Voters in Washington state are set to decide the future of a recently enacted "millionaire tax," a 9.9% income tax imposed on earnings exceeding $1 million. Signed into law in March, the tax is now facing a repeal effort led by conservative groups ahead of the November ballot. The initiative seeks to overturn the tax, with proponents warning that it could set a precedent for taxing lower income brackets over time.
The tax targets approximately 20,000 of the state’s highest earners and is projected by its supporters to generate around $3.5 billion annually. These funds are intended to support essential services such as education and healthcare, as well as expand tax credits and sales tax exemptions. Advocates argue that the measure helps correct the state’s historically regressive tax system, which favors lower taxes on wealthier residents despite a heavy reliance on sales and property taxes.
Washington is home to significant tech wealth, including billionaires like Bill Gates, Steve Ballmer, and Jeff Bezos, who until recently resided in the state. Similar wealth taxes have been adopted in Massachusetts, Maine, New York, and Hawaii, while California voters will soon decide on a separate proposed tax targeting billionaires’ wealth.
Governor Bob Ferguson has expressed support for the millionaire tax but rejected any attempts to extend it to households earning less than $1 million. The tax is part of a broader progressive revenue shift in Washington, where previous efforts to impose income taxes were blocked. The state has lacked a personal income tax for decades, relying primarily on sales and property taxes. A capital gains tax introduced in 2021 on earnings over $250,000 survived legal and political challenges, signaling increased voter openness to taxing investment income.
Opposition to the millionaire tax has been spearheaded by conservative political action committees such as Let’s Go Washington, founded by hedge fund executive Brian Heywood. Heywood, who relocated his business from California to Washington in 2010 partly due to the state’s previous tax structure, argues that the tax threatens the state’s economic competitiveness and could drive wealthy residents to leave. He contends that many high-net-worth individuals have already exited Washington for states with lower taxes.
Research from the Seattle-based Economic Opportunity Institute estimates that about 2% of taxpayers affected by the millionaire tax might relocate. Heywood has invested substantial personal funds in efforts to repeal the tax and other ballot measures, some of which have drawn controversy, including a proposal to prohibit transgender girls from participating in girls’ sports at schools. This association has complicated opposition efforts, with some factions reportedly seeking to distance themselves from Heywood’s involvement.
A separate campaign to repeal the tax, featuring former Republican Congresswoman Jaime Herrera Beutler as a spokesperson, was also launched in July. The state Supreme Court is scheduled to review the constitutionality of the tax early next year, a proceeding that could significantly influence its implementation.
Recent polling indicates that a majority of Washington voters oppose repealing the millionaire tax, with 57% against the repeal and growing support for broader income tax measures that could extend below the $1 million threshold. Supporters caution that repealing the tax would force lawmakers to resort to less equitable revenue options such as raising sales taxes or imposing payroll taxes.
If the tax withstands legal and political challenges, state officials have suggested it could pave the way for reforming other regressive taxes. Advocates highlight the absence of major business backing for the repeal initiative, while labor unions have invested heavily in defending the tax, contributing over $6 million in campaign funds. Meanwhile, opponents are exploring additional strategies to limit union influence over political financing related to these measures.