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Washington state voters to decide fate of millionaire tax as repeal effort reaches ballot

Conservative-backed initiative seeks to overturn 9.9% tax on earnings above $1m, signed into law in March

By LineZotpaper
Published
Read Time2 min
Voters in Washington state will head to the polls in November to decide whether to repeal the state's new millionaire tax, a 9.9% income tax on earnings above $1 million that was signed into law in March. The repeal initiative, backed by conservative groups, argues the tax represents a slippery slope, while opponents say it could raise billions for education and healthcare.

The tax, signed by Governor Bob Ferguson in March 2026, applies to the state's highest-earning households. A coalition of advocacy groups and unions opposing the repeal estimates the measure could raise approximately $3.5 billion annually for core priorities such as education, healthcare, and expanding tax credits and sales tax exemptions.

The repeal campaign, organized under Initiative 26-645, claims the tax could eventually be expanded to middle-income households, creating a broader income tax. The initiative will appear on the November ballot.

Washington state faces declining federal funds under the Trump administration, according to the state budget office, while home to substantial tech-industry wealth. The state has historically lacked an income tax, relying instead on sales taxes, property taxes and fees. In recent years, voters have approved new progressive revenue streams, including a capital gains tax.

Governor Ferguson has said he would veto any effort to expand the millionaire tax to cover lower-earning households. The state senate majority leader, Jamie Pedersen, noted that the fight over an income tax in Washington dates back to the 1930s, when the state supreme court ruled that income taxes constituted a property tax.

Other states have adopted similar measures. Massachusetts, Maine and New York already impose a unique tax rate on millionaires, and Hawaii passed a similar law in May. California voters will also decide on a proposed one-time, 5% tax on billionaires' wealth in November, a measure opposed by most billionaires and Governor Gavin Newsom, with some progressive groups questioning its long-term benefits.

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Analysis

Why This Matters

  • The outcome could set a precedent for how states with large wealth disparities tax high earners, especially as federal funding declines.
  • If the tax survives, it may encourage other states to pursue similar measures; if repealed, it could slow the momentum of millionaire taxes elsewhere.
  • The vote will test the electoral strength of progressive tax reforms in a state known for its tech wealth and historically regressive tax system.

Background

Washington state has long lacked an income tax, relying heavily on sales and property taxes that place a larger burden on lower-income residents. Efforts to introduce an income tax have been repeatedly rejected by voters over the decades, with legal rulings in the 1930s classifying income taxes as property taxes. The millionaire tax, passed in March 2026, represents a significant shift, targeting only the wealthiest households. It follows a recent voter-approved capital gains tax, part of a broader push to make the state's tax code more progressive.

Key Perspectives

Supporters of the millionaire tax: They argue the tax will raise approximately $3.5bn annually for education, healthcare, and tax credits, addressing the state's regressive tax system. Governor Ferguson has pledged to veto any expansion to lower earners, aiming to reassure middle-class voters. Opponents of the tax: The repeal campaign claims the tax could eventually be expanded to middle-income households, and that it unfairly targets successful individuals. They view it as a slippery slope toward a broader income tax in a state that has historically rejected one. Critics/Skeptics: Some progressive groups have questioned the long-term benefits of one-off wealth taxes, as seen in the California context. There is also uncertainty about whether the tax will generate projected revenues or drive wealthy individuals away.

What to Watch

  • The outcome of the November ballot initiative, which will determine whether the tax remains in place or is repealed.
  • How campaign spending and messaging evolve, especially from well-funded conservative groups.
  • Potential legal challenges regardless of the vote outcome, given the long history of tax litigation in Washington state.

Sources

Zotpaper

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