You know that Your Survival Guy favors states with low or no income taxes, and despite being a blue blob state in many regards, Washington has no tax on individual wages (but does tax investment and capital gains for high earners).

Despite not having a traditional corporate income tax, Washington has a “Business & Occupation Tax” that might be worse. In its 2026 State Tax Competitiveness Index, the Tax Foundation ranks Washington 45th overall, and explains:

Washington forgoes an individual income tax on wage income due to constitutional constraints, though the state recently imposed a tax on high earners’ capital gains income, a policy that raised constitutional questions but ultimately secured the assent of the state supreme court. It became a graduated rate tax in 2025, with a top rate of 9.9 percent for gains above $1 million. The constitution has been similarly interpreted as blocking a corporate income tax, but Washington instead imposes a high multiple-rate gross receipts tax, called the Business & Occupation Tax. Because it is based on gross revenues rather than net income (profits), it yields very high rates of taxation on low-margin businesses and leads to tax pyramiding, where goods and services have the tax embedded several times over, imposed on each transaction within the production process.

The state’s sales tax, imposed atop the gross receipts tax, is not just a high rate but is also imposed on a base that includes an unusual share of business inputs, particularly in the digital products space. In 2025, lawmakers adopted legislation further expanding digital products taxation and notably including digital advertising in the base, which raises legal concerns along with economic ones. Washington also levies a progressive real estate transfer tax and the nation’s highest-rate estate tax, with the top rate raised to 35 percent in 2025, rivaling the 40 percent top federal rate. High UI taxes and an uncompetitive UI tax structure also contribute to the state’s poor Index ranking despite the state forgoing an individual income tax, which might otherwise be expected to yield a much more competitive tax environment.

Now, lawmakers in Washington want to remove the last bright spot in the state’s tax structure by introducing a proposal to tax income over $1 million at 9.9%. KOMO News reports:

Senate Bill 6346 and House Bill 2724 would create an income tax for Washingtonians who make more than a million dollars each year at a rate of 9.9%. Here’s how it would work: the first $1 million of someone’s annual income would be deducted, and anything earned after that would be subject to the 9.9% tax.

Washington State Republicans have come out against the tax, explaining to readers in an X.com post:

Article VII, Section 2 of the Washington State Constitution requires that property taxes be uniform and caps them at 1%. In Culliton v. Chase (1933), the Washington State Supreme Court ruled that income is property. The people have consistently rejected a state income tax, and the Legislature banned a state income tax as recently as 2024 with I-2111. Gov. Bob Ferguson and legislative Democrats want to pass an income tax anyway.

House Republicans oppose new taxes in 2026. A state income tax is unconstitutional, unnecessary, and – if implemented – it will eventually target everyone.

Washington is home to many tech companies and other successful corporations like Starbucks, whose employees will face the full brunt of the taxes if passed. The state’s tech leaders have come together to oppose the new tax. According to The Wall Street Journal, they will deliver a letter to Washington Governor Bob Ferguson today that will say:

As experts and innovators in the field of artificial intelligence, we write to strongly encourage you to pause the state’s efforts to create a state income tax and increase the capital-gains tax.

Further on, they continue, explaining that the tax “would materially undermine Washington’s ability to keep growing the tech sector, which is a core driver of our economy, and would slow the AI innovation and investment momentum.”

Action Line: State residents are not an unending pool of wealth that radical politicians can dip into to fund their political agendas. The wealthiest residents will simply choose to escape states that treat them badly. They’ll head to the Super States, where politicians put residents and businesses first. Click here to subscribe to my free monthly Survive & Thrive letter.

Originally posted on Your Survival Guy.