In the midst of Washington State’s 2026 legislative session, Democrats have introduced Senate Bill 6346 and House Bill 2724, proposing a 9.9% income tax on earnings above $1 million. Dubbed the “millionaires tax,” this measure aims to generate billions for education, healthcare, and tax relief. However, despite its appealing rhetoric, the proposed millionaires tax will ultimately accelerate out-migration, stifle business growth, and set the stage for broader taxation, proving detrimental to the state’s economy and residents.
Proponents argue that the tax addresses Washington’s regressive system, where low-income households shoulder a disproportionate burden through sales and property taxes. By targeting fewer than 1% of households—those earning over $1 million—it promises fairness, with revenue projected at $3.5–3.7 billion annually starting in 2029. This could fund critical services like schools and health programs while offering relief, such as expanded sales tax exemptions for essentials and higher credits for small businesses. Supporters, including Gov. Bob Ferguson, emphasize shifting the load to the wealthy, potentially making life more affordable for working families.
Yet these benefits are overshadowed by severe drawbacks. Critics from the Washington Policy Center (WPC) warn that the tax would drive businesses and jobs out of state. High progressive rates have led to chronic deficits in places like California and New York, where affluent residents flee to low-tax havens. In Washington, IRS data shows a net loss of high-earning households, with 222 millennial households (AGI over $200,000) departing in 2021-2022 alone. This out-migration erodes the tax base, as even small losses among high earners—who contribute disproportionately—can slash revenue. Examples abound: Jeff Bezos relocated to Florida, and Elon Musk shifted operations to Texas, citing tax burdens. For businesses, particularly pass-through entities like LLCs, the tax hits profits directly, incentivizing relocation. A $5 million company could face a $100,000 bill on reinvested earnings, prompting exits that cost jobs and innovation.
The WPC outlines ten compelling reasons against such a tax, many directly applicable here. It’s potentially unconstitutional under Washington’s uniform taxation requirement, risking court battles. Voters have rejected income taxes ten times, including by a 2-1 margin in 2010, viewing this as a disregard for public will. It ignores rampant spending growth—over 50% since 2013—fueling perpetual deficits rather than solving them. Revenue projections often fail by overlooking behavioral changes, like restructuring income or reducing activity. Washington’s no-income-tax edge attracts talent; losing it amid remote work trends could mirror company flights from high-tax states. Volatile high-earner income would destabilize budgets, unlike stable sales taxes. The “millionaires only” pledge is illusory history shows expansions, as with federal and California taxes, or Washington’s capital gains rate hike from 7% to 9.9%. Seattle’s combined rates could hit 18%–22% higher than New York City’s—making it America’s priciest for top earners. High earners already pay 60% of taxes, and businesses bear half before add-ons. Ultimately, it won’t end deficits, as $18 billion in new revenues since 2019 still yielded shortfalls.
Let’s Go Washington, which spearheaded Initiative 2111 in 2024 to ban income taxes, sees this proposal as a direct betrayal. That voter-backed law prohibited such taxes, yet lawmakers now seek to amend it, exempting millionaires and paving the way for more. This “slippery slope” could ensnare middle-class families, as admitted by some Democrats.
In conclusion, while the millionaires tax dangles equity, its risks far outweigh rewards. Washington thrives without it—let’s keep it that way to preserve jobs, innovation, and fiscal health.
Footnotes
- Harmsworth, M. (2026, February 3). Washington’s proposed income tax – driving businesses and jobs out of the state. Washington Policy Center. https://www.washingtonpolicy.org/publications/detail/washingtons-proposed-income-tax-driving-businesses-and-jobs-out-of-the-state
- Frost, R. (2026, January 30). Top 10 reasons a state income tax is a bad idea. Washington Policy Center. https://www.washingtonpolicy.org/publications/detail/top-10-reasons-a-state-income-tax-is-a-bad-idea
- McCarthy, E. (2026, February 3). Washington state mulls a millionaire’s tax. Governing Magazine. https://www.governing.com/finance/why-washington-state-is-mulling-a-millionaires-tax
