When the state’s first tax on the super-wealthy went up for a public vote last year, Democrats held their collective breath.
For decades, the party’s pitch has been that taxes are so upside-down here, so unfair, that Washington has become a tax haven, a state rigged for the tech rich. The 2024 vote, on a tax on stock profits and other gains north of a quarter-million dollars, was a make-or-break moment for tax-the-rich progressive politics.
Lose, and you lose steam for a generation. But win?
Win and you might next shoot for the progressive moon — a state income tax.
“That vote on the capital gains tax has really emboldened the Democrats in Olympia,” says Sandeep Kaushik, a Seattle political consultant. “They’re thinking that perhaps there’s been a fundamental shift in how the normie voter thinks about a state income tax. I get the sense they’re going to go for it.”
The topline result for that 2024 capital gains tax vote was that it won in a landslide, 36%-64%. An initiative would have repealed the new tax, and 64% of the state voted No, to keep it.
What hasn’t been discussed as much, outside of insidery political circles, is what that big win signified.
This wasn’t one of those liberal deals where King County’s votes swamp everybody else’s. The tax-the-rich side won in 32 of 39 counties. It won in all 10 of the state’s congressional districts — including the most conservative, the 4th District in Central Washington.
Surprising even its backers, the capital gains tax won in some of the state’s reddest corners. It won in farm-dominated Adams County in Eastern Washington (which voted for Donald Trump for president by 43 percentage points). And in tax-averse places like Wahkiakum County, on the banks of the Columbia in the state's southwest (where Trump won by 18).
The populist turn in politics is real. Down at the base voter level, there is no party of the rich anymore.
Another takeaway: It may finally be sinking in for a broad cross-section of voters just how much the top of society has made out like bandits in the Big Tech era.
Consider that in 2017, 12,520 Washingtonians made more than $1 million in income, according to IRS filing data. Just five years later, in 2021, that number had soared to 28,930. That’s a 131% increase in millionaires. These aren’t paper millionaires either, but federal tax filers reporting they earned north of a million bucks for a single year.
Constituting less than 0.5% of the state’s population, this group makes 15% to 25% of all the money earned in the state each year, IRS data shows.
It’s long been awkward that this fastest-growing sector of the economy mostly avoids state taxation. The capital gains tax finally tapped into it a bit. But ruling Democrats now are looking again to the Holy Grail of lefty politics, a state income tax.
State Sen. Majority Leader Jamie Pedersen, D-Seattle, has a tentative plan for a 9.9% tax on incomes higher than $1 million.
No bill has been introduced, but there’s been “more chatter about the income tax in the last six months than I’ve heard in the last 15 years,” said state Sen. Noel Frame, D-Seattle, at a panel held last month by the liberal Washington State Budget and Policy Center.
The thinking goes that the 2026 fall elections will be another in which Trump blots out the political sun, sending local Republicans to dismal defeat in Washington state no matter what Democrats do. So maybe it's a good time to shoot for an income tax, which hasn’t been on the ballot since a major defeat back in 2010 (when the state had only 5,400 million-dollar tax filers).
Frame said any tax on the rich would be a long-term fight. It would have to win in the state Legislature, at the ballot box and in the courts.
Politically it will be awkward for Democrats who just last year passed a statewide ban on income taxes. That policy, approved by the Legislature in 2024 as Initiative 2111, would have to be overridden by some of the same Democratic politicians who voted it in.
Also awkward is how Democrats keep invoking tax-the-rich as a way to make the tax code less harsh on the poor and middle classes, but never follow through to lower any of the taxes that most bite these groups.
“This year the emphasis is a tax on millionaires,” said the GOP state House leader, Rep. Drew Stokesbary of Auburn, at the Re-Wire policy conference in Tacoma last week. “But how come we’re not talking about cutting sales taxes, cutting property taxes or cutting the ‘sin’ taxes? It’s because it’s a money grab.”
He’s not wrong. The system of taxes in this state really is upside down. And it’s not going to be reformed solely by adding more.
Democrats should also more closely scrutinize what results they’ve been getting from their spending boom of the past decade. It’s the sliding public schools that are most in need of an intervention, in my view.
There’s plenty of awkwardness to go around when it comes to taxing the rich, however. Example: Republicans have been citing Microsoft’s threats to hire its software engineers in Vancouver, B.C., should the state opt for levying taxes on either wealth or income.
This is a bit tough to stomach. Microsoft happens to be booking record profits while slashing thousands of jobs anyway. So is Amazon. It’s all so hard to reconcile that the Microsoft CEO, Satya Nadella, took the unusual step of penning a wistful note to laid-off employees lamenting the “seeming incongruence of the times we’re in.”
Great phrase. It’s a phrase that goes both ways.
Because what voters appear to be recognizing is exactly that: the seeming incongruence of tech executives getting world-historically rich while paying little in taxes to support state operations, all the while preposterously threatening to move to Canada.
Is all this incongruence about to boil over? 2026 is setting up to be one cauldron of a year.
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