OLYMPIA, Wash. — Olympia is getting a clearer picture of where the so-called millionaires tax is headed as it moves through the state Legislature, with Gov. Bob Ferguson signaling he wants major changes before he would sign it.
A day after the state Senate approved the bill, Ferguson said he wants to see a version that puts more money in the pockets of Washingtonians and addresses the state’s affordability crisis as the proposal heads to the House for debate.
The millionaire’s tax passed the Senate 27-22 after extensive debate and is now being considered in the House. Ferguson said Tuesday he is “crystal clear” that he will not support any form of income tax for individuals earning less than $1 million annually, now or in the future.
While he said the bill is moving in the right direction, he stressed it is not ready.
“We are not there yet, and we are still not close to being there,” Ferguson said from his Olympia office.
Ferguson said he supports a millionaire’s tax — a proposed 9.9% tax on annual income over $1 million — but wants a plan that returns a significant share of the revenue to residents and small business owners.
“I’ve said multiple times that any bill I sign must send a significant percentage of the revenue back to Washington families and small business owners,” he said.
Among the ideas Ferguson has highlighted are using about $1 billion in tax revenue for small business tax cuts, expanding sales tax exemptions on essential items, including diapers and baby products, and adding a twice-a-year sales tax holiday that would eliminate sales tax on items under $1,000. He also emphasized expanding the Working Families Tax Credit, a state program that provides money back to low- to moderate-income workers and families.
“So we must dramatically expand both how many working families qualify and the amount of money that they receive. And I need to see both of those things for any bill that I’d be signing,” Ferguson said.
Asked by KOMO News whether he would veto the proposal if those changes are not made, Ferguson declined to answer directly.
“Oh, I’m not going to get into a hypothetical. I mean, I think I’ve been pretty clear. I think where I’ve used the word must, you know?” he said.
KOMO News also asked Ferguson about critics who warn the tax could prompt high earners and businesses to leave Washington.
“I don’t see evidence of that. You know, there are anecdotal things I’ve read in the newspapers,” Ferguson said. “That’s not what I hear when I have conversations, for example, with businesses that come to meet with me on a fairly regular basis, right? It’s pretty rare that I hear this one thing is make or break for us. I think that the concern I hear is the totality. Gas taxes, put it all together, what does that mean for us? So that’s how I look at it, trying to balance all those things, which is why I appreciate the rolling back of some taxes.”
Collin Hathaway, founder of Skylight Capital, who operates several small businesses and the largest residential roofing company in Washington, said he disagrees with the governor’s assessment.
“I think his response was baffling, because the business community is thinking about it. You’ve seen a pretty large swath of people already moving from Seattle to Bellevue based on tax policies, homelessness, crime, and a bunch of other things. I would say. I know dozens of people who have re-domiciled, dozens more who are thinking about it. And it’s not just the millionaires tax, it’s the capital gains tax, the estate tax, all the elements, and as people look to expand their businesses, Washington is becoming a harder and harder place to do business,” Hathaway said.
When asked whether he is considering moving his businesses out of Washington, Hathaway said, “Not yet, but I’d say it’s a lot closer than I would have envisioned when we moved home in 2010 from the Bay Area, from California. I have invested in and built probably 15 companies around the country. We have not invested, bought, or built a company in California in 15 years because it’s too hard, and Washington is quickly approaching that point.”
The bill now moves to the House of Representatives for consideration. Both chambers must pass final legislation before the session ends on March 12.
“Our North Star, as I’ve said before and I will say it again, is to make life more affordable for more Washingtonians,” Ferguson said.
