Gov. Bob Ferguson is calling for major changes to the proposed millionaires tax as it moves through the state Legislature, saying the bill is not ready for his signature despite passing the Senate earlier this week.
The millionaires tax, a proposed 9.9% levy on annual income over $1 million, passed the Senate 27-22 and is now being considered in the House. Ferguson said Tuesday he supports the concept but wants a plan that returns a significant share of revenue to residents and small business owners.
“We are not there yet, and we are still not close to being there,” Ferguson said from his Olympia office. He stressed he will not support any income tax for individuals earning less than $1 million annually, now or in the future.
Ferguson has highlighted 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, which provides money back to low and 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 whether he would veto the proposal if those changes are not made, Ferguson declined to answer directly. When asked about critics who warn the tax could prompt high earners and businesses to leave Washington, Ferguson said he does not see evidence of that trend. “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,” he said.
Collin Hathaway, founder of Skylight Capital and operator of several small businesses including the largest residential roofing company in Washington, disagreed with the governor’s assessment. “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. He added that while he is not yet considering moving his businesses out of Washington, it is closer to reality than when he moved home from California in 2010.
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.
