(The Center Square) – As the Washington State Supreme Court prepares to weigh in on the constitutionality of a portion of the recently passed income tax on high earners, another high-net-worth Washingtonian is making plans to potentially relocate his business and his home.
Zach Abraham, principal and chief investment officer at Bulwark Capital Management, told The Center Square in a Tuesday interview the income tax is “the final blow” as far as he’s concerned, and he’s hearing the same from other successful business owners in the state.
The so-called “millionaire’s tax” is a 9.9% tax on income above $1 million, or combined household income above that threshold.
But it won’t be just millionaires paying the tax if the measure goes into effect as currently written.
Many small businesses will also be subject to the tax if the owner operates as a pass-through entity, meaning they report business income on their personal income tax returns, which is how the majority of small businesses are structured in Washington.
“Something they don’t understand is not only are a lot more people gonna leave than they think, but they’re also not going to be able to get any outside investing in Washington-based companies,” said Abraham.
He said that Washington lawmakers sidelining the state Constitution and bypassing voters is “breaking the contract.”
“What are you going to break next? I can’t trust you,” he said, referring to lawmakers. “And when you break the laws, you don’t understand, because you’re not businesspeople and you’re business and financially illiterate.”
“It’s not that we want to leave to stick it in your eye. It’s that we can’t invest here. You tied our hands. And so, not only are you going to get a giant outflow of capital, you will have no new businesses formed here,” he added.
Abraham said he expects a large number of business owners will relocate, in addition to some of the big players that have already left.
That list includes Amazon’s Jeff Bezos and Starbucks’ Howard Schultz, who have both relocated to Miami.
“They can keep lying to themselves and telling themselves Starbucks will stay. They’re gone,” Abraham said.
“And if you go look at the deal that Tennessee gave them, once again, they have a fiduciary responsibility to move their company. They can’t justify to shareholders why they’d stay here,” he added.
As reported by The Center Square, Starbucks last week disclosed that a new regional office in Nashville will employ 2,000 people within five years, including additional Starbucks employees who are now based in Seattle.
“There is a moral aspect to it as well, which is, not only am I not going to let you illegally trample over my rights and violate the contract that we both have adhered to, but I’m not gonna then watch you take those ill-gotten gains and support things that hurt the people that I love,” said Abraham.
As reported by The Center Square, Attorney General Nick Brown on Monday defended his office over emails showing coordination behind the scenes between the AG’s office and the prime sponsor of the income tax bill, Sen. Jamie Pedersen, D-Seattle.
The emails obtained by TCS indicate the AG’s office advised Pedersen to put a referendum clause on the bill, which precludes a vote of the people by referendum.
“If you look at the email communications my solicitor general and people in the office were talking about, [it was about] how this, because it’s raising revenue, couldn’t go to referendum,” said Brown to a question posed by The Center Square.
“So, we weren’t trying to bypass voters. We weren’t advising the legislature on how to do that. We were explaining what the state of the law is,” he added.
Abraham said excluding the public from having a say in the matter is a slap in the face to the people.
“And you’re telling me I should be worried about totalitarianism from the Trump administration? They’re not the ones that are trampling over my individual rights,” he said.
“If you want to know what the beginning of authoritarianism looks like, it doesn’t look like the Trump administration. It looks like this and what’s happening here.”
Abraham said for now he’s going to stay and fight the income tax with everything he has, while at the same time looking at a potential relocation to Arizona or Idaho.
On Thursday, Let’s Go Washington’s challenge to Secretary of State Steve Hobbs refusing to process a referendum goes before the State Supreme Court.
Hobbs’s office rejected the referendum, citing a “necessity clause” in the law that exempts it from public vote.
Supporters of the income tax argue it is essential for state services, while opponents claim the clause is misused to block constitutional rights to referendum.
The State Supreme Court is expected to issue a swift decision and if the referendum is blocked, LGW and Founder Brian Heywood are likely to file an initiative campaign in hopes of letting voters decide on the income tax before it takes effect.
