Individuals who dwell and work in Washington state don’t currently pay any revenue tax. However in just a few years, a small group of residents can be topic to 1: Washington lawmakers just lately handed a invoice that might impose a 9.9% tax on revenue earned above $1 million, which fits into impact on January 1, 2028.
The so-called millionaires tax may increase as much as $4 billion yearly for the state, income that Governor Bob Ferguson has said may go towards free breakfast and lunch for college students, and to working households by way of a tax credit score. (Ferguson has but to signal the invoice, which landed on his desk March 13, however has pledged to.)
The tax is a part of a wave of bills that lawmakers have been contemplating this yr to rein in wealth hoarding and tackle the widening problem of inequality. And to some “excessive internet price” people, it’s lengthy overdue.
‘It’s about time’
Judy Pigott, for instance, is a member of Patriotic Millionaires, a gaggle of rich people who advocate for extra progressive taxes. She’s additionally a long-time Seattle resident. When Pigott first heard in regards to the invoice, her response, she says, was, “It’s about time.”
“I feel it’s necessary for individuals who have larger revenue to pay a justifiable share, which, in my thoughts, means we must always eliminate loopholes and tremendous tax benefits,” she says. “Those that have [wealth], they do have a social contract—unwritten, however necessary—to the entire.”
When Pigott, 76, lived in a distinct state, her uppermost earnings have been taxed at nearly 80%. “A 9.9% tax,” she says, “appears minor to me.”
People’ efficient tax charges will truly be decrease than that price, as a result of the 9.9% applies solely to any revenue above $1 million. On a $1.2 million revenue, for instance, solely $200,000 is topic to that tax.
The invoice additionally applies to solely a small subset of the inhabitants: lower than 0.5% of Washingtonians can be impacted.
Will wealthy folks flee?
Nonetheless, there are opponents. Critics of the invoice have raised issues that it may push wealthy residents to flee the state, and even hurt recruitment efforts for Seattle sports activities groups.
Pigott has no plans to depart Seattle, and she or he doesn’t anticipate others doing so. “Whereas there could also be somebody who leaves Washington state, the explanations are unlikely to be because of this tax, actually not as a singular problem,” she says. “Extra probably, I’d say, they need sunshine.”
Analysis backs Pigott’s ideas on this.
“The literature simply doesn’t actually assist the concept that folks migrate due to their taxes going up,” says Omar Ocampo, a researcher for the Institute for Coverage Research’s program on inequality and the frequent good.
In 2023, for instance, a millionaires tax went into impact in Massachusetts, and thus far there doesn’t appear to have been a mass exodus of millionaires.
Precise information from the Inside Income Service (IRS) on revenue earners isn’t but out for that yr, however two different proxies trace to little impact, Ocampo says: the variety of millionaires within the state by internet price has grown since then, and income from the tax has surpassed projections yearly thus far.
Many headlines have been written about former Starbucks CEO Howard Schultz leaving Washington for Florida, however he’s additionally commented that he has entered the “retirement section” of his life—and Florida is likely one of the top states in terms of attracting retirees.
And in terms of sports activities, former Patriots coach Invoice Belichick had stated that the Massachusetts millionaires tax would have an effect on the group’s recruitment efforts, however as Ocampo notes, that group made it to the 2026 Tremendous Bowl.
California additionally has the next total tax burden than Massachusetts, and sports activities groups there are nonetheless profitable.
Washington state may ‘be a trailblazer’
These misconceptions, Ocampo says, emanate from what he calls the “wealth protection business,” which he describes because the opposition to, principally, any progressive taxes.
Rich people have fought such taxes publicly, usually spending important quantities of cash to take action. For instance, Google cofounder Sergey Brin has spent $45 million combating a 5% wealth tax in California, the Guardian reported this week.
Billionaires spent thousands and thousands opposing New York Mayor Zohran Mamdani’s election, spurring him to remark that they have been “spending more cash towards me than I’d tax [them].”
However Ocampo says folks are inclined to assist these taxes after they see the tangible advantages from them. Massachusetts’ millionaires tax has led to actual public transit investments, and has allowed the state to cover college tuition for 25,000 college students.
Massachusetts has turn out to be an instance lawmakers have pointed to when discussing the potential of taxing the rich. Now, Washington state may turn out to be one other mannequin—significantly for states that don’t have any revenue tax.
“Each time somebody mentions any sort of millionaires tax, folks say ‘completely not, I don’t need this.’ However then you’ll be able to see Washington being a trailblazer,” he says.
“[In places like] New Hampshire, Florida, folks can begin this as ‘possibly that is one thing that we will do and the remainder of the remainder of the inhabitants doesn’t have to fret that this revenue tax would have an effect on them, but we may have some public funding,’” he provides.
Extra rich folks themselves—at the least millionaires, even when billionaires are nonetheless largely opposed—might come round to those concepts, too. Pigott says the concept of cash solely flowing to some folks has “come to be seen as gross.” Analysis helps the concept that public opinions of the ultra-wealthy have gotten more and more unfavorable.
To Pigott, the idea of the rich holding on to all their cash doesn’t even make a lot sense.
“Too many people on this nation . . . need ‘extra for me now,’” she says. “And if what you need is extra, you can not have sufficient. It’s an unreachable objective.”
