Washington’s newly signed millionaires’ tax raises concerns for some small businesses

SPOKANE, Wash. — After a tough battle in Olympia, Governor Bob Ferguson signed into law one of Washington’s most controversial senate bills, commonly known as the “millionaires’ tax”. The law imposes a 9.9% income tax on people who earn more than $1 million a year.

Ferguson says the tax is a major step toward fixing Washington’s tax system, and is estimated to generate $3 billion more a year in revenue for the state.

“Washington families whose income is in the bottom 20% pay a whopping 13.8% of their total income in state and local taxes, while the wealthiest pay a far smaller percentage of their income. That’s not fair, and that’s not right,” Ferguson said.

The governor says the money will support schools and provide tax cuts to working families and small businesses.

Critics argue the tax is unconstitutional and warn it may open the door to a broader income tax. They’ve pledged to file lawsuits and collect signatures to overturn the new tax this November.

Some small businesses could be raising prices or even consider moving to Idaho to help offset what they’ll have to pay under the new millionaires’ tax.

Spokane County District 3 Commissioner Josh Kerns says the new law has some small businesses concerned and could discourage people from starting their business locally.

“It sends the wrong message, not only to our citizens, but other folks that are looking at Washington state as a potential to relocate, whether it’s moving here or starting a business,” Kerns said.

Kerns says not having an income tax was one of Washington’s biggest competitive advantages.

“Not having an income tax was one of the biggest advantages for our state when we were competing to get businesses to come locate here in Washington state and certainly here in Spokane County,” he said.

Much of the revenue from this millionaires’ tax will go toward the state’s general fund. It will also expand the Working Families Tax Credit for about 460,000 families. The new tax also promises to reduce certain sales taxes and business and occupation taxes.