Focus on the BIG picture.
Wednesday, Feb 04, 2026
Outside the box.
Washington Democrats Move to Tax Millionaires as Part of Major Tax Reform Push
State lawmakers formally unveil a proposal to impose a nearly 10 percent income tax on those earning over $1 million amid broader budget debates
Washington state legislators have advanced a high-profile proposal this week to impose a new income tax on residents earning more than $1 million annually, marking a notable shift in tax policy for one of the nine U.S. states without a personal income tax.
Democratic leaders in the House and Senate introduced legislation calling for a 9.9 percent levy on adjusted gross income above the $1 million threshold, a move they describe as part of efforts to modernise the state’s revenue system and fund public services once enacted.
The measure is expected to raise around $3 billion annually when it takes effect, though revenue collection would not begin until 2029.
The proposed tax comes amid ongoing discussions about how to address Washington’s budgetary challenges and long-standing concerns about tax regressivity, with supporters arguing that lower-income households currently shoulder a disproportionate share of the state’s tax burden.
Democratic backers, including Gov. Bob Ferguson, have framed the new levy as a tool to expand credits for working families, reduce regressive sales taxes on essential goods, and provide relief to small businesses as part of a broader overhaul of the state’s fiscal framework.
Despite the unified Democratic effort to introduce the proposal, Governor Ferguson declined to back the initial draft of the legislation, saying the framework unveiled by lawmakers “does not come close” to returning a sufficient share of revenue to residents to make life more affordable.
He has signalled a willingness to negotiate changes, including stronger provisions for tax relief tied to the new revenue, as discussions continue.
Opposition has been swift from Republican legislators and conservative groups, who argue the plan could face constitutional challenges and invite legal disputes.
They contend that Washington’s constitution has long been interpreted as barring income taxation on wages and salaries and that voters have repeatedly rejected similar measures in past decades.
State GOP leaders also warn that the proposal could complicate the state’s business climate and may fail to address near-term fiscal gaps because projected revenue would not materialise until later years.
As the legislative session progresses, lawmakers are expected to refine the proposal’s language and explore compromises that might broaden support.
The debate over the so-called “millionaires’ tax” reflects a broader national trend of state-level efforts to impose income taxes on high earners, with similar discussions unfolding in other states seeking to balance revenue generation with affordability and economic competitiveness.
Democratic leaders in the House and Senate introduced legislation calling for a 9.9 percent levy on adjusted gross income above the $1 million threshold, a move they describe as part of efforts to modernise the state’s revenue system and fund public services once enacted.
The measure is expected to raise around $3 billion annually when it takes effect, though revenue collection would not begin until 2029.
The proposed tax comes amid ongoing discussions about how to address Washington’s budgetary challenges and long-standing concerns about tax regressivity, with supporters arguing that lower-income households currently shoulder a disproportionate share of the state’s tax burden.
Democratic backers, including Gov. Bob Ferguson, have framed the new levy as a tool to expand credits for working families, reduce regressive sales taxes on essential goods, and provide relief to small businesses as part of a broader overhaul of the state’s fiscal framework.
Despite the unified Democratic effort to introduce the proposal, Governor Ferguson declined to back the initial draft of the legislation, saying the framework unveiled by lawmakers “does not come close” to returning a sufficient share of revenue to residents to make life more affordable.
He has signalled a willingness to negotiate changes, including stronger provisions for tax relief tied to the new revenue, as discussions continue.
Opposition has been swift from Republican legislators and conservative groups, who argue the plan could face constitutional challenges and invite legal disputes.
They contend that Washington’s constitution has long been interpreted as barring income taxation on wages and salaries and that voters have repeatedly rejected similar measures in past decades.
State GOP leaders also warn that the proposal could complicate the state’s business climate and may fail to address near-term fiscal gaps because projected revenue would not materialise until later years.
As the legislative session progresses, lawmakers are expected to refine the proposal’s language and explore compromises that might broaden support.
The debate over the so-called “millionaires’ tax” reflects a broader national trend of state-level efforts to impose income taxes on high earners, with similar discussions unfolding in other states seeking to balance revenue generation with affordability and economic competitiveness.
