Gov. Bob Ferguson sends WA Democrats back to drawing board on ‘millionaires tax’
Murmurings of a possible “millionaires-tax” proposal have echoed in the halls of the Washington state Capitol for weeks, with Gov. Bob Ferguson leading calls for lawmakers to deliver.
On Tuesday morning, after The Seattle Times reported on a draft of the final legislation and a summary that the publication obtained, Ferguson’s office issued a statement.
Ferguson called the initial proposal a “good start” but said he can’t back it as it appears today.
“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,” the Democrat said in a statement to McClatchy. “This proposal does not come close to doing that. I look forward to making sure we change that in the coming weeks.”
Supporters have cast the effort as a way of evening out Washington’s regressive tax code and making the wealthy pay what they owe. Critics and Republican lawmakers have blasted the idea of a tax on the richest residents. They point to voters’ past rejections of income taxes and argue that the proposed tax would someday be expanded — landing on the backs of average Washingtonians, too, not just millionaires.
Washington is one of nine states that doesn’t have an income tax.
Under Senate Bill 6346, a tax would be imposed on income higher than $1 million annually at a 9.9% rate, per the bill summary. The proposal, which would take effect Jan. 1, 2028, is projected to bring in roughly $3.7 billion each year, according to a Feb. 3 release.
“We have an opportunity to take a giant step forward by funding public schools, health care, and services that people across the state are counting on by increasing taxes on a few thousand very wealthy people in our state and cutting taxes for millions more,” Senate Majority Leader Jamie Pedersen of Seattle, who sponsored the Senate bill, said in the release.
Between 20,000 and 30,000 of approximately 3.1 million households in the state would be subject to the tax, according to a Senate Democratic Caucus spokesperson. Democrats contend that less than 1% of the state’s wealthiest households would be on the hook to pay.
House Majority Leader Joe Fitzgibbon, a West Seattle Democrat who’s carrying the lower chamber’s bill, said in a news release that reforming the tax code will help make life more affordable for Washington’s working families.
Others have their doubts.
Speaking to reporters Tuesday, House Minority Leader Drew Stokesbary of Auburn said Republicans have long warned that this would be part of Democrats’ plans to reshape the state.
“It turns out we were right,” Stokesbary said. “But while this one is framed as a tax on millionaires, it’s only a tax on millionaires this session. It will quickly become a tax on regular people like you and me.”
Lower-income and working residents pay a higher share of their income in taxes compared with their wealthy counterparts, according to a Feb. 3 news release announcing the legislation. For instance, while top-1%-income households pay 4.1% of their total income in taxes, those in the bottom 20% pay 13.8%.
Just one other state — Florida — is home to a tax system that’s more regressive, the release says.
In December, Ferguson threw his weight behind a tax on high-earners, with some caveats.
For one thing, the governor wanted revenue from the tax to be used for axing the sales tax on hygiene products, such as deodorant. State lawmakers were sure to include that in the bill.
For another thing, Ferguson demanded that small businesses feel some relief. The legislation would exempt small businesses grossing less than a quarter of a million dollars from the business & occupation tax as of 2029, affecting about 257,000 (nearly two-thirds) of the state’s businesses, according to Democrats’ news release. That year, the B&O surcharge would end as well, which lawmakers say would reduce taxes for many leading businesses.
Ferguson also wanted to see an eligibility expansion and increased amount for the Working Families Tax Credit, which offers tax relief for the state’s low- to moderate-income families. Democrats say their tax allows for a credit expansion. On top of that, 5% of collected revenue would be doled out to counties to help cover the costs of public defense.
Democrats argue that Washingtonians are ready for an income tax on the rich. For instance, the news release noted that 64% of voters during the November 2024 election cast their ballot to uphold the state’s capital gains tax. Pedersen told reporters Tuesday that members of both Democratic caucuses have thoughts on how they’d like to see the bill evolve. He said that Ferguson has spoken about wanting more money to go toward a small business tax credit and the Working Families Tax Credit.
“But look forward to continued conversations,” Pedersen said. “We’ve been in very regular conversation with him for six months, including and up to yesterday afternoon.”
Fitzgibbon added that they were a bit surprised by Ferguson’s Tuesday statement, given that less than a day prior, leadership had had a “very positive conversation with him about our progress and our work together on this.”
At a Tuesday news conference, Ferguson countered that he, too, was surprised by some of what wound up in the lawmakers’ proposals.
Both the governor and state Democratic leadership argue that the tax system has only gotten less fair after congressional Republicans passed H.R. 1, a sweeping tax and spending package signed by President Donald Trump last year that offers significant tax breaks for the wealthiest Americans while scaling back funding for social services.
Others have criticized the state lawmakers’ tax proposal for “penalizing” married couples who’d get a combined total of $1 million to deduct, regardless of whether filing taxes separately or together. Democrats have countered: If two spouses each earn $600,000, should they not be considered millionaires?
Ferguson told reporters Tuesday that Democrats’ current measure doesn’t “come close” to ensuring a significant portion of such revenue goes back to Washingtonians’ pockets. As for the Working Families Tax Credit, he said in part that he wasn’t pleased that it doesn’t boost the amount that people would receive.
He emphasized making life more affordable for residents.
“That’s what I hear when I travel the entire state as a statewide elected official,” Ferguson said, “and that is something that I feel very strongly that we need to deliver on in this proposal.”
Washington’s business community is approaching the income-tax idea with caution.
Kris Johnson, president of the Association of Washington Business, said in a statement that the state’s lack of an income tax has given it a competitive edge. Any changes should be done thoughtfully to avoid hurting the economy while small and mid-sized businesses are feeling the pinch of increasing tax bills, he said.
“We hope lawmakers will look for ways to grow the economy, not tax it more,” Johnson added.
State lawmakers don’t have much time to workshop the proposal. March 12 is the final day of the 2026 legislative session.
This story was originally published February 3, 2026 at 9:32 AM.
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