Seattle entrepreneur Jesse Proudman has voiced strong concerns, stating that a “close friend” and founder of the Foundations workspace, Aviel Ginsberg, has been “screaming” about individuals already planning to leave Washington due to the new tax. Proudman’s own analysis of the situation revealed that “so many people that I know and respect in the community — they’ve already left,” or are planning to depart. This exodus of high-earning professionals, founders, and investors could accelerate as the policy takes effect, with many reportedly considering relocation to cities like Austin, Miami, Nashville, and Las Vegas, which do not impose personal income taxes.
The timing of this tax is particularly problematic, as Washington’s tech economy is already grappling with the transformative effects of artificial intelligence. Leaders in the AI field have warned that an unfavorable tax climate could damage the state’s growth and competitiveness in this critical sector. A letter sent to Governor Bob Ferguson by a coalition of AI researchers, founders, and investors specifically urged a pause on the “millionaires tax,” emphasizing that Washington is “starting to lose momentum” in attracting the talent necessary to build and scale AI products.
The concerns extend beyond the tech industry. A survey by the Association of Washington Business indicated that approximately 44% of business leaders are contemplating moving their personal residence out of Washington, with taxes cited as the primary concern. This sentiment is echoed by the departure of high-profile figures like former Starbucks CEO Howard Schultz, who, after more than four decades in the state, has announced his relocation. While not publicly stated as the sole reason, Schultz’s move highlights the growing apprehension among successful individuals regarding the state’s tax policies.
Critics argue that the proposed income tax signals a broader shift towards policies that may deter innovation and investment. Historically, states with no income tax have attracted significant capital and talent, and aggressive taxation can lead to migration to more favorable economic environments. The proposed tax, Senate Bill 6346, has advanced through the state Senate and House Committee on Finance, with an emergency clause that could prevent voters from challenging it via initiative.
