After a grueling debate at the Washington State Legislature, lasting more than 24-hours in the House and a landslide vote in the Senate, a proposed income tax bill, colloquially known as the “Millionaire’s Tax” has passed a major legislative milestone.
The bill aims at instituting the state’s first income tax to fund government services and, potentially, childcare. Most residents in Washington State are in support of the tax, but it is expected to drive out some of the wealthiest business owners.
The debate lasted more than 24 hours in the House earlier this week with lawmakers taking hour-long nap breaks throughout. It passed through the house with a 27-21 concurrence vote almost immediately, with the debate focusing on the long-term impacts of the bill.
KUOW reported, “The tax would take a 9.9% cut of all household incomes over a million dollars. It’s estimated to impact about 20,000 households in the state and generate around $3 billion annually.”
“If an individual earns exactly $1 million in adjusted gross income, that taxpayer will owe no additional taxes as a result of this bill. However, the next dollar of income would be taxed at 9.9 cents,” said Forbes. Those making under a million dollars in income a year do not have to be worried, and will still benefit from a lack of income tax.
The tax has passed, but it will not be going into effect until Jan. 1, 2029, impacting 21,000 residents across the state. The current budget gap that state lawmakers are trying to bridge is estimated at $10 to $12 billion over the next four years. It is now on its way to Gov. Ferguson’s desk and expected to be signed into law.
Washington State has never had an income tax, relying on property and sales tax for revenue. Economists have consistently ranked Washington’s tax structure as the most regressive in the nation, which has made it a haven for the countries most wealthy. This tax bill is expected to change that, possibly driving out high-income earners.
Former CEO of Starbucks, Howard Schulz announced he and his wife have relocated to Florida, following another Seattle-based business leader, Jeff Bezos, who also departed for the Sunshine State in 2023.
“If a Starbucks or a Boeing or other people start to diminish their presence in Washington State, guess what happens?” asked 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.”
Many, however, are in favor of the tax bill. Recent local elections show a shift in public progression; many candidates won on a platform of wealth distribution, and this tax is estimated to bring in $4 billion annually.
The bill also expanded eligibility for the Working Families Tax Credit and doubled the business and occupation tax credit for small businesses while increasing its threshold. It also provided a sales tax exemption for grooming and hygiene products.