Washington Gov. Bob Ferguson headed into this year’s legislative session endorsing the idea of an income tax on higher earners. But he’s not on board with the framework for that tax that Democratic legislators are unveiling on Tuesday.
“I appreciate the hard work that went into drafting this initial proposal. It’s a good start, but I cannot support it in this form,” the first-term Democrat said in a statement.
The legislation will call for a 9.9% tax on adjusted gross household income over $1 million a year.
Democrats want to direct the revenue toward tax relief, both for individuals and businesses. It’s on this front that Ferguson believes the bill falls short.
“I have repeatedly insisted that a significant percentage of the revenue generated by the Millionaire’s Tax must go back into the pockets of Washingtonians to make life more affordable,” he said. “This proposal does not come close to doing that.”
The legislation has been expected for weeks, with draft language circulating among lawmakers, business groups, accountants, and attorneys.
If it is enacted, Washington would shed its status as one of nine states without an income tax on personal wages and salaries.
Supporters see the bill as a step toward reengineering a state tax code that favors the rich and forces lower-income residents to pay an outsized share of their income in taxes and fees.
But the bill is sparking bitter pushback from Republican legislators and others, who see it as opening the door to a type of taxation that the state Supreme Court ruled against in 1933 and that voters have rejected multiple times since, most recently in 2010.
Critics believe the tax will eventually creep down the income ladder and that, even now, it will deal a blow to small businesses that pass through earnings to their owners.
Challenges against the tax at the ballot box and in court are all but guaranteed.
With majorities in both chambers of the Legislature and Ferguson in the governor’s office, Democrats have the power to pass the tax over GOP opposition. They also believe public opinion is in their favor, pointing to signals like voters in 2024 upholding a tax on capital gains.
