Gov. Bob Ferguson is on board with taxing Washington’s wealthiest residents, but only if everyday families and small businesses see a big chunk of the payoff. On Tuesday he said he supports a millionaires’ tax “in principle,” while making it clear he will not sign any bill that fails to send a sizable share of new revenue back to Washington households and local employers. His comments landed just as the state Senate advanced a plan to tax household income above $1 million, a move that could significantly change how the state collects money. Ferguson called the Senate proposal a “good start,” but said lawmakers still have work to do before the bill reaches his desk.
Senate Backs 9.9% Tax On Incomes Over $1 Million
On Monday the state Senate approved Senate Bill 6346 on a 27-22 vote, sending the measure to the House. The bill would impose a 9.9 percent tax on household income above $1 million and is projected to generate about $3.4 billion a year once it is fully in place. Supporters say the plan is aimed at making Washington’s tax system less regressive, while critics warn of economic and legal blowback, according to OPB.
Ferguson Demands Cash Back For Families And Small Businesses
Ferguson told reporters that “any bill I sign must send a significant percentage of that revenue back to Washington families and small business owners,” describing the Senate language as progress but not the final product he wants. He repeated that message in a short Facebook reel and expanded on it in comments to The Spokesman-Review.
Where Ferguson Wants The New Money To Go
The governor has proposed steering about $1 billion of the new revenue into tax cuts for small businesses, including raising the Business & Occupation tax exemption to the first $2.5 million in gross receipts. He also wants to expand the Working Families Tax Credit to roughly 460,000 more households and increase the credit by about 30 percent. Those priorities were outlined by his administration in a December statement. As detailed by the Office of the Governor, Ferguson is also pushing for sales tax holidays and exemptions on essential hygiene and baby products.
Political And Legal Hurdles Ahead
The measure cleared the Senate even as three Democrats joined Republicans in voting no, and lawmakers blocked several Republican amendments while keeping in place a “necessity clause” that supporters say could limit immediate voter referendums. Legal experts and legislators widely expect the proposal to be challenged in court, given Washington’s recent history with tax-related ballot measures and court fights. Observers told Axios that litigation is likely if the bill becomes law.
What Happens Next
The bill now moves to the House, where lawmakers will hash out how much of the new tax revenue should be routed directly back to households and small businesses, changes Ferguson has said are required before he will sign off. If the legislation is enacted as written, the tax would take effect Jan. 1, 2028, with collections likely starting in 2029, leaving near term budget gaps to be filled by other measures, as reported by OPB.
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