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Washington Democrats differ on whether new high-income tax should eventually reach further

As voters prepare to decide whether to repeal Washington’s new income tax, some Democratic lawmakers are openly considering a broader tax in the future while others say changing its $1 million threshold is off the table. The debate is sharpening doubts about who could ultimately pay and what tax reform might replace.

Washington Democrats differ on whether new high-income tax should eventually reach further
Washington voters will decide Nov. 3 whether to repeal a new 9.9% income tax on household income above $1 million, but Democratic leaders are divided over whether the tax should remain limited to the wealthiest residents over the long term. The tax is scheduled to apply to income earned starting in 2028, with the first payments due in 2029. It is projected to bring in more than $3 billion a year. Initiative 645 would repeal it before collection begins. State Rep. Cindy Ryu, a Shoreline Democrat, said during a recent debate that she would support extending the tax to households earning as little as $250,000, at a lower rate. Senate Majority Leader Jamie Pedersen, the tax’s chief sponsor, has also said he favors a broader progressive income tax as part of a potential overhaul that could reduce other taxes, such as the property or sales tax. Pedersen said lawmakers could assess how the new tax works after it takes effect and consider changes later. Public records show that, before the tax was introduced, legislative staff discussed how it might eventually be expanded as part of broader tax reform. A draft memo prepared for Pedersen advised acknowledging that possibility while emphasizing the obstacles. Other Democrats reject the idea of lowering the threshold. Sen. Manka Dhingra, the deputy Senate majority leader, said an expansion “in the near future” would not happen and said she does not support a broad-based income tax. Gov. Bob Ferguson has pledged to veto any attempt to lower the $1 million threshold. The law does not permanently lock that threshold in place. The Legislature could change it with a simple majority, but a veto could block the change; Democrats do not have the two-thirds majority needed to override one. Eight Democratic lawmakers voted against the original tax. Any expansion could also prompt another voter initiative challenging it. That uncertainty has become a key argument in the campaign over I-645. Supporters of the repeal say lawmakers could eventually extend the tax to middle-income households. Steve Gordon, who chairs the repeal campaign, called that outcome an open secret. Supporters of the tax counter that political opposition makes expansion unlikely. Washington voters have repeatedly rejected broad income-tax proposals, including a 2010 measure aimed at people earning more than $200,000, which lost with 64% of the vote. The new tax also includes an automatic inflation adjustment that will gradually raise its $1 million threshold. Repeal supporters have pointed to changes involving public-pension exemptions as another sign that the tax could broaden. Tax supporters say those changes were technical; Washington State Labor Council President April Sims has argued that a pension would need to pay $84,000 a month to reach the threshold. Public opinion reflects both sides of the dispute. A recent DHM Research poll found 54% opposed to I-645 when voters were told its passage would reduce funding for schools, colleges and other services. But when asked about a millionaires tax that could eventually reach people earning $100,000, 46% said they would oppose it and 41% would support it. The state Supreme Court is also likely to weigh in if the tax survives, after opponents filed a lawsuit challenging its constitutionality. Meanwhile, the debate over possible future expansion has made the Nov. 3 vote a decision not only about a tax on millionaires, but also about voters’ trust in the Legislature’s future tax plans.

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