Dear friends and neighbors,
As the flowers are starting to bloom, we are closing the final stretch of the 2026 legislative session. Spring in Olympia always carries a sense of urgency – bills moving quickly, budgets coming into focus, and long days (and nights) speed by as we work to finish strong for the people we serve.
With just one day to go I want to share some important updates from this busy legislative spring. Firstly, after 24 hours on the floor, we have passed a bill working to correct Washingtons regressive taxation. It’s important to look at what that means for Washingtonians moving forward. Secondly, Ryan’s Law was signed by the governor March 11th.
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Millionaires Tax
This spring, much of the focus in Olympia has been on our state budget and how to address a structural revenue problem that continues to grow.
Washington’s tax code was largely built in the 1930s. Our economy has changed dramatically since then, but our tax system hasn’t kept pace.
Despite recent progress, including the capital gains tax, Washington still has the second most regressive tax system in the nation. As a share of income:
- Low-income families pay nearly 14%.
- The highest-income households pay around 4%.
That imbalance is not sustainable or fair.
On Tuesday, we passed a millionaires tax that would apply only to take-home pay (adjusted gross income) above a very high threshold. It would not apply to business revenue, and it would not apply to stocks or unrealized gains. It is about personal take-home income above the threshold.
There has been a lot of misinformation circulating, so I want to address some common myths directly:
Myth vs. Fact
Myth: “All the millionaires will leave Washington.”
Fact: The data does not support this claim.
Many states and cities with a millionaires tax have actually seen an increase in millionaires after implementation.
Cited:
- https://fiscalpolicy.org/wp-content/uploads/2023/03/030223-Fact-Sheet_-Millionaire-Migration-and-Taxes.pdf
- https://ips-dc.org/report-wealth-expands-after-higher-state-taxes-on-high-income-earners/
- https://inequality.org/article/millionaires-dont-flee-states-over-higher-taxes/
- https://www.asanet.org/wp-content/uploads/attach/journals/jun16asrfeature.pdf
Businesses operate where people want to live, and millionaires want to live where there are strong schools, infrastructure, public safety, clean water, and vibrant communities. Those things require investment.
Evidence from other states and from our own capital gains tax shows no mass exodus. In fact, high-net-worth individuals remain concentrated in states with thriving economies and strong public services.
Myth: “Washington taxes are already among the highest in the country.”
Fact: Washington ranks roughly middle-of-the-pack nationally in overall tax burden as a share of income.
The issue isn’t that we tax too much overall, it’s who we tax. Our system relies heavily on sales taxes and flat taxes that hit working families hardest. This is what we’re trying to fix.
Myth: “The budget crisis is just irresponsible spending.”
Fact: Our budget challenges are structural.
Over the past decade, nearly a million more people have made Washington their home. Demand for schools, health care, housing, and behavioral health services has grown dramatically.
At the same time, state revenue as a share of personal income has declined. Our tax code is decoupling from our modern economy.
We cannot cut our way out of a structural problem without harming K-12 education, higher education, health care access, child care, and public safety.
Myth: “This is just piling a new tax on top of an already broken system.”
Fact: Our goal is not to simply add another tax; it’s to rebalance an unfair system.
Washington relies heavily on sales tax, property tax, and the Business & Occupation (B&O) tax. These are flat taxes that do not account for ability to pay. That means a nurse, a teacher, or a small business owner pays the same rate as a billionaire.
If we never begin shifting toward more progressive revenue sources, we will remain stuck in a system that disproportionately burdens working families.
Myth: “This would tax small businesses and entrepreneurs.”
Fact: This proposal applies only to personal adjusted gross income above $1 million, not to total business revenue.
Myth: “State revenues are growing, we don’t have a revenue problem.”
Fact: Our economy has grown, but our revenue system hasn’t kept pace.
Revenue as a share of total personal income in Washington is lower than it was 20 years ago. Meanwhile, the state population has grown by nearly 1 million people in the last decade, increasing the demand for schools, housing, healthcare, and public safety. With unreliable federal funding, we need a system that grows with our population and economy. Ours is structurally decoupled from the our modern tech- and service-driven economy.
Myth: “Voters already rejected an income tax — this ignores their will.”
Fact: Voters have consistently rejected broad-based income taxes that would impact everyone.
This proposal is fundamentally different: it is narrowly targeted to towards those earning over 1 million dollars of gross income and focused on correcting regressive inequities in our tax code.
Myth: “This will hurt Washington’s competitiveness.”
Fact: Washington’s competitiveness depends on strong public investments.
Businesses choose to locate where there are:
- Highly educated workers
- Strong public schools
- Reliable infrastructure
- Public safety
- Healthy communities
These things require stable funding.
A modernized, fair tax structure strengthens competitiveness because it creates long-term stability and reduces volatility during downturns.
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Thank You for Joining Our Telephone Town Hall
Thank you to everyone who joined our Telephone Town Hall! I’m so grateful for the thoughtful questions and respectful dialogue. At the peak, we had 2,901 people join the call!
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Ryan’s Law Passed the Legislature
I’m proud to share that Ryan’s Law (HB 2152) was signed by the governor on March 11th.
In the final chapter of life, comfort should never be denied by bureaucracy.
This legislation is rooted in compassion, dignity, and respect for patient choice. When someone is facing the end of their life, our responsibility is simple: reduce suffering and honor their dignity. No one should be forced to endure unnecessary pain or anxiety because of outdated policies that ignore what works for patients and families.
Washington has allowed medical cannabis since 1998, but many terminally ill patients were forced to choose between symptom relief and remaining in a health care facility. Ryan’s Law closes that gap by requiring hospitals, nursing homes, and hospice care centers to allow qualified patients with a terminal condition to utilize medical cannabis while in the facility.
The bill is named in honor of Ryan, whose experience during the final weeks of his life inspired similar laws across the country. In one hospital, he was denied access to medical cannabis; in another, he was able to manage his symptoms and meaningfully connect with loved ones during his precious final days. At the end of life, people deserve comfort, autonomy, and peace. Ryan’s Law brings us one step closer to a more humane health care system.
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Just One More Day!
Thank you for staying engaged, for asking hard questions, and for caring deeply about our community. It is an honor to serve you.
As always, please reach out to my office if you have questions or concerns. I am grateful for your partnership as we work toward a stronger Washington.
With appreciation,
Rep. Shelley Kloba