After a grueling 25 hours of debate on the Home ground, full with an nearly show-stopping filibuster effort of greater than 80 amendments by Republicans to cease the invoice from transferring ahead, Washington made historical past this week with the passage of a millionaires tax invoice, which might create the primary earnings tax within the state’s historical past.
On March 9, lawmakers handed a 9.9% tax on private earnings above $1 million per 12 months—a primary for the income-taxless state. The ultimate vote was 52–46, and concerned the longest ground debate in Washington historical past, far exceeding the earlier report of 9 hours.
“We knew it was going to be a pretty major endeavor,” Rep. Brianna Thomas, a Democrat who supported the measure, instructed Fortune. “We’ve got 93 years of precedent in front of us, behind us, around us at all times on the conversation around an income tax.”
Washington was one in all solely 9 states with no earnings tax, and has operated on basically the identical tax construction—reliant solely on gross sales and enterprise taxes—because it was constructed on an agrarian, timber, and delivery economic system within the early twentieth century. Washington final voted on an earnings tax in 1932, when it handed overwhelmingly, solely to be struck down by the state Supreme Court docket a 12 months afterward the grounds that earnings is assessed as property beneath the state structure, requiring a uniform taxation scheme. In 2010, state legislators tried to introduce one other earnings tax, solely this one didn’t even come near passage.
For Thomas, the economic system has merely outgrown the code. Washington has now develop into the house of world multitrillion-dollar organizations Amazon, Microsoft, and Boeing, and it’s staring down a projected funds deficit of $10 billion to $12 billion over the subsequent 4 years.
“Washington state was originally built on an agrarian and timbered economy,” she stated. “We still have a tax code based on apples and cherries while building some global-leading technology every which way you throw a rock.”
The result’s a tax construction that economists have constantly ranked among the many most regressive within the nation. In line with the Institute on Taxation and Financial Coverage, the highest 1% of earners in Washington pay simply 4.1% of their earnings in state and native taxes. The underside 20%, nonetheless, pay 13.8%.
“We’ve got more millionaires and billionaires than we’ve ever had, and they’re paying, effectively, a 4% tax rate,” Thomas stated. “Meanwhile, you got working folks paying 11% of their income, and the lowest-income people paying 14%. Isn’t it unfair for those who have the most, to pay the least, and those who have the least to pay, the most, proportionally?”
The invoice imposes a 9.9% tax on private earnings above $1 million yearly, affecting roughly 21,000 filers, or lower than 1% of Washington’s inhabitants, and is projected to generate $3.5 to $4 billion per 12 months as soon as it takes impact in 2029. It additionally contains tax aid for everybody else: gross sales tax exemptions on diapers, over-the-counter drugs, and private hygiene merchandise, plus an expanded Working Households Tax Credit score.
Passage wasn’t clear. The Home thought-about 81 amendments over 25 hours, with Democrats working to carry their very own members alongside.
“There was not unified assent for the bill on the Democratic side,” Thomas instructed Fortune.
The Senate then handed a concurrence vote 27–21 (talking with Fortune previous to the Senate’s vote, Thomas joked the 25 hours of debate would doubtless deter any related debacle from occurring within the Senate: “The Senate will concur, because they don’t want to do a 25-hour floor battle. That’s just not how the Senate rolls.”) The invoice now heads to Gov. Bob Ferguson, who has signaled he’ll signal it.
However Thomas was cautious about what victory truly means.
“We’ve got to let it sit,” she stated. “We have to get through our own Supreme Court review again, and it still has to go to a vote of the people. There are many miles to go before this is actually the law of the land.”
Washington will get a millionaires tax, others push one for billionaires
Washington’s invoice is probably the most concrete step but in a wider nationwide push to tax excessive wealth. Not too long ago, Sen. Bernie Sanders (I-Vt.) and Rep. Ro Khanna (D-Calif.) launched the “Make Billionaires Pay Their Fair Share Act,” a proposed 5% annual wealth tax on the roughly 938 Individuals with a internet price above $1 billion, a gaggle Sanders says collectively holds $8.2 trillion. In its first 12 months, income would fund a one-time $3,000 examine for households incomes $150,000 or much less; going ahead, it might goal Medicaid, trainer salaries, and childcare prices. Sanders tasks the invoice would generate $4.4 trillion over its first decade.
Equally, in California, a labor union put ahead the 2026 Billionaire Tax Act, a poll initiative that will impose a one-time 5% tax on residents with a internet price above $1 billion. If handed, it might generate roughly $100 billion in one-time income, directed towards healthcare and meals help.
“The haves have more than they’ve ever had,” Thomas stated. “The have nots have less than they’ve ever had. That’s just not going to be sustainable for everyday folks.”
Virtually instantly after the invoice handed, billionaire Starbucks founder Howard Schultz introduced he was swapping Seattle for Miami, the place he just lately paid $44 million for a penthouse. Though he has not confirmed the passage of the invoice is why he selected to depart, Schultz, who’s price $6.6 billion, wrote on LinkedIn he hoped Washington would “remain a place for business and entrepreneurship to thrive.”
He additionally isn’t the primary to depart Washington. Amazon founder Jeff Bezos equally moved to Miami in 2023, costing the state an estimated $954 million in tax income in 2024 alone. When Bezos offered 50 million Amazon shares that 12 months from Florida, he saved an estimated $610 million in state taxes by now not being a Washington resident.
Regardless of Schultz’s departue, Thomas didn’t flinch. “I certainly hope Washington is more than a spreadsheet or a tally sheet to someone,” she stated. “This isn’t a math problem to me. This is a policy problem rooted in the fact that I care about my community.”
