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As a kid growing up in Tacoma, I remember visiting Seattle to interview executives at Go2Net and leaving in awe of what was possible. That moment distinctly shaped my career, one I’ve spent as a founder building multiple companies in Washington state. I stayed because this region had something special: a culture of innovation, a willingness to take risks, and a tax climate that fostered the high risk, high reward reality of startup life.
Watching what’s happening in Olympia, I’m saddened by the storm brewing on the horizon. I see an unconstitutional tax being passed to plug a hole created by a spending problem that in turn will cause an exodus of talent and capital, widen the deficit, and result in the application of this income tax to every Washingtonian. And all of this is happening just as AI transforms the knowledge economy in a way almost no one yet understands.
Washington legislators have a spending addiction, and Olympia’s solution is to reach deeper into the pockets of its citizens. The proposed SB 6346, the “millionaires tax,” would impose a 9.9% income tax on high earners, not through a constitutional amendment approved by voters, but through legislative sleight-of-hand. Proponents promise revenue to close a projected $4.3 billion deficit in the state’s budget. But the numbers don’t work, the constitutional bypass is dangerous, and the consequences for Washington’s economic future have been wildly underestimated.
The state’s spending problem is undeniable and untenable. The budget has more than tripled in the last decade: from $33.6 billion in 2013-2015 biennium to a projected $173 billion for ‘25-27 biennium. Even adjusted for inflation and population growth, real per-capita spending is up over 50%. The state faces a $1.5 billion deficit this biennium and a projected $4.3 billion hole in the next.
Now, in the 11th hour of this legislative session, SB 6346 is introduced: an income tax that attempts to bypass 90 years of constitutional precedent. Washington’s constitution treats income as property, capped at a 1% tax, and changing that requires two-thirds legislative support plus voter approval. That’s a high bar and intentionally so. SB 6346 side steps this entirely, passing the tax as ordinary legislation and relying on five justices to overturn nine decades of precedent. If Washington wants a progressive income tax, there’s a legitimate path: amend the constitution. Punting to the courts isn’t leadership, it’s a gamble with the state’s economic future.
But more importantly, this tax won’t just apply to millionaires — that’s simply the wedge being used to get it approved. Senate Majority Leader Jamie Pedersen, the bill’s sponsor, has acknowledged that once the infrastructure requiring all Washingtonians to file tax returns is in place, “we all want to make sure that our successors will have the flexibility to respond to the challenges that they see.” This is a polite way of saying the door is open to a universal income tax. On March 10, lawmakers rejected amendments to the bill that would have locked in the $1 million threshold to the law.
Proponents argue that wealthy residents won’t leave over a 9.9% income tax, but history says otherwise. Washington already ranks 45th nationally in tax competitiveness and after the capital gains tax passed in 2022, the state saw major capital flight in years following. Forbes estimated one high-profile relocation saved nearly $1 billion in annual taxes, more than the state collects from capital gains in a year. A February 2026 survey by the Association of Washington Business found 44% of business leaders are considering moving their personal residence out of state, and the share actively looking to relocate has nearly doubled.
The revenue projections for SB 6346 are almost certainly overstated. Capital gains collections fell short because the tax base shrunk from unexpected relocations in the years following and the same will happen here. Every entrepreneur who leaves takes future job creation with them. Every company that moves employees takes their spending (sales tax), housing budget (property tax), and charitable giving with them. The people who feel they “couldn’t be paid to leave” will find their neighbors already have, and those left behind will foot the state’s deficit on their own.
All of this comes at the worst possible moment. Washington’s tech sector is facing a once-in-a-century transformation from the application of AI. The knowledge economy is in deep trouble as companies determine the breadth and depth of cuts with a post-AI enabled workforce. In October 2025, Amazon announced 2,300 corporate layoffs in Washington. Microsoft has cut more than 3,200 jobs in the state since last May. Tech employment here fell 6% even as the national economy added jobs, and entry-level roles for workers under 25 plummeted by 13%. Microsoft’s CEO recently acknowledged that AI now generates 30% of the company’s code. We’re not just seeing layoffs, we’re witnessing a fundamental restructuring of the industry that has been a core pillar for Washington.
There’s a legitimate path to an income tax: ask the voters. But that’s not what’s happening here. What’s happening is a constitutional end-run in the final days of a legislative session, passed by lawmakers who won’t be around to answer for the exodus that follows and who have acknowledged this tax will ultimately be paid by all. Florida, Nevada, Texas, and Tennessee are watching and they won’t need to recruit, they’ll just need to wait.
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