The so-called “millionaires tax” passed the Washington House Tuesday night after more than 24 hours of debate, teeing up the bill for final approval today or tomorrow.
The controversial measure creates a 9.9% tax applied to taxable, personal annual income that exceeds $1 million. Washington is currently one of nine states without an income tax and the move is expected to face challenges in court and as a ballot measure.
Supporters of Senate Bill 6346 say it will bring some fairness to a regressive tax code that has relied heavily on sales, property and business taxes. The legislation includes tax benefits for low-income families and small businesses.
A final fiscal analysis has not been released, but the bill is expected to generate $3.5 billion or more each year in tax revenue beginning in 2029. State leaders this year have been trying to plug a more immediate $2 billion budget gap.
“The Millionaires’ Tax will apply to less than one half of one percent of Washingtonians, but make life more affordable for millions. I look forward to signing it,” said Gov. Bob Ferguson in a statement.
But some tech leaders and entrepreneurs worry it could undermine their sector by souring Washington’s relatively favorable tax laws for startup founders, investors and high-wage earners.
That concern took a high-profile form last night as Howard Schultz, the billionaire former CEO of Starbucks, disclosed on LinkedIn that he and his wife, Sheri, have relocated to Miami. While Schultz —who is retired — framed the move as a desire to be closer to family on the East Coast, he pointedly noted his “hope that Washington will remain a place for business and entrepreneurship to thrive.”
Schultz’s family office will follow him to Florida, though his foundation will stay in Seattle. The move underscores warnings from critics like Kris Johnson, president of the Association of Washington Business, who called SB 6346 a “seismic shift” in the state’s tax structure.
“By adopting a state income tax, Washington is giving up one of our primary competitive advantages we have had over other states and regions,” Johnson said, adding that the state is already expensive for families and employers and could push businesses to start, grow or move elsewhere.
Others took a critical but measured tone. Rachel Smith, president of Washington Roundtable, a nonprofit representing major employers, credited lawmakers for for repealing an expanded sales tax on services that was passed last year and scaling back the estate tax.
She highlighted the need for further changes to the tax code to improve the state’s “economic competitiveness” and “long-term budget sustainability.”
“As we have said before, we see this as the beginning — not the end — of real, earnest work to implement the changes Washington needs,” Smith said. “It is imperative that this work happen quickly.”
SB 6346 marks the first time in decades that state lawmakers have pursued a personal income tax aimed at high‑income residents.
The bill passed the House with a 51-46 vote. No Republican lawmakers supported the measure and eight Democrats voted against it. One member was excused. It now returns to the Senate for agreement, and then moves to the governor. The legislative session is scheduled to end tomorrow.
Related:
- Opinion: The wrong tax at the wrong time for Washington
- Opinion: You couldn’t pay me to leave Washington state, and I’d pay more to stay
