Millionaires, billionaires flee new taxes in California, Washington state

The Washington Legislature passed a law this week that will attempt to soak millionaires as the state scrambles to balance the books.

But the result may be the Evergreen State losing some of its most iconic and productive taxpayers, a trend that seems to be gaining steam along the Democrat-led West Coast.

Lawmakers passed the so-called Millionaires’ Tax in a 51-46 vote Wednesday after a floor debate stretching more than 24 hours – the longest in state history, KIRO News reported. The measure imposes a 9.9% tax on households earning more than $1 million annually, and is expected to be signed by Gov. Bob Ferguson. 

Ferguson, a Democrat, said he wasn’t worried about the rich leaving the state, noting 41 states “have an income tax.” He even called the measure “tax relief.”

“Washington is a state that is attractive to people for all sorts of reasons,” he said.

But the flight response by those who will have to pay the tax was immediate.

Starbucks founder moves

Starbucks founder Howard Schultz announced Tuesday on LinkedIn he and his wife are moving from Seattle to Miami after more than four decades in the city. He didn’t cite the tax directly, but expressed concern about the business climate in the state. 

“It is our hope that Washington will remain a place for business and entrepreneurship to thrive, creating essential opportunity for those in Seattle and the surrounding areas,” Schultz wrote.

He isn’t alone in his concern. A survey by the Association of Washington Businesses found 44% of the state’s business leaders are considering moving their personal domicile outside Washington, the Olympian reported.

House Republican Floor Leader Rep. April Connors told the newspaper that as a real estate agent, she had personally seen at least 10 clients exit the state in recent months, half citing tax policy.

One constituent who relocated to Montana had donated $100,000 to their surrounding community the year before they left, she said.

“We’re not only losing people that are paying into our tax base, but we’re losing people who are paying with their philanthropy dollars into the Tri-Cities,” Connors told the Olympian.

Now Schultz follows that charity money out the door.

Importantly, so does the company he built.

Starbucks recently announced plans to open a 250,000-square-foot regional corporate office in Nashville, placing major operations in a state with a dramatically different tax and regulatory environment. 

By contrast, Tennessee is giving tax breaks to companies that create jobs, reported the Tennessean.

The National Taxpayers Union Foundation (NTU) noted Washington was positioned to benefit from the exodus in neighboring California, but the tax environment in the Pacific Northwest has changed the dynamics.

“Before 2020, Washington consistently gained more new residents from interstate migration than it lost,” NTU said. “Starting in 2017, that positive trend rapidly began to slow, then flip upside down.”

California considers billionaire tax

This pattern of Americans fleeing blue states for red ones in search of lower taxes and better cost of living is well-documented.

Not coincidentally, big blue California will consider a ballot measure that could make the Evergreen State’s millionaire tax look modest by comparison. A proposed November ballot initiative would tax the 2025 net worth of California billionaires by 5%, reports CalMatters.

Unlike an income tax, the Golden State tax targets net worth directly, not income, and it would try to impose retroactive taxes on anyone who left the state.

Critics warn it’s not a one-time tax, but a first-time tax to be imposed repeatedly if successful.

Sen. Bernie Sanders flew in to rally for it in Los Angeles, talking about the billionaires’ “divine right to rule” without mentioning how he made millions in Congress while ruling.

“The billionaire class no longer sees itself as part of American society,” he warned, saying artificial intelligence (AI) and robots created by billionaires are helping install a “ruling elite.”

The billionaires, for their part, are already voting with their feet, reported Business Insider.

Google co-founder Sergey Brin is leaving ahead of a potential tax hit. He put up $20 million to fight the tax. Brin and fellow Google alum Larry Page have purchased homes in Miami in recent months.

Meta’s Mark Zuckerberg followed with a purchase on nearby Indian Creek.

California’s Democrat Gov. Gavin Newsom – eyeing a 2028 presidential run and dependent on Silicon Valley donors – has come out against the billionaire tax.

Voters will likely agree. While a new UC Berkeley survey found 50% of California voters currently support the billionaire tax, it’s a weak starting point because ballot initiatives typically erode in popularity from their opening numbers once opposition campaigns begin, Politico said.

Other surveys show taxing anyone is never really that popular, no matter how rich they are.

California Republican Rep. Kevin Kiley isn’t waiting for the November midterms to fight back. He’s introduced federal legislation that would prohibit any state from levying a retroactive tax on residents who leave.

This would close what critics describe as a punitive state measure designed to tax the wealthy out the door, an idea increasingly popular in blue states looking to raise money for welfare programs.

“It’s not a one-time [tax]. It’s a first time,” Trump AI czar David Sacks warned. “And if they get away with it, there’ll be a second time and a third time. And this will be the beginning of something very new and different in this country.”