Democrats Hide Budget Cuts with “Millionaire’s Tax”
Jason Thiel
At the end of March, Governor Bob Ferguson signed into law a 9.9 percent income tax on residents whose income exceeds $1 million, dubbed the Millionaire’s Tax. It’s estimated that the bill will raise $3.5 billion a year, but collections won’t actually begin until 2029.
Will this Millionaire’s Tax fund bold new programs like free universal childcare or free health clinics? No.
About $1 billion of the money will pay for tax cuts, including a tax break for small businesses making less than $250,000 in annual revenue and sales tax exemptions for things like diapers, hygiene products, and over the counter medicine. It also funds an expansion of the Working Families Tax Credit.
The rest of the money goes into the “state operating budget”, where as much as $2 billion could be used to fill Washington’s existing budget deficit.
After spending several billion on tax breaks and budget holes, Democrats (maybe) will have enough left over to fund the new programs they’ve promised: funding for public defenders and free breakfast and lunch to every K-12 student. But we know how far Democrats’ promises go.
Mere days after signing the Millionaire’s Tax into law, the Democrats passed a budget that includes cuts to public services, including a $143 million cut in funding for childcare providers for low-income families. There is also a tax break for “pass through” income, that helps business owners avoid both corporate income tax and this Millionaire’s Tax.
The bill may not even make it to 2029. The Citizen Action Defense Fund, a right-wing pro-business legal fund that is partially funded by millionaire Republican megadonor Brian Heywood, is filing a lawsuit declaring the Millionaire’s Tax unconstitutional according to the state’s Constitution. Brian Heywood is also trying to collect signatures to put a referendum overturning it on the November ballot. They have a case, both because the Washington State Constitution only supports an income tax if it’s uniform and no more than 1 percent, and because the courts hate the working class.
The Democrats are not really in favor of taxing the rich. They only passed this bill under pressure from the movement, and because they know it’s possible that it won’t actually collect any revenue.
The Democrats have a supermajority in the state Senate and a strong majority in the state House. If they wanted to, they could have built a statewide movement to amend the Washington State Constitution to prevent a legal challenge. They could have mobilized thousands of working people to Olympia to force through that amendment. Even a majority of Republicans support it. In Washington, 71% of Democrats, 54% of Republicans, and 61% overall support the Millionaires Tax. In fact, the Democrats have had control over every branch of the state government for the last 20 years, and they could have done this at any time.
What’s more, the bill has a number of tax breaks and loopholes for the rich and big business. For instance, despite being called a “Millionaire’s Tax,” the first million dollars earned is tax exempt. That means if someone makes $1,000,500, they only pay tax on the $500 and get to pocket the full $1 million. On top of that, there’s a $100,000 charitable deduction. All in all, someone can earn $1.1 million in a year and pay $0 in taxes on that income.
With their supermajority in Olympia, Democrats could tax the rich to fund free universal healthcare, universal childcare, and a massive expansion in affordable housing. They could pass strong residential and commercial rent control. They could raise the minimum wage to $30/hour and tax the rich to help small businesses pay the increased wages.
Instead, the Democrats have passed a tax on millionaires only after poking as many possible holes in it as possible, a year before House Reps and half the Senate are up for re-election. Like Seattle’s Amazon Tax, which Democrats have already looted $800 million since 2022, Democrats are preparing to raid the Millionaires Tax to fill the budget hole created by not taxing the rich in the first place. Working people need to fight to tax the rich to fund free healthcare for all, millions of publicly owned homes, and free childcare for all—not empty promises for crumbs that make childcare slightly more “affordable.”
The Millionaire’s Tax has only passed because of the mass anger at both parties, and the rising popularity of the demand to tax the rich across the political spectrum. At the beginning of 2025, Democratic Governor Bob Ferguson tried to cut $4 billion from the state budget and opposed any taxes on the rich. Six months into his term, he had the lowest approval rating of any Washington governor in 30 years.
Ferguson wants to pose as a progressive. But he has been staunchly opposed to any kind of taxes on the rich, however meager. The Millionaire’s Tax is an attempt to whitewash his and the Democrats’ record. We cannot let them get away with that. This is the same party and governor that tried to furlough public sector workers, cut billions of dollars in public services, and attack state workers’ healthcare last year. The only reason he didn’t succeed is because socialists fought to expose him, and public-sector union members marched through the Capitol building threatening to go on strike.
The Democrats need to look like they’re fighting for something while providing as many scapegoats to blame for nothing actually changing. They want to blame the Washington State Supreme Court and the Republicans if the bill is declared unconstitutional. They want to blame Brian Heywood if it gets overturned at the ballot box on some special election ballot.
We need a new party. A workers’ party, that isn’t controlled by the billionaires and that is fighting for working-class demands. That’s the only way that we will win something better than this measly attempt at taxing the wealthy in Washington. And that starts by running independent socialists against Democrats and building independent working-class organizations to fight for our demands.