Blog

New brief: I-645: Repealing the State Individual Income Tax

A 9.9% tax will be imposed on Washington income over $1 million beginning Jan. 1, 2028. Initiative 645 would repeal the income tax and prohibit any state or local taxes on individual income. I-645 would reduce revenues for funds subject to the outlook (NGFO) by $3.108 billion in 2027–29 and by $8.324 billion in 2029–31. […]

Dept. of Revenue requests an 11.4% spending increase (not including the expansion of the Working Families Tax Credit program)

The Department of Revenue (DOR) is requesting $1.087 billion in general fund–state (GFS) appropriations for 2027–29, which would be an increase of $111.0 million (11.4%) over 2025–27 appropriations. Of that increase, $20.8 million is at the carry-forward level. This includes $10.2 million for implementation of the state income tax. The budget request does not include […]

Capital gains realizations by high earners in Washington decreased by more than in other states in 2023

As I wrote on Friday, the taxpayer migration and Statistics of Income data sets from the Internal Revenue Service (IRS) now incorporate the first few years of Washington’s capital gains tax. Although there is not yet much history, the data suggest that Washington residents may have moved or otherwise altered their behavior in response to […]

The adjusted gross income of Washington millionaires declined in 2022 and 2023

Yesterday I reviewed the economics literature on the question of whether wealthy people move in response to tax increases. It’s an important question because the revenue impact of the new income tax is uncertain. The extent to which people (and their incomes) move out of state will have implications for the state budget. Unfortunately, there’s […]

Potential behavioral responses to the income tax

With the income tax, Washington’s tax structure will become more volatile—especially because it is targeted at taxpayers with income over $1 million. The volatility makes it a difficult tax to forecast in general; for Washington, it will be especially hard to forecast in the beginning as it is a brand new tax. When it is […]

Fiscal notes and the income tax

When estimating the fiscal impact of a policy proposal, a key component is the baseline. To what is the new policy being compared? What revenues are expected under existing law, and how would the proposal change that? When agencies prepare fiscal notes during a legislative session, they all use the November revenue forecast as the […]

Washington’s state and local taxes and spending per capita ranked 13th highest among the states in 2024

The U.S. Census Bureau recently released state and local fiscal data for fiscal year 2024. This is the best source of data to use for comparisons of taxes and spending across states. To make those comparisons, we adjust the data by population and by personal income. State and local taxes per capita in Washington grew […]

Challenges to public investment impact disclosures

This fall, voters will consider I-645, which would repeal the income tax. Under a 2022 law, a public investment impact disclosure (PIID) will appear in the middle of the ballot title for I-645. The PIID has drawn two challenges. Under current law, any ballot measure that makes a change to a tax or fee and […]

What to make of the high capital gains tax collections for tax year 2025?

The Department of Revenue reported last month that capital gains tax collections for tax year 2025, which were collected in April and May 2026, totaled over $1.5 billion. (This is not the final number. All taxpayers must submit estimated payments in April, but taxpayers with filing extensions will finalize their payments in October 2026.) According […]

Happy Fiscal New Year!

Today is the first day of fiscal year 2027, which is the second year of the 2025–27 biennium. Washington’s current budget troubles are the direct result of the Legislature appropriating significantly more than was expected in revenues in 2023–25. Ultimately, actual spending from funds subject to the outlook (NGFO) in that biennium exceeded ongoing NGFO […]