Republican leaders call Democrats’ newly unveiled income-tax plan ‘wrong direction,’ cite threats to small businesses and affordability

Olympia — Senate and House Republican leaders used a week‑4 media availability to sharply criticize a Democratic income‑tax proposal unveiled the previous evening, saying the measure will worsen affordability and harm small and medium‑size businesses.

Senator John Braun, the Senate Republican leader, said the bill “is 100% in the wrong direction,” arguing it provides very limited tax relief while creating new burdens he said will be borne by ordinary Washingtonians and by businesses. House Republican leader Drew Stokesberry warned the proposal — framed by proponents as a tax on millionaires — will soon reach lower income brackets and “quickly become a tax on regular people like you and me.”

Why it matters: Republican leaders said the proposal would raise roughly $4 billion a year but delivers little targeted relief; Braun said only about 5% of the revenue would fund meaningful tax reductions. They singled out several technical provisions they contend are especially harmful: a marriage penalty; denial of loss carryforwards that Republicans say will dry up investment (particularly in housing development); and taxing pass‑through income from S corps, LLCs and partnerships that can be “paper” or “phantom” income without corresponding cash to pay a tax bill.

Leaders cited migration and business relocation data as part of their warning. Stokesberry and other speakers referenced IRS migration analyses and private studies showing net domestic outflow of high‑earning households, and named high‑profile company moves (Ken Fisher/Fisher Investments, Schweitzer Engineering) as examples of a broader trend they said would accelerate under expanded taxes.

On alternatives and budget priorities: Asked how to fund rising county public‑defender costs without the proposed income tax, Braun said the issue is budget prioritization. He estimated counties need about $200 million a year in additional support and said the state’s roughly $78 billion budget could be reprioritized rather than imposing a new $4 billion income tax.

Other bills and concerns: Republicans used the session to list bills they oppose as affordability risks, including a proposed insurance company tax (identified as House Bill 2973 in the session discussion), a textiles extended producer responsibility measure referred to as House Bill 1420, and local‑tax provisions in House Bill 2442. They also raised concerns about proposed taxes on social media, cigarettes and a potential payroll tax.

Evidence cited: Leaders said IRS migration data, a 2004 IRS migration study and a 2025 study on affluent Gen‑Z departures support their position that wealthy households are leaving Washington. They also cited recent corporate layoffs and private moves by business owners as real‑world examples.

What’s next: The bill was introduced by the Democratic majority the evening before the press availability. Leaders said negotiations so far appear to be primarily within the Democratic caucus and with the governor’s office; they welcomed the governor’s admonitions but said they would reserve judgment until the end of the session. Republicans announced listening sessions on initiatives for later the same day and vowed to continue opposing what they described as affordability‑worsening measures.

The leaders’ statements represent Republican policy positions and criticisms; the media availability did not include Democratic lawmakers or bill sponsors to respond to those points.