After unprecedentedly long debates lasting more than a day, the Washington state House of Representatives on Tuesday approved an income tax for residents earning more than $1 million a year. The decision marks a historic shift in the tax policy of one of nine U.S. states that until now had no personal income tax. Washington long compensated for the absence of an income tax with a heavy reliance on sales and property taxes, making its system one of the most regressive in the country, since those levies placed a heavier burden on low- and middle-income people than on the wealthy.
The final vote ended 51–46 late Tuesday night, bringing to a close the longest debate over a bill in the state's recent history. Eight Democrats joined all Republicans in opposing the so-called "millionaires' tax," while the Democratic majority celebrated a key victory. The shift reflects a change in the state's political course: traditionally liberal on policy but conservative in tax structure, Washington differs from other no-income-tax states like Texas or Florida thanks to a more diversified economy with a strong tech sector.
Supporters of the bill, primarily Democrats, say it aims to correct a fundamental unfairness. They argue the new tax will make the system fairer. Opponents, mostly Republicans, vigorously contested it. They warned it would be only the first step and that over time the tax would expand far beyond the ultra-wealthy. They also predicted it would prompt an exodus of wealthy residents and businesses from the state, harming the economy. Debates were especially heated given the influence of large tech companies such as Amazon and Microsoft in the Seattle area, whose highly paid employees have widened economic inequality and raised the cost of living—on one hand intensifying calls for fairer taxation to fund public services, and on the other raising concerns about negative effects on the business climate.
Under the text of the bill, the new tax would be 9.9% and would apply only to the portion of annual income that exceeds the $1 million threshold. It is estimated to affect between 20,000 and 30,000 households in the state. The tax collection will begin in 2029 on income earned in 2028.
The tax is expected to raise about $4 billion annually for the treasury. Most of those funds will replenish the state's general fund to finance public services. Five percent will be directed to early childhood development and child care programs. Democrats also plan to use part of the funds to provide free school breakfasts and lunches for all students.
In addition to the millionaire tax, the bill contains measures to support middle- and low-income families. In particular, it eliminates the sales tax on diapers, toothpaste, shampoo and other personal hygiene items, and it expands a tax credit program for working families.
The marathon debate in the House was intense: Republicans offered about 80 amendments in an attempt to change or block the bill. Proposals included cutting other taxes or putting the question of an income tax to a statewide vote. Democrats, however, rejected nearly all substantive changes.
The bill now returns to the state Senate, which is expected to quickly agree to the amendments and send the measure to Democratic Governor Bob Ferguson for his signature; the governor has already pledged to sign it. Governor Ferguson plays a key role in advancing progressive policy in Washington, advocating a balance between tech-driven economic growth and the need to reduce the regressivity of the tax system. The legislative session is scheduled to end Thursday.
