(The Center Square) – The day after majority party Democrats in the Washington State House of Representatives passed, after a 24-hour debate, a tax on annual personal income exceeding $1 million, business organization across the state are sounding the alarm.
On the same day the House approved Senate Bill 6346, former Starbucks CEO Howard Shultz and his wife announced on X that they have moved to Florida, leaving Washington after nearly half a century.
Patrick Connor, Washington state director for the National Federation of Independent Business, issued a Wednesday statement in response to the House’s passage of the controversial income tax.
“The majority party repeatedly mentioned they were doing this to help small business, a nod to the expanded [business and occupation tax] exemption for very small firms,” he said. “Had they listened to our state’s small-business owners and representative organizations, they would’ve heard loud and clear that small business does not want this new income tax.”
NFIB noted one of the few amendments adopted was a tax break for hospitals and a handful of large physician groups, but not smaller practices, “reinforcing how tone deaf the legislative majority is to our small medical practices and other small business owners.”
The Washington Roundtable, Association of Washington Business, Seattle Metropolitan Chamber of Commerce, Bellevue Chamber of Commerce, and Greater Spokane, Inc. also issued a joint statement upon House passage of the income tax bill.
“With the House and Senate having passed the first ever income tax in Washington state – and Governor Ferguson having indicated he will sign it – the business community continues to urge state leaders to work towards a sustainably managed budget and a tax code that will ensure Washington’s competitiveness.”
AWB President Kris Johnson was sharper in his criticism of the legislation.
“By adopting a state income tax, Washington is giving up one of our primary competitive advantages we have had over other states and regions,” he said. “We are already a high-cost state for families and employers, and this move — a seismic shift in our state’s tax structure — will unfortunately cause more small- and medium-sized business owners to seriously consider starting, growing or moving their business to other states with a more stable tax environment.”
Johnson thinks the tax will expand beyond high earners.
“We fully expect additional tax increases will be required again next year and for the foreseeable future, and that eventually the income tax will apply to all Washingtonians,” he continued. “We have to stop over-spending, have a renewed focus on creating jobs and develop a plan to grow our economy.”
Arlington, Va.-based Americans for Prosperity, a conservative advocacy group, issued a statement upon the House’s passage of the income tax.
“For decades, Washingtonians have rejected an income tax, but unfortunately, the Washington Legislature has decided not to listen to their constituents and vote to enact an income tax,” AFP Western Region Director Heather Andrews said. “Lawmakers may claim this tax targets only the wealthy, but history shows these policies almost always expand over time and will put Washington families, workers, and small businesses at risk. Instead of passing policies that threaten the state’s economic competitiveness, lawmakers should be focused on keeping businesses and investments in Washington to bolster the state’s economic future.”
Shultz’s announcement that he and his wife had left Washington for Florida did not mention Washington’s income tax legislation but did refer to the state’s overall business climate.
“It is our hope that Washington will remain a place for business and entrepreneurship to thrive, creating essential opportunity for those in Seattle and the surrounding areas,” he wrote.
Shultz has an estimated net worth of $3.5 billion.
Senate Minority Leader John Braun spoke about Shultz’s departure and the proposed income tax.
“I don’t think there can be any doubt that this was related to the income tax and the many taxes that came from the Democratic majorities over the last eight years,” the Centralia Republican said during a Wednesday media availability event.
House Minority Leader Drew Stokesbary, R-Auburn, told The Center Square he took issue with comments on the House floor Tuesday evening by House Majority Leader Joe Fitzgibbon.
The West Seattle Democrat said it was not the job of lawmakers to determine if the income tax bill is constitutional, as the courts will make that determination assuming it becomes law.
“All three branches of government, when they take office, they swear an oath to uphold the Constitution, including us. If it wasn’t our job to abide by the Constitution, and that was only the court’s job, then why on Earth would we have to take that oath in the first place?” Stokesbary asked. “We take the oath because it means something. It means we’ve got to do our best to do what we think is constitutional and avoid doing what we believe to not be constitutional.”
The bill has returned to the Senate for final concurrence because the House made significant amendments to the original Senate version.
The legislative session is scheduled to wrap up on Thursday.
