When Washington Governor Bob proposed the state’s first income tax in modern history, he uttered the word “affordability” five times.
Ferguson on Tuesday requested the legislature to create a 9.9% tax on personal income over $1 million, which would transform a state revenue system highly dependent on sales and property tax. Although his fellow Democrats have for decades failed to pass an income tax, Ferguson stated that “it’s a different time right now.”
“We are facing an affordability crisis,” Ferguson said. “It’s time to change our state’s outdated, upside-down tax system. To meet the needs of Washingtonians today and make our taxes more fair, millionaires should contribute to our shared prosperity.”
Democrats across the US are increasingly looking into taxes as a means to capture the populist moment and address the country’s widening wealth gap. If “affordability” was the issue emphasized by Democrats who exceeded expectations in the off-year elections of 2025, the slogan next year could very well be “tax the rich.”
Democrats view this as an opportunity as the Trump administration this year paired tax cuts for high earners with cuts in Medicaid and supplemental food assistance. Raising taxes on the wealthy could also assist in solving a fiscal problem for states allocating more resources to fill the gaps from federal cuts.
“We have a federal government that has gone into super-villain mode, seemingly deliberately taking from the poor and middle class to give to the rich,” said a tax professor at UC Davis School of Law. “This unnecessary emergency is presenting a challenge to states: Will they let this suffering occur, and if not, how will they pay for the emergency response? Taxes on the best-off are not only fair but also efficient.”
Read more:
Tax advocates often point to Massachusetts’ 4% surtax on incomes over $1 million, which brought in approximately $5.7 billion in fiscal 2025, far exceeding revenue projections in its third year of collection.
New York Mayor-elect Zohran Mamdani campaigned on increasing the city’s income tax on millionaires by 2 percentage points to 5.9%, which critics said would lead to a departure of wealthy people.
Colorado voters this year approved a measure to limit deductions for taxpayers earning at least $300,000. The revenue will fund a program providing free meals for all public school students. Colorado officials also advanced a ballot measure to change the state’s 4.41% flat rate to a graduated income tax, potentially raising more than $4 billion. That will likely be put to voters in 2026.
Michigan residents could also face a ballot initiative next year to change the state’s flat 4.25% tax rate to add a 5% surcharge on individuals earning more than $500,000 and couples making more than $1 million.
Romney’s Call
Even 2012 Republican Presidential candidate Mitt Romney has joined the call. Last week, the former US senator from Utah wrote an essay in the New York Times calling for the rich to pay more, mainly in the form of closing loopholes the wealthy use to minimize tax obligations.
“It would help us avoid the cliff ahead,” Romney said, referring to government funding shortfalls, “and might tend to calm some of the anger that will surely grow as unemployed college graduates see tax-advantaged multibillionaires sailing 300-foot yachts.”
Most of the populist proposals from the states would raise taxes on income. But the tricky part about some wealth is that it doesn’t come from a paycheck and is thus harder to tax. Even a levy on capital gains depends on a taxpayer selling assets to realize that increased value.
For example, former Chief Executive Officer Steve Ballmer’s net worth increased by $706.5 billion on Monday, according to the Bloomberg Billionaires Index. Even though his mansion is across the lake from downtown Seattle, those gains wouldn’t be subject to an income tax.
That’s why some Washington state Democrats are still pushing for the US’s first wealth tax on unrealized gains. Under a proposal passed by the state Senate last year, portfolios of some publicly traded asset classes worth at least $50 million would be taxed at 0.5%.
Ferguson criticized the wealth tax proposal last year, saying it would be irresponsible to balance the budget on a measure that would surely face legal challenges.
One of the most common concerns is that once legislators have a new tax mechanism, they’ll either increase the rate or lower the threshold at which it would apply. Ferguson in his income-tax proposal acknowledged that concern, saying the $1 million level should increase with inflation and be included in the statute or perhaps even a constitutional amendment.
Read More:
State taxes are also easier to avoid than federal taxes because it’s relatively easy to change a primary residency. Washington used to attract taxpayers tired of California’s high rates, but that has changed since the Evergreen State started taxing capital gains. Next year could be the year of the millionaire’s tax — in Washington state and across the US.