When a policy idea is sound, the facts speak for themselves. But when a policy idea is bad, it has to be sold, often using tactics and messaging designed to obscure the truth.
On February 3rd, House and Senate Democratic leadership held a press conference to do just that - sell their new 9.9% income tax proposal to the public. For nearly an hour, Representatives Fitzgibbon and Berg, along with Senators Pedersen, Frame, and Dhingra made the case for why Washington needs to adopt an income tax for the first time in state history.
I decided to list and fact check those claims.
Claim: Washington has a “structural revenue problem” exacerbated by federal policy changes.
Fact: Washington has a structural spending problem.
- Sen. Pedersen (19:41) "We experienced last year in dramatic fashion and then because of the federal cuts, we are experiencing, again, an unbalanced budget. We have a structural revenue problem in our budget that was not solved with $7 billion of cuts last year that we're right back to."
- What Sen. Pederson isn’t sharing is that since 2015, spending has wildly exceeded both inflation and population growth. Education spending has increased by 83%, healthcare by 111%, social services by 150%, and executive agency spending by 150%.
- The legislature increased appropriations for 2023-25 by 15.8%, even though revenues were only projected to grow 3.5%. When you choose to grow spending five times faster than income, the revenue isn’t the problem. This results in the deficit-tax-deficit cycle we are seeing today: Raise taxes → Spend the new revenue plus more → Face a deficit → Claim you need more taxes → Repeat.
- Sen. Dhingra (20:14) "Our tax structure is not sustainable. That was shown to everyone last year when we had to balance the budget." Our tax structure supported adding $14.8 billion in new policy spending since 2021. Income taxes are also vastly more volatile than sales taxes. Capital gains tax revenues swings wildly based on stock market performance, particularly during recessions. A tax structure that relies on income taxes is not "sustainable."
Claim: The federal government’s passage of HR1 is all the more reason we need an income tax to fill financial gaps.
Fact: Legislators claimed we had a deficit before HR1 passed. The federal policy changes are a convenient talking point, not the actual driver.
- Sen. Frame (33:35) "The passage of HR1 for our state looks like a $90,000 tax break for the highest income earners." Legislators were claiming we had a budget crisis before HR1 passed. The shortfall is $2.3 billion in 2025–27 and $4.3 billion over the four-year outlook. So which is it? Is the income tax necessary to close the deficit, or is it a response to federal tax cuts?
- Rep. Fitzgibbon (43:57) "HR1 is a major change. The massive tax cuts on the wealthy that Congress passed, the massive shifts on to state government that they forced our way, compelling us to build new IT systems to kick more people off food assistance." Building IT systems is a normal administrative cost. This is fearmongering designed to make a routine expense sound like a crisis requiring $3.5 billion in new taxes.
Claim: This tax is a “win-win-win” that will fund tax relief for small businesses and working families.
Fact: The "win-win-win" here is entirely for government. More revenue, more spending, more baseline budget to defend.
- Rep. Fitzgibbon (00:55): "By asking the wealthiest income earners in our state to pay a portion of their income to support our shared needs, to support education, health care, community safety, we think this is a real opportunity for a win win win for our state."
- Democrat leadership claims cumulative tax relief would fall into the 20% range: Sen. Pedersen (09:31) "When you put together the sales tax reductions for grooming and hygiene products, the working family's tax credit expansion and funding, the small business credit and the doubling of the small-business credit, and money to end the surcharge a year early, then it's in the 20% range we think." This is patently false. The amount is closer to 5%.
- Even if it reaches 20%, let's do the math. If 20% of $3.5 billion goes to "tax relief," that's $700 million. Which means $2.8 billion goes straight to new spending that becomes the baseline for the 2029-31 budget. Five years from now, legislators will claim they need even more revenue to avoid "devastating cuts" to that new baseline.
- Even Governor Ferguson is publicly skeptical, telling media, “I have repeatedly insisted that a significant percentage of the revenue generated by the Millionaire’s Tax go back into the pockets of Washingtonians to make life more affordable. This proposal does not come close to doing that.”
- Sen. Pedersen (17:35) " We are not interested in increasing taxes on working people. And that's why it has never happened before." Democrats have absolutely increased taxes on working people. Just to name a few:
- Sales tax increases that hit everyone who buys anything
- Gas tax increases (multiple times) that hit everyone who drives
- Long-term care payroll tax that hits every worker in the state
- B&O tax increases that get passed on to consumers through higher prices
- Property tax levy increases that hit homeowners and renters (through higher rents)
- Vehicle registration fee increases
- Ferry fare increases
- Utility taxes that hit everyone who turns on the lights
- Transportation benefit district taxes
- Parks and recreation levies
- Tire fees
- Plastic bag fees
Claim: A $2 million earner would only have a “blended rate” of 4.95%, making us “better than California.”
Fact: Marginal rates, not blended averages, drive economic behavior.
- Sen. Pedersen (12:47) "The rate for the first million dollars of income is zero, so you have to get up, I mean, if you had $2 million of income, your blended rate is going to be 4.95%."
- When a business owner considers expanding, they don’t look at their average blended tax rate. They look at the 10% the state takes off the top of every new dollar earned.
- Being “better than California” is a low bar and ignores the combined tax burden that ordinary people pay attention to. When you combine federal income tax (37%), state income tax (9.9%), Social Security and Medicare, and our existing capital gains tax, the marginal rate in Seattle would exceed 57%. That would make Seattle the highest-taxed city in America.
- Businesses are already fleeing Seattle for Bellevue to avoid local payroll taxes. A state income tax would simply push that flight across state lines to Florida, Texas and Tennessee. High-tax states like California, Oregon and New York are losing residents and businesses. They represent a warning – not an example for us to emulate.
Claim: This tax is only for the “wealthiest” and will “never” expand to the middle class.
Fact: When asked repeatedly Democrats they want to expand this tax to everyone, Democrat lawmakers have deflected by saying that’s not the policy before them today, and that they “cannot bind future legislatures.”
- Rep. Fitzgibbon (39:13) "We're not going to bind future legislatures, but that's not a proposal that we support." Ironically, Rep. Fitzgibbon’s statement exposes the “millionaires only” claim as a meaningless sales pitch. Not “binding a future legislature” is a policy choice, not a mandate. Lawmakers frequently create binding policy for debt and spending. By choosing not to codify protections for middle-income earners today, Democrats ensure that a future legislature has a tax system ready to be expanded the moment the next budget deficit is announced.
- Sen. Pedersen (18:12) "There's just no support from our constituents or from our colleagues for an income tax on low income earners." There wasn't support for a capital gains income tax in 2013 either. Then proponents spent nearly a decade building the case, and it passed. Right now there's "no support" for lowering the threshold. But two years from now, when the deficit is even bigger because lawmakers spent the new revenue, they'll argue that $750,000 earners can afford to pay their fair share too.
- One Democrat lawmaker has been honest enough to say his own party can’t be trusted on this issue.
- Every state that started with a high-earner income tax eventually expanded it. The promise is always "we'll never lower the threshold." The reality is always that thresholds get lowered when legislators need more revenue.
Claim: An anti-referendum clause is necessary because the income tax revenue is needed for government operation.
Fact: The income tax would not generate revenue until 2029.
- Sen. Pedersen (19:51) "This revenue is needed for state government and its existing institutions. That is literally the language out of the constitution." A tax that won't collect a dollar until 2029 is not an emergency. Washingtonians have voted against income taxes 11 times. This clause has been added to the bill because the sponsors know what would happen if voters were asked a twelfth time.
- Sen. Pedersen (22:13) "We fully expect that the voters are going to be weighing in on this, right? An initiative to the people this fall." If lawmakers are confident voters will approve it, why include the anti-referendum clause that prevents them from voting on it before it takes effect?
The constituency for tax increases is persistent, organized, and fueled by those who directly benefit from government spending. To break the deficit-tax-deficit spending cycle that is making Washington state a more difficult place to live and do business, the public needs to be just as organized and even more persistent.
Washington Policy Center will continue to challenge these misleading sales pitches and narratives with data. We invite you to stay informed, share the facts, and join us in holding the legislature accountable to the taxpayers they serve.
