending, and state lawmakers are currently trying to close a budget gap estimated at $10 billion to 12 billion over the next four years.
Lawmakers plan to spend the bulk of the money generated by the new tax on core government services. After months of negotiations over the precise details, they also agreed to devote 5 percent of the new revenue to child care programs and early learning opportunities and, to help ensure the governor’s support, to expand a tax credit for lower-income families.
Wealthy residents and entrepreneurs have long been drawn to Washington because of its lack of an income tax.
“If a Starbucks or a Boeing or other people start to diminish their presence in Washington State, guess what happens?” said Andrew Barkis, a Republican lawmaker from Thurston County, during the State House’s 24-hour debate on the tax this week. “Those high-paying jobs? They are going to leave. It is happening.”
In a LinkedIn post announcing his move, Mr. Schultz wrote that he hoped “Washington will remain a place for business and entrepreneurship to thrive.”
Trump Administration: Live Updates
Updated
- Food stamp recipients sued over rules against candy and sugary drinks.
- The Trump administration wants to strip protections from some 350,000 Haitians.
- A V.A. initiative could force homeless veterans into institutional care.
The millionaires’ tax would not begin generating revenue until 2029, and even that timeline could slip. Supporters of the tax anticipate an effort to block it by ballot measure and legal challenges.
A legal fight could provide a chance to overturn a 1933 decision in which the Washington Supreme Court ruled that income counts as property. That decision has effectively blocked a graduated income tax in the state, whose Constitution requires property taxes to be “uniform.”
Voters in Washington have rejected an income tax 10 times since then. But public sentiment in the state has been turning against the wealthy.
In 2024, voters refused to overturn a capital-gains tax on stock and bond profits over $250,000, which legislators had created several years earlier. Last fall, residents of Seattle and several of its suburbs elected slates of progressive candidates who talked openly of wealth redistribution.
During floor debates this week, Democratic lawmakers noted that many of the state’s affluent taxpayers had benefited from President Trump’s federal tax cuts.
“Maybe they won’t mind contributing here at home,” said Brianna Thomas, a Democratic State House member from West Seattle. “Maybe they’ll be happy to stay here and invest in the community that has given them the opportunity to thrive.”
Anna Griffin is the Pacific Northwest bureau chief for The Times, leading coverage of Washington, Idaho, Alaska, Montana and Oregon.
The post A State of Wealthy Entrepreneurs Passes a ‘Millionaires’ Tax’ appeared first on New York Times.
