Gov. Ferguson stumps for millionaires tax in Vancouver

Washington Gov. Bob Ferguson campaigned in Vancouver on Thursday, hoping to garner opposition for a state initiative aimed at repealing the income tax passed by lawmakers earlier this year. The tax, set to take effect Jan. 1, 2028, applies to those making an annual income of more than $1 million. Critics quickly gathered signatures to get Initiative 645, which would repeal the tax, on the Nov. 3 ballot. “This is a tax on the one-half of 1 percent of those who do the most well in our state, and to make sure we’re using those revenues to help out working families all across the state of Washington,” Ferguson said Thursday. The governor spoke at Fourth Plain Forward in central Vancouver. He was joined by a group of local residents who aired concerns about what the tax’s repeal would do to the state budget and the programs it supports, including healthcare and education. Vancouver City Councilor Kim Harless, who is running to represent the 49th District in the Legislature, said she fears that cutting this revenue would “blow a huge hole in our state budget.” The initiative’s passage, she noted, would end the tax cuts for small businesses and working families created as part of the income tax legislation. “Almost certainly, it means that those families, likely you and your neighbors, and the small businesses that you treasure — those mom-and-pop shops around the corner — will instead see increased taxes as the Legislature has to grapple with the huge budget hole that this measure would create,” she said. The income tax legislation includes provisions to raise the state’s business and occupation tax credit from $55 per month to $125 and from $160 per month to $375 for service-oriented businesses, while also providing relief for some businesses paying a sales and use tax, like daycares. The business and occupation filing threshold also increases to $250,000. The legislation also exempts hospitals and healthcare providers from a business and occupation surcharge meant to target income for large businesses. The income tax would apply to about 1,000 high-income earners in Southwest Washington. The governor estimated the income tax legislation would spare roughly 60 percent of all businesses in the state from paying the state’s business and occupation tax. “So if you are small to medium-sized businesses, this is literally a tax break for a millionaires tax. And if you vote yes on this initiative, you are adding to your tax burden,” he said. Businesses across Clark County have complained they feel targeted by state taxes. Ferguson disputed that. The state is among one of the best places in the country to do business, he said, pointing to a recent ranking on business friendliness from CNBC that put the state at 11th in the country. “I’m not suggesting we don’t have challenges as a state,” Ferguson said. “Every state does.” “A clear motivator for this millionaires tax is to … eliminate taxes for small businesses,” he said. Ferguson stressed the tax would apply to only income over $1 million, not the entirety of a person’s income. He also said he would veto any legislation that lowers the threshold below $1 million. The income tax legislation expands eligibility for the state’s working family tax credit — a refund on sales tax paid by low- to moderate-income Washingtonians — and exempts sales taxes on certain items, including diapers, over-the-counter drugs, and grooming and hygiene products. It also states that lawmakers intend for revenue from the tax to provide free breakfast and lunch for all the state’s children every school day. “This is all about tax breaks for folks working hard. That’s what this is,” Ferguson said. “(It) will make our state better, more affordable and more competitive for everybody.”

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