(The Center Square) – Democratic senators are considering an income tax on millionaires to help close Washington state’s persistent multi-billion-dollar budget gap heading into 2026. Republican leaders strongly oppose the idea, characterizing it as a job killer.
Individuals and households would pay a 9.9% tax on adjusted gross income exceeding $1 million, and receive a credit for state capital gains tax payments. It could generate an estimated $3 billion from a projected 20,000 households subject to the tax.
The Senate Democratic Caucus considered the idea during a retreat earlier this year; however, no formal legislation has been introduced to date.
Democrats cite Washington’s ongoing budget deficits and a belief that tech titans and wealthy residents aren’t paying enough for public services as reasons for possibly seeking new revenue.
It may be a tough sell, even to Washington Democratic Gov. Bob Ferguson, who recently said he does not plan on “balancing the budget with revenue.” However, that doesn’t mean Democratic budget writers won’t officially propose a millionaire tax.
Republican budget leaders are even more skeptical of the possible tax.
Senate Minority Leader John Braun, R-Centralia, talked with The Center Square about his concerns over the potential tax, which he says would impact far more than just the wealthiest Washingtonians.
“They pitch it as an income tax that would only affect high earners, which they say is going to be 10%, which is nearly the highest in the nation, but only on folks above a million dollars with adjusted gross income,” Braun, who is running for Congress, explained. “It also includes probably nearly every LLC or S corporation in our state. It’s not at all unusual to show on the books a profit of a million dollars in a fairly small company, but anybody who’s been involved in a small company knows that money doesn’t just show up. It shows up as a tax liability for the owner, and most of the time, that money is kept in the company in the LLC and the S corp. for working capital for reinvestment.”
Braun said an income tax would be devastating for Washington businesses, which are already dealing with high taxes and onerous regulations.
“They won’t be competitive,” he said. “They will lose business, and ultimately many will fail, I suspect. So, this is a bad idea.”
Braun noted that the best argument against an income tax is that voters have repeatedly rejected it, and wealthy Washingtonians are fleeing the state due to the tax burden they are already facing.
“Thirteen times the voters have said, ‘No, we don’t want an income tax.’ And if you look at migration levels, you know, it’s very clear people of all income levels, for many years, have been moving from income tax states to nontax states. That used to be true for Washington until we raised every other tax. Now there’s virtually no migration into Washington,” he continued. “But the Democratic majority, you know, they don’t really believe in the wisdom of the people. They think they just know better, and they can do it better. And this is headed for disaster, I suspect.”
Microsoft President Brad Smith delivered a sharp critique of new taxes passed this session by the state Legislature while speaking at the Washington Policy Center’s annual dinner two months ago.
“I go down time and time again to Olympia, and I often find that I meet with folks who either haven’t learned that their proposals have been enacted elsewhere and failed, or they’re not willing to consider not just the possibility, but the reality that the taxes they’re enacting are driving people and jobs away,” he noted.
Smith said he made more trips to Olympia during the 2025 legislative session than he typically does to express Microsoft’s concerns for the wide range of tax proposals.
“The good news is we defeated a wealth tax and a payroll tax, and that’s the end of the good news,” he said.
State Sen. Chris Gildon, R-Puyallup, told The Center Square that an income tax will not solve the current budget issues.
“So here we are again this December with talks of a budget shortfall, and the mantra again is tax the rich. I don’t believe that that’s what they’re going to do, and I’ll tell you why,” he said. “The budget problem that they have, the biggest one, is in 2026 and again in 2027. If they even did pass a wealth tax, per se, they wouldn’t start collecting that tax until approximately 2028. So the wealth tax doesn’t fix their immediate problem.”
Gildon said he suspects Democrats will gravitate to other revenue-generating proposals.
“They need some right-now money, and I believe they’re going to go after some of those taxes that they can collect immediately in order to fill that budget shortfall,” he predicted.
Gildon said the minority party will once again offer a budget solution that does not include a single new tax proposal.
“We’ve got a list of reasonable reforms. As you know, we put forth a budget that was balanced last year, that didn’t put any cuts to services, that didn’t have any taxes, and it fully funded our government,” he said.
The Center Square reached out to Senate Majority Leader Jamie Pedersen, D-Seattle, to ask if he would support the income tax proposal, but did not receive a response by the time of publication.
Braun conceded GOP members may be powerless to stop additional taxes in next year’s session, but said the minority party will be guided by one thing during the 2026 session.
“Affordability, affordability, affordability,” he said. “Can we afford this today, tomorrow and in the future? And their policies [Democrats] are driving us to a place that we can’t afford today, tomorrow and in the future.”
