Washington state has decided to go full steam ahead with a “millionaire tax.” The effects are already starting to show.
Washington legislators have passed a proposed millionaire tax, sending it to the desk of Gov. Bob Ferguson (D-WA), who has said he will sign it. Democrats hope the state Supreme Court will allow the tax to stand, striking down a 1933 decision that prevented such taxes targeted at certain earners. This new proposed tax would be a 9.9% tax on people with an income above $1 million. This would be the only income tax in Washington state.
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Washington has already been running wealthy residents out of the state. In 2023, the state imposed new taxes on capital gains, payroll for large employers, and “financial intangibles.” Those residents began moving to other states, such as Nevada or Florida, to avoid those new, targeted taxes. That included Amazon founder Jeff Bezos, who relocated to Miami over the capital gains tax.
This new wealth tax is restarting the relocation process. Starbucks CEO Howard Schultz is bailing on Washington in anticipation of this millionaire tax, joining Bezos down in Florida. Meanwhile, the defending Super Bowl champion Seattle Seahawks are preparing for a future in which signing free agents becomes more difficult. General Manager John Schneider has already said the tax will “sting,” as it will erase the “huge” advantage the Seahawks have over their California rivals.
Also of note, the Seahawks are currently in the process of being sold. Who is to say that a new, superwealthy owner won’t pull the team out of Seattle and take it to a more tax-friendly state?
How this cycle goes is that the wealth tax drives the wealthy out of the state, leading to lower tax revenue for the state, which must be made up elsewhere. That means taxes have to go up somewhere else, a cycle that results in everyone’s taxes going up.
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We know this because it is already happening in Washington. As I noted last year, Washington Democrats were working on a $12 billion tax package to make up for an estimated budget deficit of $10 billion to $12 billion or more, as the state had doubled its annual spending since 2013. That tax package did not include a wealth tax, but it didn’t matter: “While the wealth tax won’t be in the latest tax hikes, the package will still focus on increasing taxes for wealthy residents and big businesses. Washington has already struggled to keep high-earners in the state, with thousands moving out in recent years.”
Washington Democrats are hollowing out the state’s tax base because they refuse to stop spending money. Just as with California, New York, and Illinois, Washington is going to run out all of its high earners and continue to jack up taxes on the everyday residents who remain. Democratic politicians in major states, including Washington, are incapable of responsible tax and spending plans, and the result is that they run their states into the ground.