Key Takeaways
- Washington would have 6,100 fewer jobs and 1,400 fewer new businesses annually. Washington's economic growth will slow. The report estimates the tax could reduce new employer businesses by 11.9%, which is about 1,400 fewer new businesses and about 6,100 fewer jobs each year.
- Washington will have nearly 8,000 fewer jobs in 2028. The report estimates about 7,800 fewer full-time jobs in 2028 and about 18,800 fewer by 2036.
- The state collects more, but the state economy will produce less. The tax would raise an estimated $2.6 billion in 2029 and $3.3 billion in 2036. For each additional $1 the state collects, the economy would produce about $1.90 less in 2028 and about $2.50 less by 2036.
- The state would produce almost $5 billion less in goods and services. Washington’s economy will slow. In 2028, the state would produce about $4.9 billion less in goods and services than it would without the tax. By 2036, the yearly gap grows to about $8.3 billion.
- Consumer spending would be $3.6 billion lower in 2028.
- Business Investment would be $3.1 billion lower in 2028.
Introduction
Washington's 9.9% income tax on earnings above $1 million (Senate Bill 6346) would bring in money for the state but leave Washington with fewer jobs, less economic growth, and less business investment than it would have had without the tax.
The economic damage estimated by the report is based solely on the current threshold of the tax. Given the law lays the groundwork for future reductions of the threshold for the tax and the historic trend of income taxes broadening once passed, future damages could exceed current estimates.
In each of the last three budget cycles, Washington state adopted spending that was more than the tax revenue it expected to collect: about $1.9 billion more in 2019-21, $2.6 billion more in 2021-23 and $4.1 billion more in 2023-25.
Ongoing budget pressures require more than another source of tax revenue. The state should address spending growth and commitments, and lawmakers should promote spending discipline, revenue stability, and a competitive tax environment.
