Picking the worst state for tax policy usually means reviewing the foolish policies of states such as California, New York, and New Jersey, while contemplating the relative damage of levies such as personal income taxes, corporate taxes, and sales taxes.
Depending on how the different variables are weighted, there could be different answers.
But what if we want to know the state going in the wrong direction at the fastest rate?
But state lawmakers are not content. They apparently want to make the tax system so bad that Washington becomes the worst of the worst.
Here are some excerpts from a recent Tax Foundation report by Jared Walczak.
In Washington, which had no income taxation until recently, many high earners could face the highest combined state and local top rate in the country—18.037 percent (split across employer and employee)—if lawmakers adopt a new proposed millionaires’ tax. …Governor Bob Ferguson (D) announced his support for percolating legislative proposals to adopt a 9.9 percent income tax on income above $1 million. Such a tax would make the state increasingly undesirable for high earners, particularly in the state’s crucial tech sector. Washington already taxes high earners’ capital gains income with a 9.9 percent rate on capital gains income above $1 million (7 percent between $278,000 and $1 million), and both the state and the city of Seattle have payroll taxes that create significant additional tax burdens on high earners and their employers. …a tax this aggressive would do real damage to Washington’s economy, sending jobs and economic opportunity elsewhere. In particular, for significant swaths of the state’s tech sector, already the target of anomalously high business taxes, a 9.9 percent income tax could prove the last straw, driving any subsequent expansion to other states, and quite possibly taking existing jobs with them.
When you also add in various payroll taxes that apply to income, the Evergreen State would have one of the nation’s worst tax systems.
But some unlucky residents of Seattle would have the dubious honor of enduring the nation’s highest tax burden on income.
Though I suspect Seattle would no longer be home to many rich people and the state of Washington doubtlessly suffer a loss of entrepreneurs, investors, and business owners.
The Wall Street Journal definitely is not impressed. Here are some excerpts from a recent editorial.
Amazon billionaire Jeff Bezos may have seen the tax increases coming in Washington state when he moved to Miami two years ago. And he got out just in time as Democrats who run the Evergreen State—once a low-tax refuge—pursue a new tax-and-spend ratchet. …Revenue hasn’t kept pace with the 60% surge in spending since the start of the pandemic, despite many tax increases. …Mr. Ferguson’s millionaire tax would slam small businesses organized as pass-throughs. Their owners could be forced to pay a 9.9% charge on income that flows through to them, on top of taxes that the businesses pay at the firm level on their gross receipts. Washington has lost 16,000 small businesses in the last five years. Do Democrats want to lose more? …Democrats in Olympia face stiff competition from the likes of New York, New Jersey and California. But at their tax-and-spending pace, they are making a run to the tax bottom.
Please note that the real problem is that the spending burden surged by 60 percent. This is what is driving the greed for new taxes (along with the hate-and-envy ideology).
Mark Harmsworth of the Washington Policy Center is worried that further tax increases will negatively impact the state as successful people emigrate.
Washington state, a beacon for innovators and entrepreneurs, is witnessing a troubling trend: a steady outflow of its wealthiest and most entrepreneurial residents. High taxes, burdensome regulations, and an anti-business climate are pushing the wealthiest and high-earners to sunnier, lower-tax havens such as Nevada, Texas, and Florida. …Washington lost a net 222 high-earning millennial households (incomes over $200,000) between 2021 and 2022, the eighth-highest loss nationwide. By mid-2025, a follow-up report showed wealthy Gen Z-ers fleeing even faster, with Washington second only to Illinois in net outflows of affluent young professionals. These aren’t isolated cases; they’re symptomatic of a broader flight fueled by policies like the 2022 capital gains tax and looming wealth tax and income tax proposals. …anecdotal evidence and migration stats show the biggest fish swimming away. The capital gains tax raised $1.2 billion, but at what cost? For every dollar collected, the state risks losing billions in economic activity from departing innovators.
What’s amazing is that some folks on the left are whistling past the graveyard.
Here’s a tweet from the Seattle Times that wins a prize for self-deception (see here and here).
Adding insult to injury (or, to be more accurate, adding injury to injury), there are other simmering tax increases.
Here are passages from a story by Jerry Cornfield in the Washington State Standard.
Democratic state lawmakers are once again eyeing a statewide version of a Seattle tax on companies with large payrolls and high-paid employees. Proposed legislation crafted by Rep. Shaun Scott, D-Seattle, aims to raise more than $2 billion a year. …It targets private employers whose workers earn more than $125,000 a year. It would impose a 5% tax on payroll expenses above that salary threshold. Companies with more than 50 workers, payroll in excess of $7 million and gross receipts of more than $5 million would pay the tax, he said. Businesses may not deduct from employee wages to pay this tax. …Roughly 4,300 businesses would be covered, he said.
I’ll close with a bit of irony. As rich people and big employers leave the state, one indirect effect will be that Washington will become more equal (that is an automatic consequence of shedding population from the top-1 percent).
This should make folks on the left happy. But only because they are wearing ideological blinders and don’t realize that the net effect is to make everyone else in the state poorer.
I tried to warn them more than 10 years ago, but my words fell on deaf ears.
