Washington’s new "millionaire's tax" draws scrutiny over structure, business risk and legal challenges

Moderated by Joe Fain, a panel of policy analysts and lawmakers at the Bellevue Botanical Gardens focused on Washington’s recently passed "millionaire's tax," debating what it is, who it will affect and how it will be implemented.

Ashley Washington, a tax professional at Deloitte, summarized the measure as “a 9.9% tax on income over $1,000,000,” and said the statute contains many nuances that will complicate guidance and collection. She told the audience tax professionals and clients are still parsing interactions between the new surcharge and recent capital gains and estate tax changes.

Ryan Frost, director of budget and tax policy at the Washington Policy Center, warned the levy could be "anti-business" because many affected taxpayers receive pass-through income tied to small or closely held businesses. Frost cited surveys by business groups that he said show some owners are considering redomiciling, and he argued the accumulation of taxes over several years risks net migration of wealth and firms.

Rep. Larry Springer (D-45) acknowledged the legislature approved roughly $3 billion a year in new revenue tied to the measure and noted implementation is delayed: he said the levy "does not go into effect till 2029," a panelist later clarified reflects tax-year timing and payments may occur in 2029 for 2028 tax years. Springer said that delay gives the Legislature time to amend technical problems but warned future legislatures could ratchet thresholds or rates.

Panelists flagged several nontechnical concerns. Frost said the Department of Revenue will require significant resources to administer the law, citing an implementation appropriation of about $132,000,000 for collection and compliance. Several panelists predicted immediate legal scrutiny: one anticipated challenges based on older Washington precedents treating income as property and expected at least one referendum to reach voters before the tax is collected.

Sandeep Kaushik, a public affairs consultant, argued inequality and top-end income growth justify targeting wealth, but he cautioned that rhetoric antagonistic to business can amplify flight risks. Ashley Washington and Ryan Frost both emphasized that the tax’s practical effects depend on regulation, rules for pass-through entities and how the courts and voters respond.

The panel closed with a practical observation: even supporters acknowledged that the law’s final shape could change during implementation or via subsequent legislative action, and that the next several years will include rulemaking, potential litigation and a likely ballot fight prior to revenue realization.