Washington Democrats are promoting their latest tax proposal as a “millionaire’s tax,” but critics say the legislation goes far beyond taxing the wealthy and instead lays the groundwork for a full state income tax.
Todd Myers, vice president of research for the Washington Policy Center, said the proposal effectively rewrites the state’s entire tax structure and creates a new income tax system that could easily be expanded to more residents in the future.
Todd Myers: Washington Democrats’ “Millionaire’s Tax” Is Really a Rewrite of the State Tax Code
“The ‘millionaire’s tax’ is just a talking point for now… They’re rewriting the entire tax code to create that income tax structure.” pic.twitter.com/zKu3IZRBxr
— Ari Hoffman (@thehoffather) March 10, 2026
“They’ve basically created a state income tax and just set the threshold at a million dollars,” Myers said during an interview on The Ari Hoffman Show on Talk Radio 570 KVI. “But that threshold can be changed anytime.”
A New Tax Framework
Myers explained that the legislation restructures Washington’s tax code to mirror aspects of the federal income tax system. While the initial threshold targets high earners, he said lawmakers have previously discussed lowering that level.
“The ‘millionaire’s tax’ is just a talking point for now,” Myers said. “It’s very clear that some lawmakers want to lower that threshold in the future.”
According to Myers, the only way to accomplish that long-term goal is by first establishing the legal and administrative framework for a statewide income tax.
“They’re rewriting the entire tax code to create that income tax structure,” he said.
Rushed Through a Short Session
The timing of the proposal has also raised concerns.
Myers noted that the tax plan was released roughly a month into Washington’s short legislative session, leaving limited time for analysis or public scrutiny.
“They’re cramming a complete rewrite of the tax code into a short legislative session,” Myers said. “And we know from experience that when you rush complex tax legislation, mistakes happen.”
He pointed to tax measures passed last year that lawmakers later had to revisit due to errors in the legislation.
Economic Concerns
Critics also warn that higher taxes could discourage investment and drive businesses away from Washington.
Myers said the state’s success in attracting major technology companies may have made lawmakers complacent about the risks.
“Washington has been successful for so long that some policymakers find it hard to believe things can change,” he said.
Supporters of the proposal sometimes point to California’s thriving tech industry despite its high taxes. But Myers said Washington lacks the built-in advantages California has developed over decades.
“California has the ecosystem of AI experts and companies already there,” he said. “We’re trying to attract some of that talent. Our advantage used to be taxes. If we lose that, it becomes much harder.”
Without that competitive edge, Myers warned that companies looking to expand or relocate may instead choose states with lower tax burdens.
“If taxes matter to them, they’ll go to Texas,” he said.
Limited Tax Relief
Supporters of the proposal have argued that the new tax would allow the state to reduce other taxes. But Myers said the relief offered in the legislation appears minimal.
Ryan Frost, budget and tax director at the Washington Policy Center, analyzed the plan and compared it to the conditions Gov. Bob Ferguson previously said would be required for him to support an income tax.
Are lawmakers being transparent about the new income tax proposal?
WPC’s Ryan Frost argues Democrats are misleading the public. pic.twitter.com/leKcWlbbOh
— The Center Square Washington (@TCSWashington) March 7, 2026
“What the governor actually got in this proposal was about half of the tax relief he said he needed,” Myers said.
Ryan Frost, Director of Budget and Tax Policy at the Washington Policy Center, says Democrats’ revised income tax bill does not provide meaningful tax relief for working families. pic.twitter.com/GqmHYWjOlJ
— The Center Square Washington (@TCSWashington) March 7, 2026
That gap, he added, suggests the primary goal of the legislation is simply to establish an income tax.
WPC’s Ryan Frost says the income tax bill’s projections are nowhere near Democrats’ target. pic.twitter.com/5xnifmEQxS
— The Center Square Washington (@TCSWashington) March 7, 2026
“They just want an income tax and will say what they need to say to get there,” he said.
Questions About Revenue
There are also concerns about whether the tax would produce the revenue lawmakers expect.
Myers pointed to the example of Seattle’s former “head tax” on large employers, which led some companies to shift jobs outside the city and ultimately generated less revenue than projected.
Economists often cite the “Laffer Curve,” the concept that raising taxes beyond a certain point can actually reduce government revenue as people and businesses change their behavior.
“I don’t know exactly where that threshold is,” Myers said. “But there’s a danger that once you cross it, people start leaving or investing elsewhere.”
He said growing frustration among business leaders — including some who are not politically conservative — suggests Washington may be approaching that tipping point.
“I’ve been talking to people in the AI community who are not Republicans and not conservatives,” Myers said. “They’re frustrated and starting to question why the state is doing this.”
A Possible Legal Strategy
Another concern raised by critics is the potential legal strategy behind the proposal.
Washington courts have historically ruled that income qualifies as property under the state constitution, which effectively prohibits a graduated income tax.
Myers said emails from state Sen. Jamie Pedersen dating back to 2018 indicate some lawmakers hoped to pass an income tax specifically to challenge those precedents in court.
“We know that’s the strategy,” Myers said. “The emails explicitly say they want to get the Washington Supreme Court to overturn the existing rulings.”
Those rulings have repeatedly affirmed that income is property and therefore subject to the state constitution’s uniform taxation requirements.
A Turning Point?
For Myers, the biggest risk may not be a single policy but the cumulative impact of multiple tax increases.
He compared the situation to a famous line from author Ernest Hemingway about bankruptcy: it happens “slowly, and then all at once.”
“There’s always a point where people say, ‘That’s it — I can’t take any more,’” Myers said.
Whether Washington is approaching that point remains to be seen. But as lawmakers debate the proposal, critics argue the stakes go far beyond a tax on millionaires.
“This isn’t just a small policy change,” Myers said. “It’s the foundation for a statewide income tax.”
