Governor Ferguson and Democrats in the legislature are about to propose a 9.9% income tax on "high earner" Washingtonians. Here are ten reasons why this proposal should be rejected.
10. It Won't Solve the Perpetual Deficit Cycle
Washington has collected $18 billion dollars in additional tax revenues since 2019 through various measures including the capital gains tax, the long-term care payroll tax, and increases to the business and occupation tax. The legislature spent all of it, then spent another $8.6 billion above what they collected, culminating in last year’s historic tax hike of over $9 billion.
Despite that, the state faces a $2.3 billion budget deficit this year.
This isn't a revenue problem; it's a spending problem. Every major tax increase has been followed by spending growth that outpaced the new revenue, creating a deficit-tax-deficit-tax cycle. There's no reason to believe a new income tax would break this pattern.
9. High Earners and Businesses Already Pay Their "Fair Share"
The "fair share" talking point collapses under scrutiny. According to the Department of Revenue's own data, the top 20% of Washington earners pay roughly 60% of all personal state and local taxes in absolute dollars. Yes, Washington's tax system is regressive as a percentage of income; lower earners pay a higher share of their income in taxes. But in actual dollars contributed to state coffers, high earners already shoulder the majority of the burden.
And it's not just individuals. In 2024, businesses paid half of all state and local taxes in Washington, and that's before last year's large tax increases on business are even incorporated in the data. This income tax proposal will likely apply to adjusted gross income, meaning a business that grosses over $1 million gets taxed even if expenses consume most of that revenue. Washington businesses already pay B&O tax on gross receipts regardless of profit. The proposal will likely include a credit for B&O taxes paid, but that credit will offset a fraction of the 9.9% rate.
8. Seattle Would Have the Highest Combined Tax Rate on Earnings in America
According to the Tax Foundation, the proposed 9.9% state income tax would stack on top of existing Seattle payroll taxes to yield a combined top rate of 18.037%. That's derived by adding the proposed income tax (9.9%), the WA Cares tax (0.58%), the Seattle Social Housing tax (5%), and the Seattle JumpStart tax (2.557%). That rate would be 22% higher than the next closest jurisdiction, New York City, making Seattle the single most expensive major city in America for high earners. With federal taxes included, high-income Seattleites would face an astronomical combined rate approaching 58%.
7. The "Millionaires Only" Promise Won't Last
Every broad-based income tax in American history started narrow and expanded. The federal income tax originally applied only to the very wealthy. California's income tax started with modest rates and now reaches deep into the middle class. Washington's own capital gains tax, which every other state and country in the world classifies as an income tax, proves the point.
Passed in 2021 as a flat 7% tax, lawmakers already expanded it in 2025 by adding a 2.9% surcharge on gains over $1 million, creating a new 9.9% top rate. While they haven't lowered the threshold (yet), the tax has already grown more aggressive in just a few years.
6. Budget Stability Will Suffer
Capital gains and high-earner income taxes swing wildly with market conditions. In boom years, revenue pours in, encouraging spending increases that become baked into the baseline. In bust years, revenue collapses, creating instant deficits. California's heavy reliance on income taxes from high earners causes budget swings from massive surpluses to massive deficits based largely on stock market performance. Washington's consumption-based system provides much more stability.
5. Washington Will Lose Its Competitive Advantage
The absence of an income tax has been one of Washington's key advantages in attracting businesses and talent. The migration of companies from Seattle to Bellevue following the JumpStart tax was just a preview. An income tax would eliminate one of the few remaining reasons for high-earning individuals and business owners to choose Washington over other states. In an era of remote work and increased mobility, state tax policy matters more than ever for location decisions.
4. Revenue Estimates Are Always Wrong
Revenue projections for taxes on the wealthy consistently overestimate actual collections because they fail to account for behavioral responses. High earners have options. They can time when they realize gains, restructure their compensation, relocate, or simply reduce taxable activity. Any honest analysis of the proposed income tax must account for the reality that people respond to incentives.
3. The Spending Problem Remains Ignored
Since 2013, real state spending, adjusted for inflation and population growth, has surged by more than 50%. The current deficit exists despite record revenue because spending decisions have consistently prioritized expansion over sustainability. Until lawmakers demonstrate they can live within existing means, giving them access to a new revenue source simply enables continued fiscal irresponsibility.
2. Voters Have Repeatedly Rejected Income Taxes
Washington voters have rejected income tax proposals at the ballot box ten times over the past century. The most recent attempt, in 2010, failed by a margin of nearly two to one. Attempting to impose one through legislative maneuvering rather than a direct vote to the people disrespects the clear and repeated will of the electorate.
1. It’s Unconstitutional
Washington's constitution has been consistently interpreted to require uniform taxation of property, including income (which courts have treated as property). The capital gains tax survived judicial review only through creative legal arguments that classified it as an "excise" tax rather than an income tax. A direct income tax would face immediate legal challenge, creating years of uncertainty and potentially requiring a constitutional amendment that voters have repeatedly rejected.