Washington state is blowing up its no-income-tax advantage

They really did it. Washington lawmakers are blowing up what was left of the state’s competitive advantage by adopting an unconstitutional income tax. After a marathon all-night debate in the House lasting a record 24 hours, SB 6346 moved closer to Governor Ferguson’s desk by a 51-46 vote. Several Democrats joined all Republicans in voting no. The Governor previously said he would sign the income tax, and the Senate is expected to quickly approve it. The bill includes an emergency clause to prevent Washingtonians' right of referendum to repeal it.

For nearly 100 years, the state supreme court has ruled that Washingtonians own their income, meaning it is property. This is why a graduated income tax (non-uniform and at more than 1% of value) requires a constitutional amendment.

Here is how Washington’s constitution defines property: “The word ‘property’ as used herein shall mean and include everything, whether tangible or intangible, subject to ownership.”

This definition of property wasn’t part of the state’s original constitution but was instead added by 61% of voters in 1930. It is one of the broadest definitions of property in any state constitution.

Six prior times in the state’s history (1934, 1936, 1938, 1942, 1970, and 1973), the Washington Legislature understood that to follow the rule of law and comply with numerous state Supreme Court rulings, a constitutional amendment was required to impose a non-uniform income tax in excess of 1%. Though these constitutional amendments were all rejected by the voters, they were the proper way to try to impose an income tax.

An amendment to SB 6346 by Rep. Corry would have made the income tax bill null and void unless voters first approved a constitutional amendment authorizing an income tax. That amendment was rejected 46-49.

Repeatedly being unable to secure voter approval for a constitutional amendment, income tax supporters instead are now willfully employing lawfare in hopes the courts will do what the voters won’t. Senator Pedersen, one of the income tax sponsors, said this about the proposal: “We want the state Supreme Court to reconsider its ruling. That is not a bug; that is a feature of the proposal.”

As the state supreme court noted in 1960, however, an income tax should be decided with a constitutional amendment:

“The argument is again pressed upon us that these cases were wrongly decided. The court is unwilling, however, to recede from the position announced in its repeated decisions. Among other things, the attorney general urges that the result should now be different because the state is confronted with a financial crisis. If so, the constitution may be amended by vote of the people. Such a constitutional amendment was rejected by popular vote in 1934.”

The history of income taxes across the country is to start limited on high earners and then expand to more taxpayers. Washingtonians should expect the same to happen here.  

Income tax rate and bracket creep are especially concerning when realizing Sen. Pedersen said this about repealing the I-2111 income tax ban adopted in 2024: “That was — what did Mary Poppins call that? — a ‘pie crust promise.’ Easily made, easily broken. We put that language into statute, and we can amend it any time we want to. I wouldn’t take that super-seriously.”

It wasn’t long ago that Washington state openly boasted about how businesses and individuals had a competitive advantage because the state didn’t impose income taxes.

Washington’s Department of Commerce advertised across the country in 2012: "Choose Washington - We offer businesses some competitive advantages found in few other states. These include no taxes on capital gains or personal or corporate income."

Not anymore.

Washington was already ranked near the bottom of the Tax Foundation’s 2026 State Tax Competitiveness Index before imposing this income tax. Mountain States Policy Center’s Fact Book also found that the Evergreen State is failing the economic test compared with other states in the region.

The Association of Washington Business's quarterly survey showed that 44% of business leaders are considering moving their personal residence out of Washington state. This figure has doubled since the income tax was proposed in the legislature. In addition, 17% of businesses are considering fleeing Washington altogether, which is up 9% from the same time last year.

Other states are taking notice. Officials in Montana actively review legislation in other states that could negatively impact the business climate. When legislation is passed, the Governor’s team reaches out to the industries impacted to ensure they know Montana is open for business. Or, as Governor Gianforte would ask them: “Do you want to move back to America?”

Expect Washington businesses to receive a similar call from the Treasure State and other business-friendly states soon.

With one single vote, Washington lawmakers have decided to defy legal precedent, blow up the state’s business climate, and deny citizens their right of referendum. A trifecta of bad policy that firmly signals “Choose Washington” is a slogan and strategy of the past.