A ballot measure to repeal the state's newly enacted income tax on millionaires was the subject of a spirited public debate last Thursday in Bellevue. Brian Heywood, the hedge fund manager leading the "Let’s Go Washington" campaign behind Initiative 645, and House Minority Leader Drew Stokesbary, R-Auburn, contended that the tax is not needed and poses risks to the state's economy and its residents. Arguing in favor of the tax were Sen. Manka Dhingra, D-Redmond, and Soleil Boyd, executive director of the Children’s Alliance, who maintained the tax is a crucial step towards a more equitable tax system and essential for funding state services. The discussion took place at the Meydenbauer Center during the Eastside Leadership Conference, hosted by the Bellevue Chamber of Commerce. Ballots for the November 3 election are set to be distributed by the end of next week.
Initiative 645 asks voters to decide on repealing Senate Bill 6346, legislation passed by the state Legislature in March. This bill established a 9.9% income tax on individual and household wage income exceeding $1 million annually, based on adjusted gross income reported on federal tax returns. The tax is scheduled to take effect on January 1, 2028, with the first collections expected in 2029. State economists estimate this tax will generate approximately $3.5 billion from about 25,000 filers in its inaugural year. A "yes" vote on Initiative 645 would repeal this income tax, while a "no" vote would uphold it.
Beyond the income tax, Senate Bill 6346 also includes other significant tax changes, mostly scheduled for 2029 and intended to be covered by the income tax collections. These provisions eliminate sales tax on essential goods such as diapers, personal hygiene products like soap and toothpaste, and certain over-the-counter drugs. Additionally, the law repeals sales and use taxes for retail services, with the exception of advertising services, and expands a tax credit program designed to benefit lower-income families. Notably, if Initiative 645 passes and the income tax is repealed, these other changes to sales taxes and tax credits would still be preserved.
Proponents of Initiative 645 voiced concerns that the income tax, despite its current millionaire threshold, would eventually be expanded to apply to a much broader range of earners. Heywood suggested that lawmakers would inevitably lower the income threshold, potentially impacting retirees' pensions. Stokesbary emphasized the importance of wealthy individuals to the state's economy, stating that they "provide an important role in our community" by bringing capital and investment that fuels growth. He argued that any state funding issues stem from legislative spending choices rather than the absence of an income tax. Heywood asserted that Washington has historically thrived and launched major companies like Boeing, Microsoft, and Amazon without such a tax, and can continue to do so. This viewpoint was further supported by former Congresswoman Jaime Herrera Beutler, who is also a supporter of the initiative.
Conversely, supporters of the income tax, including Sen. Dhingra and Soleil Boyd, defended it as a necessary measure to address the state's "most regressive tax structure in the country." Dhingra argued that "nice things cost money" and that the state cannot continue to provide its desired quality of life and services without a more balanced tax system, citing that 41 other states have adopted similar income taxes. Boyd of the Children’s Alliance warned that repealing the tax would lead to severe consequences for the state's social safety net, particularly as federal support for services like Medicaid is being reduced. She cautioned against the initiative, stating it "is absolutely going in the wrong direction, and the reasoning behind it benefits very few people and harms pretty much everybody else." April Sims, president of the Washington State Labor Council, also opposes the initiative.
The potential for the $1 million income threshold to drop remains a central point of contention. Those advocating for repeal frequently argue that Democratic lawmakers will eventually need more revenue and will lower the threshold. Heywood asked the audience at the debate if they believed the threshold would remain at $1 million, and no one raised their hand, to which he remarked, "Not one single person believes the income tax is going to stay at a million dollars." This concern gained some traction when Shoreline Rep. Cindy Ryu, a Democrat, indicated she could envision the threshold being reset to $250,000. However, Gov. Bob Ferguson, a Democrat, has pledged to veto any bill that seeks to reduce the threshold, and Democratic legislative leaders maintain they have no current plans to do so. Sen. Dhingra stated that while individual elected officials may have different opinions, the law itself includes an inflator designed to increase the threshold with inflation.
Historically, Washington voters have faced similar decisions regarding personal or corporate income taxes 11 times over nearly a century. The first attempt in 1932 was initially successful but was subsequently struck down by a state Supreme Court decision in 1933. All subsequent measures have failed, most recently in 2010, when proposed income thresholds were $200,000 for individuals and $400,000 for joint filers.