Rep. Shelley Kloba: Millionaires Tax - Myth vs Fact
Wednesday, March 11, 2026
From Rep. Shelley Kloba, 1st LD
This spring, much of the focus in Olympia has been on our state budget and how to address a structural revenue problem that continues to grow.
Washington’s tax code was largely built in the 1930s. Our economy has changed dramatically since then, but our tax system hasn’t kept pace.
Despite recent progress, including the capital gains tax, Washington still has the second most regressive tax system in the nation. As a share of income:
- Low-income families pay nearly 14%.
- The highest-income households pay around 4%.
On Tuesday, we passed a millionaires tax that would apply only to take-home pay (adjusted gross income) above a very high threshold. It would not apply to business revenue, and it would not apply to stocks or unrealized gains. It is about personal take-home income above the threshold.
There has been a lot of misinformation circulating, so I want to address some common myths directly:
Myth vs. Fact
Myth: “All the millionaires will leave Washington.”
Fact: The data does not support this claim.
Many states and cities with a millionaires tax have actually seen an increase in millionaires after implementation.
Cited:
- https://fiscalpolicy.org/wp-content/uploads/2023/03/030223-Fact-Sheet_-Millionaire-Migration-and-Taxes.pdf
- https://ips-dc.org/report-wealth-expands-after-higher-state-taxes-on-high-income-earners/
- https://inequality.org/article/millionaires-dont-flee-states-over-higher-taxes/
- https://www.asanet.org/wp-content/uploads/attach/journals/jun16asrfeature.pdf
Evidence from other states and from our own capital gains tax shows no mass exodus. In fact, high-net-worth individuals remain concentrated in states with thriving economies and strong public services.
Myth: “Washington taxes are already among the highest in the country.”
Fact: Washington ranks roughly middle-of-the-pack nationally in overall tax burden as a share of income.
The issue isn’t that we tax too much overall, it’s who we tax. Our system relies heavily on sales taxes and flat taxes that hit working families hardest. This is what we’re trying to fix.
Fact: Washington ranks roughly middle-of-the-pack nationally in overall tax burden as a share of income.
The issue isn’t that we tax too much overall, it’s who we tax. Our system relies heavily on sales taxes and flat taxes that hit working families hardest. This is what we’re trying to fix.
Myth: “The budget crisis is just irresponsible spending.”
Fact: Our budget challenges are structural.
Over the past decade, nearly a million more people have made Washington their home. Demand for schools, health care, housing, and behavioral health services has grown dramatically.
At the same time, state revenue as a share of personal income has declined. Our tax code is decoupling from our modern economy.
We cannot cut our way out of a structural problem without harming K-12 education, higher education, health care access, child care, and public safety.
Fact: Our budget challenges are structural.
Over the past decade, nearly a million more people have made Washington their home. Demand for schools, health care, housing, and behavioral health services has grown dramatically.
At the same time, state revenue as a share of personal income has declined. Our tax code is decoupling from our modern economy.
We cannot cut our way out of a structural problem without harming K-12 education, higher education, health care access, child care, and public safety.
Myth: “This is just piling a new tax on top of an already broken system.”
Fact: Our goal is not to simply add another tax; it’s to rebalance an unfair system.
Washington relies heavily on sales tax, property tax, and the Business & Occupation (B&O) tax. These are flat taxes that do not account for ability to pay. That means a nurse, a teacher, or a small business owner pays the same rate as a billionaire.
If we never begin shifting toward more progressive revenue sources, we will remain stuck in a system that disproportionately burdens working families.
Fact: Our goal is not to simply add another tax; it’s to rebalance an unfair system.
Washington relies heavily on sales tax, property tax, and the Business & Occupation (B&O) tax. These are flat taxes that do not account for ability to pay. That means a nurse, a teacher, or a small business owner pays the same rate as a billionaire.
If we never begin shifting toward more progressive revenue sources, we will remain stuck in a system that disproportionately burdens working families.
Myth: “This would tax small businesses and entrepreneurs.”
Fact: This proposal applies only to personal adjusted gross income above $1 million, not to total business revenue.
Fact: This proposal applies only to personal adjusted gross income above $1 million, not to total business revenue.
Myth: “State revenues are growing, we don’t have a revenue problem.”
Fact: Our economy has grown, but our revenue system hasn’t kept pace.
Revenue as a share of total personal income in Washington is lower than it was 20 years ago. Meanwhile, the state population has grown by nearly 1 million people in the last decade, increasing the demand for schools, housing, healthcare, and public safety. With unreliable federal funding, we need a system that grows with our population and economy. Ours is structurally decoupled from the our modern tech- and service-driven economy.
Fact: Voters have consistently rejected broad-based income taxes that would impact everyone.
This proposal is fundamentally different: it is narrowly targeted to towards those earning over 1 million dollars of gross income and focused on correcting regressive inequities in our tax code.
Fact: Our economy has grown, but our revenue system hasn’t kept pace.
Revenue as a share of total personal income in Washington is lower than it was 20 years ago. Meanwhile, the state population has grown by nearly 1 million people in the last decade, increasing the demand for schools, housing, healthcare, and public safety. With unreliable federal funding, we need a system that grows with our population and economy. Ours is structurally decoupled from the our modern tech- and service-driven economy.
Fact: Voters have consistently rejected broad-based income taxes that would impact everyone.
This proposal is fundamentally different: it is narrowly targeted to towards those earning over 1 million dollars of gross income and focused on correcting regressive inequities in our tax code.
Myth: “This will hurt Washington’s competitiveness.”
Fact: Washington’s competitiveness depends on strong public investments.
Businesses choose to locate where there are:
A modernized, fair tax structure strengthens competitiveness because it creates long-term stability and reduces volatility during downturns.
Fact: Washington’s competitiveness depends on strong public investments.
Businesses choose to locate where there are:
- Highly educated workers
- Strong public schools
- Reliable infrastructure
- Public safety
- Healthy communities
A modernized, fair tax structure strengthens competitiveness because it creates long-term stability and reduces volatility during downturns.
Contact Me
LEG 132A | PO Box 40600 Olympia, WA 98504
shelley.kloba@leg.wa.gov
(360) 786-7900 | Toll-Free Hotline: 1-800-562-6000 | 1-800-635-9993 (TTY)
https://housedemocrats.wa.gov/
LEG 132A | PO Box 40600 Olympia, WA 98504
shelley.kloba@leg.wa.gov
(360) 786-7900 | Toll-Free Hotline: 1-800-562-6000 | 1-800-635-9993 (TTY)
https://housedemocrats.wa.gov/
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7 comments:
Lofty words from Rep. Kloba but she isn't telling the whole story. Be sure to click the link where she claims that Washington's taxes are middle of the pack, because the truth is that our tax environment is 45th of 50 states. Our tax collections are 14th per capita based on old data that doesn't yet account for last year's historic tax increases. Now we're definitely in the top 10 for state tax burden.
Perhaps she would be interested in explaining her NO votes on all the following bill amendments:
2548: Forbidding future legislatures from either raising the income tax rate or lowering the income level where the tax kicks in.
2598: Lowering the regressive sales tax 0.75% to help reduce the burden on lower income people.
2584: Removing the so-called necessity clause which prevents voters from having a referendum.
There isn't space here to talk about the dozens of reckless programs since 2020 which have given grants to politically connected constituencies without meaningful oversight. Rep. Kloba doesn't want to talk about that problem. She just wants to spend more and more of your money.
Either the citations are old or the states of NY and Mass, are not telling the truth because they are crying on newscasts everyday about their wealthy population decline. Business and money are fleeing states for other states and NY, Mass, Cal and now Oregon are on everyone's list. Western and NEern wealth is fleeing to the South and Midwest. Corporations and the monied are moving. A simple google search refutes the citations.
Myth: “All millionaires will leave the state”. I would agree that it’s highly unlikely that all will leave, but supposing 1/2 do leave (10,000) will you then invoke Section 1107 of the bill to tax those residents who fall in a lower tax bracket to make up the difference of the estimated $3.4 BN revenue stream that’s planned? As you know Section 1107 is called the NECESSITY CLAUSE and it prevents voters from exercising their right to take out a referendum opposing any income tax measure. If you are so sure about millionaires hanging around why was it necessary to amend this bill with Section 1107?
Fact: this is unconstitutional and will go down in flames by the WA Supreme Court.
Fact: slash spending first.
If I ever make $1M/year in personal income, I can assure you I won't care about taxes on the income beyond that.
It'll start at a million. Then they'll lower the exemption to $750K. Then $500K. Then $250K. Then $100K. They've been transparent about their intentions. Will you feel cheated later when they do what we're telling you they'll do?
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