MarketMoodz
Washington's Millionaire Tax Could Push Top Rate Above 18%
Washington Gov. Bob Ferguson is proposing a 9.9% state income tax on residents earning more than $1 million, unveiled ahead of the 2026 legislative session. Tax Foundation analysis projects the top rate could exceed 18% on wage income and RSUs in Seattle, a result critics warn could slow job growth and drive capital to other states.
Key Takeaways
- 9.9% tax on income above $1 million proposed by Gov. Ferguson ahead of the 2026 session.
- Eligibility reportedly excludes some high-net-worth individuals based on home value, raising questions about the plan's scope.
- Tax Foundation projects the top rate could top 18% on wage income and RSUs in Seattle.
- Critics warn the tax could drive cross-state migration of jobs and investment.
- Ferguson says revenue would fund K-12 funding and remove sales taxes on essentials like hygiene products, diapers, baby formula, and affordable clothing.
People Involved
- Bob FergusonGovernor of Washington
- Jim WalshWA GOP Chairman
- Jared WalczakTax Foundation Senior Fellow
Entities Involved
- Washington State GovernmentState government proposing income tax on high earners
- Tax FoundationIndependent policy think tank providing the top-rate analysis
MarketMoodz Analysis
For investors, a top-18%-plus rate on wage income and RSUs in Seattle would raise after‑tax costs for high earners and could influence where capital and talent are deployed. If enacted, the policy would reshape the local tech ecosystem and startup funding dynamics in Washington.
Historically, wealth taxes have faced legal and constitutional scrutiny in several states, and critics argue cross‑state migration of capital and jobs is common when high earners face punitive tax burdens. The Tax Foundation’s modeling underscores that risk, suggesting expansion of the tax base could alter corporate investment decisions and relocation timing.
What to watch next: the exact legislative text and any constitutional challenges, plus how lawmakers resolve exemptions and relief provisions. The bill’s fate will hinge on how the state addresses feasibility, equity, and potential economic drag, as well as broader political dynamics ahead of the session.
Source: Original Article
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