Washington Voters Reject Repeal of 9.9% Millionaires Tax by 16-Point Margin

Voters in Washington state are projected to keep the state's new tax on high earners, rejecting a conservative-backed measure that would have repealed it before implementation. The Associated Press projected that "no" votes would lead "yes" votes by a margin of 16 points. This result secures the new 9.9% income tax for individuals earning over $1 million per year.

The 58% to 42% vote share was recorded with more than three-quarters of ballots counted as of Friday morning. The tax is designed to apply to a small segment of the population. An estimated 20,000 households in the state, representing less than 1% of filers, are expected to pay the levy. The tax includes a standard deduction of $1 million, meaning only income above that threshold is subject to the rate.

Brian Heywood, a Seattle-area hedge fund founder, sponsored the repeal effort through a group called Let's Go Washington. Heywood has previously bankrolled other right-wing ballot initiatives in the state, including two anti-trans measures that appeared on this year's ballot. His group argued that the new tax would push wealthy residents out of the state and create a precedent for taxing the middle class.

The tax is expected to generate an estimated $3 billion annually for the state. The revenue will fund several specific programs, including expanded free meals in public schools and a state tax credit for working families. It will also create sales-tax exemptions for necessities such as diapers, soap, and over-the-counter drugs, while doubling a tax credit for small businesses.

Governor Bob Ferguson campaigned against the repeal, warning that losing the revenue would jeopardize safety net funding. Speaking at a Seattle child care center in October, Ferguson stated, "It would break my heart to lose access like this for thousands and thousands of kids all across the state." The state is one of nine that historically has not had an income tax, a point repeal proponents used to argue the measure opened the door to broader levies.

The outcome in Washington parallels efforts in California, where Silicon Valley investors have attempted to defeat a one-time 5% wealth tax on the ultrarich. In California, counting continued after the close of polls, with early reports suggesting votes in support of the tax were trailing. Several states are currently looking to new taxes on the wealthy to offset budget shortfalls caused by federal cuts to healthcare and food assistance under President Donald Trump's legislation.

Despite the ballot victory, the tax still faces a legal challenge. A group of business owners has sued the state, arguing the new tax violates the state constitution. The plaintiffs include the National Federation of Independent Business and six residents who earn more than $1 million a year. The tax is scheduled to take effect in 2028.