Washington’s governor says he will sign a multibillion-dollar tax bill
Gov. Bob Ferguson said Friday he will sign the latest version of Washington’s proposed tax on “millionaires,” paving the way for legislation that has sparked a heated debate between tech and business government.
In a statement, Ferguson said the revised proposal meets his desire to send more money to working families and small businesses.
“I strongly encourage the Legislature to pass this bill and all these investments to be able to pay for themselves,” he said. “It represents an important step forward in rebuilding our flawed system and making life more affordable for Washington families and small businesses.”
Ferguson earlier this month criticized Senate Bill 6346 for doing too little for small businesses and low-income residents in the state. He suggested the measure could be delayed next year if lawmakers can’t strike the right balance.
Ferguson said the latest revisions would expand the Working Families Tax Credit, preserve sales tax exemptions on items like diapers and hygiene products, add sales tax exemptions to prescription drugs, support free school meals, and donate 5% of revenue to child care and early learning.
The bill, which passed the Senate last month and still needs approval by the House, would impose a 9.9% tax on Washington taxable income above $1 million, starting January 1, 2028.
SB 6346 represents one of the most significant efforts in years to reform the personal income tax in Washington.
The bill has drawn opposition from some tech leaders and entrepreneurs who worry it could undermine the industry by undermining Washington’s tax laws that favor startup founders, investors and high earners.
Earlier this week, a group of AI researchers, inventors, and investors sent a letter to Ferguson, arguing that higher income tax and investment incentives will squeeze top talent and startups elsewhere. They called on the state to “pause” the tax job, as well as increase Washington’s capital gains tax.
Supporters argue that those fears are overblown and say the bill helps overhaul the state’s regressive tax code, which relies heavily on property, sales and business taxes to fund education and other public programs.
This bill is expected to generate approximately $3.7 billion annually.
The move comes as the state struggles to close a more than $2 billion budget hole through spending cuts and the announcement of potential tax reforms, while some of Washington’s largest employers cut thousands of jobs on their payrolls.
Lawmakers also advanced an amendment that would partially eliminate a recent sales tax increase on select services that drew criticism from tech companies and included a Comcast lawsuit. However, the higher tax on advertising services will remain.
