Washington Senate OKs income tax on millionaires
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The Washington state Senate passed an income tax on millionaires Monday, sending the proposal to the state House for further debate.
Why it matters: Washington is one of only nine states in the U.S. without an income tax, a distinction voters have repeatedly protected at the ballot box.
Zoom in: The millionaire tax bill, which cleared the Senate on a 27-22 vote, would take effect in 2028, applying a 9.9% tax to gross annual income above $1 million.
- It is expected to raise more than $3.5 billion per year. Supporters estimate it would affect about 20,000 taxpayers statewide — less than 1% of Washington households.
How it works: Most of the revenue would bolster the state's general fund, which faces a long-term shortfall.
- Some would go toward tax relief, including lowering taxes on small businesses and eliminating the sales tax on hygiene products such as deodorant and shampoo.
- A portion would help expand the state's Working Families Tax Credit, which provides tax rebates for low- to moderate-income families.
What they're saying: Democrats supporting the tax argued Washington's current tax system is unfair, largely because it relies on sales taxes and property taxes that disproportionately affect lower-income residents.
- "It is a source of continuing shame for me that we have one of the most regressive tax systems in the country," state Senate Majority Leader Jamie Pedersen (D-Seattle) said during Monday's floor debate.
- He said the tax would help raise money for public schools and other vital state services.
The other side: Republicans in the chamber all voted against the measure, with some predicting the income tax would eventually be extended to apply to more people.
- Several GOP senators argued the tax would violate the state constitution, which past court rulings have interpreted to bar a graduated income tax.
- Critics also said it would drive successful people out of the state.
- "Prosperity is not a limitless resource," state Senate Minority Leader John Braun (R-Centralia) said on the Senate floor. "When we punish it, we shrink it."
Between the lines: Three Democrats — state Sens. Adrian Cortes of Battle Ground, Drew Hansen of Bainbridge Island, and Deborah Krishnadasan of Gig Harbor — joined Republicans in voting no.
- Cortes and Krishnadasan represent competitive swing districts.
- Hansen, meanwhile, told Axios that he wants to see the bill "do more to cut taxes and take other steps to make life affordable for families in this state."
- Gov. Bob Ferguson called for similar changes when the bill was unveiled earlier this month.
What we're watching: Whether additional tax relief measures are incorporated into the bill — and whether it can clear the state House before the Legislature's scheduled adjournment on March 12.
Go deeper: Why Washington's income tax ban won't block a millionaire tax