Washington Sen. Jamie Pedersen Dismisses Fears of Millionaire Tax Exodus

The Seattle state lawmaker who sponsored Washington's new "millionaire's tax" dismissed concerns that the high-income tax hike will prompt wealthy residents and businesses to leave the Pacific Northwest.

"The reality is the millionaire tax is not likely to result in businesses leaving," State Sen. Jamie Pedersen, a Democrat from Seattle, told a local FOX affiliate after Gov. Bob Ferguson signed the bill.

Pedersen, the Senate Majority Leader for Washington's 43rd Legislative District, said no evidence shows the tax, recently signed into law by Ferguson, will push top earners to lower-tax states like Florida or Texas.

"The drivers that we heard about from businesses are concerned about the sales tax on services and concern about the estate tax. Both of those things the legislature took action on in the last session," Pedersen said. "I do not have any indication that the millionaire's tax is going to cause some significant exodus."

The legislation represents a major change for a state with no personal income tax. Democrats passed the bill in the 2026 session. It imposes a 9.9% tax on annual income exceeding $1 million for individuals or households.

Ferguson signed the tax in March 2026, but it takes effect January 1, 2028, with first payments due in 2029. The delay gives the state Department of Revenue time to set up collection systems and allows constitutional challenges to work through the courts.

Regional businesses show strain despite Pedersen's view. Starbucks announced it will move 2,000 corporate jobs, mostly in IT and supply chain, to a new headquarters in Nashville, Tennessee. The company says it is not leaving its Seattle base, but the shift to a no-income-tax state has heightened tax flight worries.

Multiple local business owners told FOX 13 Seattle they closed operations because of the state's expanded retail sales tax on services. Lawmakers recently scaled back those expansions and plan to roll back some retail taxes within three years.

A 1930s Washington State Supreme Court ruling treats income as "property," which the state constitution requires taxing uniformly at no more than 1%. Democrats call the millionaire's tax an "excise tax," like the capital gains tax upheld in 2023.

Pedersen wants to overturn that precedent. "I’d like to force the Washington State Supreme Court to reconsider its case law that considers income to be property. Do you have any other suggestions about how to bolster the argument that this would be an excise tax and not a property tax?" he wrote.

Seattle Mayor Katie Wilson, a self-described socialist elected in 2025, faces criticism for brushing off taxpayer complaints. The Washington Post editorial board called her "arrogant" and "dismissive" about high-net-worth residents possibly leaving, saying her words ignore a shrinking tax base and taxpayer fatigue from high local rates.

In 2025, the legislature raised the estate tax to 35% for the wealthiest residents, the highest in the U.S., but softened it slightly this year after business pushback.

Pedersen’s office did not respond to Fox News Digital's latest request for comment.