Lawmakers voted two years ago to bar an income tax. Now, many Democrats have changed their minds

OLYMPIA – Less than two years after both chambers of the Washington Legislature overwhelmingly passed an initiative to bar state and local jurisdictions from adopting an income tax, lawmakers are on the verge of doing just that.

A version of the legislation introduced in the House of Representatives has the backing of the governor, and Democrats in the Legislature appear to have enough support to pass the biggest shift in the state’s tax code in nearly a century.

While final details are still being ironed out, the bill would impose a 9.9% tax on income above $1 million.

Under the proposal, only income, and not assets such as a home, would be subject to the tax on individual and joint filers once it takes effect in 2029.

While many Democrats have long argued for an income tax, it also has been seen as politically unpopular.

“An income tax is dead on arrival in Olympia,” Democrat Chris Gregoire said while campaigning for governor in 2004. “Everywhere I go, I hear, ‘Don’t you dare support an income tax.’ “

Her main Democratic opponent in the race, then-King County Executive Ron Sims, a Spokane native, strongly supported one, even airing a TV ad focused on his income tax plan. Gregoire beat him by 35 percentage points in the primary before going on to win two terms.

Unlike some previous Democratic plans to implement an income tax such as Sims’, most of the revenue raised by the proposed income tax under consideration and backed by Gov. Bob Ferguson would boost state spending. While some taxes would decrease, property taxes wouldn’t. Sales taxes on some items like diapers and medicine would go away, but it would stay the same for most items.

State Sen. Marcus Riccelli, D-Spokane, is among the 27 Democrats who voted in support of the tax last month in the state Senate. He’s also among the 13 who did so after voting for Initiative 2111, which bars state and local government from “imposing a tax on any form of an individual’s personal income.”

The initiative came before lawmakers after organizers gathered more than 400,000 signatures ahead of the 2024 legislative session. When brought up for votes, it passed the House of Representatives 76-21 and the state Senate 38-11. Unlike Riccelli, Spokane Democrat Rep. Timm Ormsby, a supporter of the income tax, voted against the initiative.

In an interview on Friday, Riccelli said he’s “always been interested in turning around our upside-down tax code.”

Riccelli cited data from the Department of Revenue, which shows that had the tax been implemented last year, 211 residents in the third legislative district would have paid into it. In total, the tax would have collected an estimated $22.5 million from the district Riccelli represents.

“We are a working-class community that benefits greatly from services from education to healthcare to social services,” Riccelli said. “So for me, making sure that people pay their fair share is absolutely critical.”

Riccelli said the tax isn’t “broad-based” but rather a “scalpel.” He stopped short of specifically saying he wouldn’t support lowering the income threshold so that the tax applies to more residents in the future.

“At this point, what I want to support is the wealthiest people paying their fair share. And this tax applies to those who live in and work in Washington and make more than $1 million annually,” Riccelli said. “So that’s 20,000 households in our state, and less than 1% of the households, and that’s who we’re focused on, that’s what I support.”

In talks with his constituents, Riccelli said he’s generally heard support for the idea.

“They want to know some of the mechanics of the tax, where the money’s going, all of the stuff that’s being hashed out now,” Riccelli said. “And I think we’ll be able to take it back and really share how we can put us on a sustainable track.”

Riccelli isn’t alone in shifting his opinion on a state income tax. While the House of Representatives has not yet voted on the proposal, 15 of the sponsors who introduced the idea also backed the initiative two years ago.

As Democratic leaders introduced the tax idea last month, three of the six lawmakers who spoke to reporters about the need for the tax had also voted for the initiative.

House Majority Leader Joe Fitzgibbon, D-West Seattle, is among the 21 Democratic state representatives who voted against the initiative two years ago. During a Feb. 3 media availability to discuss the income tax, Fitzgibbon said federal changes, including the passage of the One Big Beautiful Bill Act by Congress last year, have resulted in state lawmakers needing to look for additional revenue.

“The massive shifts onto state government that they forced our way, compelling us to build new IT systems to kick more people off of health care and food assistance, those are very major impacts to the people of our state,” Fitzgibbon said. “Not just the state government, but to the people that state government is there to provide a safety net for.”

While he said there might not have been a singular turning point that prompted state lawmakers to come around to the idea of an income tax, the passage of the H.R.1 was a contributing factor.

“That said, Initiative 2111 also prohibited local income taxes. That’s not addressed by this proposal,” Fitzgibbon said. “I think this proposal is a response to what we’re hearing from our constituents about the needs for the people of our state and their rage at what the federal government is doing to us.”

Rep. April Berg, D-Mill Creek, who introduced the amended income tax framework the governor backed on Friday, said the initiative was “very broad” and there’s “not really a disconnect” with her support of the legislation this year.

“And I do agree that we should not have a very broad, deep income tax on every Washingtonian,” said Berg, who voted for the initiative that banned all income taxes. “What we’re doing here is very narrow. And what we’re doing now is because things have frankly changed in the last two years.”

Berg said she takes “every vote very seriously,” though those votes are “in the moment and on the issues of that bill.”

“And for that particular initiative, it was very broad,” Berg said. “And it’s like yes, we are not going to have a broad-based, deeply felt income tax. That is not something that I believe our state should have.”