OLYMPIA, Wash. — This story was originally published on MyNorthwest.com.
Governor Bob Ferguson said he will sign a revised version of Washington’s proposed “Millionaires’ Tax” after lawmakers added an amendment aimed at sending more of the revenue back to families and small businesses.
The striking amendment, proposed by Democrat Representative April Berg, expands eligibility for the Working Families Tax Credit, which currently reaches 460,000 additional households, providing qualifying families with checks ranging from $300 to $1,300, and reduces taxes on small business owners.
Ferguson said this amendment is part of a broader effort to make life more affordable for Washingtonians and addresses affordability issues, including funding for free school meals and additional sales tax exemptions.
Ferguson had previously said he would only support the tax if a significant portion of the revenue was returned to residents.
“I’m glad to say the latest floor amendment to the bill achieves these critical goals, and will help make our state more affordable,” Ferguson said in a statement. “I will sign this version of the bill.”
The updated bill would also exempt over-the-counter medications from the state sales tax and dedicate 5% of the tax revenue to the Fair Start for Kids Account, which funds childcare and early learning programs. The new proposal retains earlier provisions that would eliminate sales taxes on common household items such as diapers and hygiene products.
The tax passed the Senate last week
The bill, sponsored by Democrat Senator Jamie Pedersen, passed the Washington State Senate last week by a 27–22 vote. The proposal would impose a 9.9% tax on Washington residents earning more than $1 million, beginning January 1, 2028. Democratic lawmakers say the measure could generate about $3 billion annually starting in 2029, funding tax relief and public programs.
However, the debate over the controversial tax intensified Tuesday during a public hearing before the Washington House Finance Committee. Republicans worry the bill would create a slippery slope resulting in lowering the $1 million threshold in the future and could drive higher earning taxpayers and businesses out of the state.
During the public hearing, former Washington Attorney General Rob McKenna testified against the bill based on questions concerning its constitutionality.
“Under our Constitution, we can have a state income tax if it follows the rules for property taxes,” McKenna said. “If this legislature wants a progressive income tax, it should send a constitutional amendment to the voters and not pretend the Constitution isn’t clear, unless every legislator who votes for this bill is prepared to explain why taxpayers don’t have a property right to their own income.”
At least one self-described millionaire also testified.
“This is just another tax that’s going to make us not able to generate wealth in our families,” Mike Sotelo, President of the Ethnic Chamber of Commerce Coalition, said. “It limits access to capital. It makes a higher loan denial for us … You want to help minority business? Don’t pass this bill.”
Jabe Blumenthal, a lifelong Washingtonian, explained that he built his wealth as an early employee at Microsoft. He said he has supported the state’s capital gains tax since its inception, and expects to pay the proposed state income tax every year.
“We need tax policy where all rich people, not just those who want to, are required to pay their fair share into a system that works so well for them. And I’m very happy to do so,” Blumenthal testified.
The bill currently remains in the House Finance Committee. If it passes the committee, it will be debated on the House floor before a final vote, then back to the Senate for approval on any amendments before heading to the Governor’s desk for signature into law.
“I strongly encourage the Legislature to pass this bill with all of these investments in affordability included,” Ferguson concluded in his statement. “It represents a historic step forward in rebalancing our unfair system and making life more affordable for Washington families and small business owners.”
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