Washington State Legislature Passes ‘Millionaire Tax’

I was today years old when I found out the state of Washington has no income tax whatsoever. As you can imagine, that doesn’t help when it’s trying to balance the budget. In an effort to manage the state’s growing deficit, the state legislature has passed a bill imposing what’s been labeled a “millionaire tax” on high earners. 

According to KUOW, the 51-46 vote came after an intense 25-hour debate. Rep. April Berg (D-Mill Creek), who sponsored the bill in the House, defended its need during the lengthy debate. “As a state, we’re struggling to fund these vital services, and we are in desperate need of structural tax reform,” Berg added. “The ‘millionaires tax’ before you, Madame Speaker, is a way to change that.”

The “millionaire tax” would impose a 9.9% income tax on families who earn over $1 million annually. The tax would apply only to income above the $1 million threshold. So if someone makes $1 million flat, they’re still not paying income taxes. If that son of a gun is making $1,000,010, though, they’d better get ready cause the tax man is coming. 

“It’s a really big day,” said Rep. Joe Fitzgibbon (D-West Seattle). “This has been a lot of work that’s gone into this tax reform, and we think it’s going to really pay dividends for Washingtonians.”

Washington Gov. Bob Ferguson has signaled his support for the bill and intends to sign it once it reaches his desk. Ferguson was initially hesitant about the bill, but was swayed when an amendment was added earmarking 5% of the revenue from the tax for child care and early learning programs. 

The bill also expanded the Working Families Tax Credit to higher-income families, and pledged to fund free breakfast and lunch for all public school children with the money generated through the millionaire tax.

“I was open to lots of ideas. The key north star that I said over and over was dollars back to the people,” Ferguson said after the vote. “I made it very clear that I was less focused on specific ideas, I put a lot of ideas out there, and for me it was just the amount, dollars back to the people.”

Republicans in the state legislature largely opposed the measure, with concerns that the millionaire tax would eventually be expanded to Washingtonians of all income groups. “While the title of the bill is a tax on millionaires, it’s my belief this is a tax on Washingtonians,” Rep. Joshua Penner (R-Orting) said. “It just matters when it’s going to apply to which Washingtonian.”

While less than 1% of Washington’s population will be affected by the tax, Republicans were concerned it would cause the millionaire class to flee the state. Howard Schultz, the former CEO of Starbucks, announced he would be moving from Washington to Florida as lawmakers were passing the bill. While he didn’t explicitly list the tax as a reason for the move, the timing is more than a little suspicious. 

“If a Starbucks or a Boeing or other people start to diminish their presence in Washington State, guess what happens?” Andrew Barkis, a Republican lawmaker from Thurston County, said during the debate period. “Those high-paying jobs? They are going to leave. It is happening.”

Should it be signed into law, the bill wouldn’t take effect until Jan. 1, 2028, with the first round of taxes collected in 2029. That timeline isn’t a complete lock, though, as the law is expected to face legal challenges and possibly a Republican ballot initiative.

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