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Guess what happened when Washington state rolled out a steep new income tax

When Washington state Democrats passed a new income-tax bill in March, the disastrous impacts started even before Gov. Bob Ferguson signed it into law.

Corporations and big-name entrepreneurs began a mass exodus to avoid the heavy so-called “millionaire’s tax” — a major movement of capital flight.

But even as wealth departs the Evergreen State, other Washingtonians are gearing up to fight.

Locals love their state — the mountains, the lakes, spectacular, unbeatable summers.

They also love their no-state-income-tax status, long thought sacrosanct under Washington’s constitution.

Some aren’t ready to give that up.

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Enter Brian Heywood, founder of the grassroots citizen action group Let’s Go Washington.

“People that should have been fighting us, they’re now going, ‘holy crap, I’ve had enough,’” Heywood told me. That includes moderates, independents and even left-leaning voters.

“People in that stripe are also saying, man, this is too much,” Heywood said.

So he’s forming “a very broad coalition” to push back.

Public opposition to the new tax, a 9.9% levy on incomes over $1 million, gives Heywood hope.

Over 100,000 Washingtonians registered their displeasure during public testimony on the bill.

Local voters have rejected an income tax 11 times in the state’s history, and a citizen initiative pushing back against a similar measure in 2024 was signed by over 446,000 people.

Now, the opposition is taking two forms.

Last week, hours before Ferguson’s signature made the law official, former Washington state Attorney General Rob McKenna announced plans to file a lawsuit challenging it under the state constitution.

“Washington’s constitution is clear, and the courts have been equally clear for nearly a century — income is property, and progressive income taxes are unconstitutional under existing law,” said McKenna.

The new income tax “creates a direct conflict with binding precedent.”

Legal efforts may hit a wall at the state’s Supreme Court — an elected body that has consistently ruled in the hard left’s favor in recent years.

But with five of the court’s nine seats up for election in November, Heywood sees an opportunity.

Anger over the tax issue could spur Washingtonians to the polls to select five new justices willing to uphold the state’s tax traditions.

And the legal challenge is only one front of the battle.

Last week, Heywood announced plans to spearhead a citizen referendum to repeal the income tax outright.

“Because unlike King Bob, we believe that the framers of our state’s constitution meant it,” he said.

Let’s Go Washington must gather 200,000 signatures by June to qualify the referendum for the upcoming election.

Heywood is confident it can be done.

“Our state constitution is the law of the land and not a suggestion that the legislature and the governor can ignore on a whim,” he said.

The final battle will take time, and will also come at the ballot box — challenging every Democrat who championed the income tax, and swinging control of the state legislature back to a common-sense, business-friendly mindset.

Ex-Starbucks CEO snaps up $44M Florida penthouse —  as he becomes latest to flee Seattle’s ‘millionaires’ tax’

Political battles are costly — and daunting. Heywood, McKenna and others are fired up now, but advertising, signature-gathering and campaigning all come at a high sticker price.

So while some plan to fight, many Washingtonians have already chosen flight.

Starbucks founder and CEO Howard Schultz announced his move to Florida the same day the new tax was passed.

His company’s flagship office building in Seattle is rapidly emptying as employees relocate to new corporate headquarters in Nashville.

Zach Abraham, CIO of Bulwark Capital Management, told me he’s making plans to move his company out of state.

At a recent board meeting involving firms managing $4 billion of investable capital, he said, “we agreed, not only are we leaving, we won’t make any investments in start-ups in this state either.”

“That’s just the tip of the iceberg,” Abraham added.

Microsoft cut more than 3,100 jobs statewide.

Amazon cut more than 2,300 jobs in the Seattle area.

Meta laid off hundreds more while pulling back from major office commitments.

The tech layoffs have contributed to a state-specific rise in unemployment, even as the national labor market has improved.

A whopping 44% of employers are considering moving their personal residence out of the state, the Association of Washington Business found in a February survey, with 64% citing taxes as the primary concern.

Independent brick-and-mortar businesses across the greater Seattle area report declining foot traffic, and the city’s office vacancy rate has risen to over 33%.

Yet even as Abraham makes plans to join the exodus, he has hope for the political uprising.

“People that would not have ever aligned are aligning,” he told me. “I see people opening wallets and getting serious.”

The feisty, independent-minded Washington where he was born and raised still remains, Abraham said.

“I think the old girl’s got a couple of punches left.”

Ari Hoffman hosts the “Ari Hoffman Show” on Seattle’s Talk Radio 570 KVI and is the Post Millennial’s West Coast editor.

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