Ryan Frost is the director of budget and tax policy at Washington Policy Center. Mark Harmsworth is the small-business director at Washington Policy Center and a former Republican Washington state representative.
After a decade of unprecedented spending growth, Washington state Democrats, who have largely controlled the state government for 40 years, are now proposing an unconstitutional income tax on high earners to plug a multibillion-dollar budget deficit only a year after the largest tax increase in state history.
For decades, Washington state’s economic advantage was its lack of a personal income tax, allowing it to compete for talent and capital against states with larger economies such as California. That advantage is evaporating.
The Tax Foundation’s State Business Tax Competitiveness Index has seen Washington’s rank steadily erode over the past decade, falling from the sixth best business tax climate in the 2014 index to 45th this year. That collapse is due to many factors, including the addition of a capital-gains tax and a long-term care payroll tax, atop an already onerous business and occupation tax on gross sales.
An additional personal income tax would create a double-taxation environment, driving entrepreneurs toward income tax-free states such as Florida and Texas.
Washington built its economy by attracting companies such as Microsoft and Amazon with no income tax. (Amazon founder Jeff Bezos owns The Washington Post.) Seattle recently imposed new payroll taxes, and businesses responded by relocating to neighboring cities. An income tax would make that exodus statewide. High earners are already leaving Washington amid the recently enacted taxes, and those moving in earn substantially less than those departing.
This isn’t the first time an income tax has been proposed. It’s a century-old argument that Washingtonians have settled repeatedly. Since the state Supreme Court first ruled a graduated income tax unconstitutional in 1933, voters have rejected creating an income tax 10 times at the ballot box.
Even the state legislature acknowledged this as recently as 2024. In a rare bipartisan move, lawmakers affirmed Initiative 2111, an initiative to ban state and local income taxes sent to the legislature and signed by nearly 450,000 voters.
That commitment lasted less than a year. In mid-December, Senate Majority Leader Jamie Pedersen (D) said that the vote on the 2024 ban was just a “pie crust promise — easily made, easily broken.” He said the legislature could “amend it any time we want to” and advised the public not to take it “super-seriously.”
It’s rare for a legislative leader to openly dismiss a statutory commitment as meaningless political theater. Rarer still is what happened at a recent legislative event, where Democratic state Rep. Larry Springer had the integrity to be honest with the public when others in his caucus would not. Springer was asked directly, “Why should the public assume that it’s not gonna be an income tax on them by 2031?” His answer was clear: “You shouldn’t … We also just a year ago put in statute that an income tax is not going to be passed in Washington. … And within a year, we’re proposing an income tax. Yeah, you should probably be skeptical.”
Gov. Bob Ferguson’s (D) response to this credibility crisis is to say he’d support a constitutional amendment keeping the tax limited to millionaires. But this rings hollow when the income tax proposal itself violates the state constitution.
The current push is billed as a solution to a revenue crisis, but the ledgers tell a different story. This is a crisis of spending, not revenue. Over the past six years, Washington’s biennial operating budget has exploded from $102 billion to $166 billion, growth that far outpaces the state’s inflation and population growth combined.
The pattern is predictable: increase taxes, allocate the revenue to permanent new obligations and then point to the resulting “shortfall” as justification for the next tax hike.
The push for an income tax isn’t about making life easier for lower-income families. It would fund an expansion of government programs while keeping other regressive revenue streams largely intact. When the government increases spending by roughly two-thirds in six years, the problem isn’t that citizens aren’t paying enough. It’s that the government has lost the ability to say no.
States watching Washington’s experiment have been warned: There is no tax increase large enough to satisfy a government that increased spending by 15.8 percent between 2023 and 2025 when revenue was projected to grow by only 3.5 percent. Businesses will move. High earners will leave. And for a federal government facing its own deficits, the lesson is the same. The answer to overspending is restraint, not an accelerating cycle of economy-stifling tax hikes.
Washington is no longer a shining example of how to build a prosperous economy. It is a case study of how to dismantle one. To abandon its economic identity for an income tax is to step onto a fiscal treadmill that never stops — and as our own leaders have admitted, the middle class will be forced to run next.
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