In Washington State, Democrats Consider Breaking a Taboo: Taxing the Rich

By Anna Griffin for The New York Times • February 23, 2026

The state where Jeff Bezos and Bill Gates made fortunes might have progressive social policies, but its resistance to an income tax is similar to conservative states. That might change.

Anger over widening income inequality and fears of deep public service cuts are pushing lawmakers in the state of Washington toward what has long been unthinkable in state politics: a personal income tax — for now, at least, only on the very wealthy.

Washington is one of just nine states that does not tax income, and over the years, that has been a lure for people eager to live in a place with socially liberal policies and the culture of a progressive state — but the tax code of a more conservative one.

“It’s who we are,” said John Braun, the Republican leader in the state senate.

Yet last week, in a sign that frustration with the super rich might be rising, even in the state where Jeff Bezos and Bill Gates made their fortunes, the State Senate approved what supporters and opponents alike call the “millionaires tax,” a proposed 9.9 percent annual tax on personal earnings over $1 million, enough to bring in $3.7 billion a year.

Members of the state House must now decide whether to embrace the tax — and the fundamental shift it represents in how Washington pays for schools, health care and other public services — before their 2026 legislative session ends on March 12.

By West Coast standards, the income tax proposal is hardly radical. The tax rate on Washington millionaires would be the same as the income tax rate Oregon imposes on individuals earning at least $125,000. California’s top income tax rate, 12.3 percent, kicks in for individual incomes well below $1 million.

On the other coast, Massachusetts voters approved a measure in 2022 that added a surtax on incomes over $1 million to help fund schools and transportation.

But taxing income will only graze the super rich. That’s why California labor unions have been pushing a one-time, 5 percent tax on the wealth of residents worth more than $1 billion, a far more dramatic policy change since it would tax the value of assets like mansions or yachts, not income, which the wealthiest minimize for tax purposes. That tax would apply to about 200 households, and Gov. Gavin Newsom has objected over fears it could lead to an exodus of affluent people and the businesses they often own.

Washington had considered its own wealth tax, which would have charged a 1 percent annual tax on “financial intangible assets” — think stocks, bonds and mutual funds — exceeding $250 million. That would have applied to about 700 Washington households, but legislators declined to pass it last year.

The millionaire’s tax would affect more than 20,000 households, making the new bill a compromise meant to address constituent frustrations about rising income inequality without fully alienating the billionaire business owners fueling the state economy. The revenue, which would hit state accounts starting in 2029, could also help close multibillion dollar deficits expected in coming years though would not help state leaders avoid cuts in the near term.

“We don’t need to be the Cayman Islands; we don’t need to be a tax haven,” said Jamie Pedersen, a Democratic state senator and author of the tax bill. “We’ll do just fine if we have a stable, ordinary, progressive tax system.”

When it comes to finances and politics, California and Washington have plenty in common: Both have been dominated by Democrats for a generation; Washington last voted for a Republican for president in 1984, California in 1988. Both are home to some of the highest concentrations of billionaires in the country, largely because of the tech industry. Both have seen state budgets hit hard by federal tax cuts and reductions in federal spending.

Washington, however, faces a unique set of financial challenges rooted in a tax system that relies heavily on forms of revenue that hit lower-income residents harder: property taxes, sales taxes and what’s known as a “business and occupation tax” on gross receipts, which economists say can amount to a second, hidden sales tax when it is passed along to consumers.

Washington voters actually approved an income tax the first time the question was posed to them, in 1932. But the state’s supreme court ruled that the new tax was illegal, because in the view of justices back then, income is property. Washington’s Constitution requires all property taxes to be “uniform,” meaning, according to the court ruling, one person’s “property” cannot be taxed at a higher rate than someone else.

Since then, voters have rejected an income tax 10 times.

But taxing the wealthy is gaining traction.

“It’s literally just in the last couple of months that an income tax went from being something mainstream Democrats tried to distance themselves from to becoming mainstream Democratic orthodoxy,” said Drew Stokesbary, leader of the House Republicans in the Washington Legislature.

Six years ago, Seattle leaders approved a payroll tax on high-salary businesses to fund affordable housing. A year later, state lawmakers established the state’s first capital gains excise tax targeting high-value stock and bond sales. Last fall, voters in Seattle and its suburbs elected a slate of progressive candidates who campaigned on explicit promises of wealth redistribution.

Still, only Florida has a more regressive state tax system, according to the Institute on Taxation and Economic Policy, a liberal research organization.

“People still cannot afford to pay their rent, cannot afford to feed their families, can’t afford health care anymore, need child care to be able to go to work and can’t afford it,” said Noel Frame, a Democratic state senator who wrote last year’s failed wealth tax bill. “Our tax structure does not work.”

Gov. Bob Ferguson, a Democrat, has decried a system that “takes too much in taxes from hard-working families and not enough from the wealthy.” He has also not yet promised to sign the new income tax measure. After the Senate vote last week, Mr. Ferguson said lawmakers need to include more help for small businesses, two annual sales tax holidays and more relief for working families.

Overt opposition has so far come primarily from smaller-business organizations and anti-tax activists like Brian Heywood, a multimillionaire who has been funding conservative ballot measures for several years in Washington. The largest businesses in Washington have stayed quiet.

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The state’s largest business lobbying groups have similarly not weighed in, but the chief executive of Seattle’s chamber of commerce, Joe Nguyen, was clearly worried.

“If you want to tax the rich, you need to have rich people to tax,” said Mr. Nguyen, who was once a Democratic state legislator, Microsoft manager and head of the Washington Department of Commerce. “If you want to protect workers, you need jobs for them to fill.”

Anna Griffin the Pacific Northwest bureau chief for The Times, leading coverage of Washington, Idaho, Alaska, Montana and Oregon.