Washington State Capitol by Martin Kraft is licensed under CC BY-SA 4.0
Last year, Democrats passed a law increasing the estate tax (also known as the death tax) to as high as 35%. The death tax targets the transfer of assets from a deceased person to their heirs. In other words, Washington Democrats are jealous that your recently deceased relatives didn’t leave anything for them, so they passed laws carving out over a third of your inheritance for government spending. Only 17 states have the tax at all, and last year’s increase burdens Washingtonians with by far the highest estate tax in the country. Coupled with the capital gains tax that took effect in 2023, Democrats now tax your income when you’re alive and when you’re dead.
Top Washington Democrats are already realizing the consequences of such an aggressive high-tax agenda. Senate Majority Leader Jamie Pedersen admitted that the higher death tax is causing many considering retirement in Washington to think twice about staying: “I think a big lesson for me out of the work we’ve been doing on taxes in the last year is it’s not good for us to be an outlier,” he said. Because of Democrats’ concerns that the higher tax would actually lead to less tax revenue overall as people move away, the state legislature passed Senate Bill 6347, which undoes the recent estate tax hikes.
But Pedersen and progressives in the legislature still haven’t gotten the message. Pederson himself was the prime sponsor of the “millionaire tax” which adds a 9.9% tax on income over $1 million and is now on Governor Ferguson’s desk. Despite his stated concerns about Washington being an outlier on taxes, Pederson championed legislation that would give Washington the 4th highest income tax burden in the country.
Although Pederson defends his bill by claiming that this tax would impact only a minority of state residents, his own logic on the estate tax applies here too: even a few of those wealthy residents relocating could wreck revenue hopes, deprive the state of entrepreneurs, and dampen the business climate, since small businesses file on the personal side of the tax code and will be subject to the new income tax. In fact, the man who used to be Washington’s wealthiest resident, Jeff Bezos, left Seattle to avoid the massive new capital gains tax in 2023, depriving the state of up to $1 billion in tax revenue and waiting to sell his stocks at his new home in Miami, where the income tax is zero.
Even California Governor Gavin Newsom knows that an extra tax on the wealthy would drive them out, but his opposition to the billionaire tax hasn’t stopped people from fleeing the state. Ironically, tens of thousands of California residents have moved to the Evergreen State only to find a tax environment that is becoming similarly unfriendly to them and to their heirs. But wealthy residents in both states are seeing the writing on the wall. In 2025 alone, nearly a thousand households from Seattle, Los Angeles, and San Francisco have relocated to the Las Vegas area. Other states like Texas and Florida (neither of which have an income tax or any sort of estate, wealth, or capital gains tax) have seen an influx of wealthy and older residents who want to be left alone.
Washington Democrats now face a pivotal choice: double down on progressive taxation in pursuit of ever more public spending, or recalibrate their approach to retain high-income residents, successful tech companies in Seattle, and long-term economic competitiveness. If policymakers continue to raise taxes on everything that moves, they risk not only revenue shortfalls but also the gradual erosion of the entrepreneurial ecosystem that has fueled Washington’s growth.
