Washington Sen. Jamie Pedersen Dismisses Fears of Millionaire Tax Exodus

Washington state Sen. Jamie Pedersen, the lawmaker who sponsored the new "millionaire's tax," brushed off worries that the high-income tax increase will spark an exodus of rich residents and businesses from the Pacific Northwest.

"The reality is the millionaire tax is not likely to result in businesses leaving," said Pedersen, a Democrat from Seattle, in an interview with a local Fox affiliate after Gov. Bob Ferguson signed the bill into law.

Pedersen, who leads the state Senate majority and represents the 43rd Legislative District, said no evidence shows the tax will push top earners to states like Florida or Texas with lower taxes. "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," he said. "I do not have any indication that the millionaire's tax is going to cause some significant exodus."

The law ushers in a major change for Washington, a state long known for lacking a personal income tax. Democrats passed the measure in the 2026 session. It levies a 9.9% tax on annual income above $1 million for individuals or households.

Ferguson signed the bill in March 2026, but it won't start until January 1, 2028, with first payments due in 2029. The delay gives the Department of Revenue time to set up collection systems and lets constitutional challenges work through the courts.

Businesses in the region face pressure even so. Starbucks plans to move 2,000 corporate jobs, mostly in IT and supply chain, to a new headquarters in Nashville, Tennessee. The company says it isn't leaving its Seattle base, but the shift to a no-income-tax state has fueled talk of tax flight.

Local owners told FOX 13 Seattle they shut down because of the state's broader retail sales tax on services. Lawmakers recently dialed back those changes and plan to repeal some retail taxes in three years.

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

Pedersen wants the court to revisit 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, according to reports.

The tax fight plays out as Seattle Mayor Katie Wilson, a socialist elected in 2025, draws fire for shrugging off complaints from taxpayers. The Washington Post editorial board called her arrogant and dismissive about losing wealthy residents, warning of a smaller tax base and taxpayer fatigue from high local rates.

In 2025, lawmakers raised the estate tax to 35% for the richest residents, the nation's highest rate, but eased it slightly this year after business pushback.

Pedersen's office did not respond to a recent Fox News Digital request for comment.