Washington State Lawmakers Join Other States In Proposing A Millionaire's Tax

Democratic lawmakers in Washington state introduced a proposal Tuesday to impose a tax on residents whose annual incomes exceed $1 million, becoming the latest state to weigh a millionaire's tax.

While legislators in Washington have introduced similar legislation in the past, Democrats claim the outlook for passage has never been this good. A recent poll showed that 61 percent of all Washingtonians — and 54 percent of Republicans — support an income tax on high earners. The proposed legislation would place a tax of nearly 10 percent on residents with annual incomes exceeding $1 million.

Democratic Washington House Majority Leader Joe Fitzgibbon says his caucus’ optimism comes in part because the Trump administration’s One Big Beautiful Bill Act added more tax breaks for wealthy people who have non-standard income. Washington remains one of the few states without an income tax.

“The magnitude of the tax cuts, both on individuals and on businesses that the federal government … really stokes the fires of people's anger at both the federal administration and [at] wealthy people that they don't think are paying their fair share,” Fitzgibbon told POLITICO ahead of the bill introduction.

First-term Democratic Gov. Bob Ferguson endorsed the legislation last December and championed it in his State of the State address in January. And Democrats, who control the state Legislature and governor’s office, are promoting the education and health care services the tax could fund, as well as possible tax reductions for lower- and middle-income earners they believe they could provide with the additional revenue.

Republicans are attacking the bill for failing to solve the state’s current $2 billion budget deficit — returns from the millionaire's tax would not be seen for a few years — and for taking more resources to enact.

Washington Senate Republican Leader Sen. John Braun, who is challenging Democratic Rep. Marie Gluesenkamp Perez in Washington’s 3rd District this November, said it may be hard for Democrats to get a complex tax bill through the Legislature in a short session, even with the majority.

Washington is not alone in considering a tax on high earners or a wealth tax this year: California and Rhode Island are also considering such legislation, and there are pushes in other states like Illinois to get similar bills introduced. Massachusetts and Minnesota enacted their own income taxes on high earners in recent years.

Each proposed state millionaire's tax is slightly different in whom it taxes and how much, but legislators in all these states cite Trump’s tax cuts for millionaires and the administration’s cuts to services like Medicaid as motivating factors for legislators and for voters.

In Rhode Island, for example, legislators last year introduced a tax on earners making over $625,000, and Democratic Gov. Dan McKee’s proposed budget this year included a 3 percent surtax on income over $1 million. While Rhode Island legislators have tried to pass this in the past, proponents say the federal funding cuts out of Washington, D.C., have changed the outlook.

“What I believe that it makes [the outlook this year] different is the Trump cuts — they're already starting to hurt us,” said Rhode Island state Rep. Karen Alzate, explaining that her state depends heavily on federal money. “We don't have the financial means to do this ourselves, to fund [the gaps] ourselves.”

State Democrats introducing similar bills shoot down concerns that high-income earners will leave with new or additional taxes. Alzate said Rhode Island is already losing companies to states with higher taxes and more services nearby, while Fitzgibbon said that cutting education and health care at the state level could drive away companies that pick Washington because of the quality of life for their employees.

Meanwhile in California, billionaires are already threatening to leave the state, and Gov. Gavin Newsom is staunchly against the proposal, which may appear on the November ballot.

If the bill passes out of Washington’s Legislature this year, it will likely go before voters before becoming law. A ballot measure to repeal the tax law is expected to be proposed, and voters will have the ultimate say in November — another reason why strong polling was so important.

“We just want to be sure that the public is on board with this approach,” Fitzgibbon said. “It looks like, from what we've seen so far, that they are.”