Washington's New Millionaire Tax Sparks Legal Battle Over Constitutionality
Washington Governor Bob Ferguson has signed a controversial income tax bill into law, targeting high earners. The new legislation introduces a 9.9% tax on annual income exceeding $1 million, set to take effect in 2028. Opponents, however, have already launched a legal challenge, arguing the tax violates the state's constitution. The newly signed bill, ESSB6346, will impose a 9.9% tax on income over $1 million per year. Estimates suggest around 20,000 to 30,000 households in Washington will be affected, generating approximately $3.5 billion in annual revenue. A portion of this—7%—will go toward funding public defence services in cities and counties.
The law also includes tax relief measures. Some hygiene products will become exempt from sales tax, and certain sales tax increases planned for 2025 will be scrapped. Critics, led by former Attorney General Rob McKenna, argue the tax is unconstitutional. McKenna's group, the Citizen Action Defense Fund, claims Washington's constitution treats income as property, making progressive income taxes illegal. Opponents also warn the tax could eventually expand to lower income brackets, covering all earned income. Business groups have raised concerns that the new tax may drive companies out of the state. However, no evidence yet exists of firms planning to relocate their tax domicile in response.
The income tax is scheduled to begin in 2028, affecting only the highest earners. Legal challenges are already underway, with opponents questioning its constitutionality. If upheld, the tax will fund public services while altering the state's tax structure for years to come.
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