Ballot fight on WA income tax looks certain

TUMWATER – Opponents of Washington’s new income tax on high earners turned in more than 500,000 signatures Thursday for an initiative to repeal the levy, nearly double the amount needed to secure a spot on the November ballot.

Let’s Go Washington, the political committee that’s become the state’s leading purveyor of conservative ballot measures, delivered the boxes of petitions for IP26-645 at the secretary of state’s office shortly before 4 p.m.

The initiative seeks to repeal the 9.9% tax on individual and household wage income above $1 million a year, while preserving tax breaks and the expansion of a tax credit program for lower-income families built into the law. It also prohibits local governments from imposing any income tax.

Brian Heywood, the hedge fund manager who leads Let’s Go Washington, told supporters that more than 511,408 signatures would be submitted. If at least 309,000 are valid registered voters, the measure will qualify for the November ballot.

“When you go out and you talk to over half a million people, you hear their voices, you hear what they’re saying,” he said. “Number one is not one single person we talk to believes Olympia when they say this income tax is not coming to them. They know it’s coming for them.”

Going into campaign mode

The targeted tax was part of legislation passed by Democrats this year and signed by Democratic Gov. Bob Ferguson on March 30. Every Republican in the Legislature and a handful of moderate Democrats opposed it.

It will go into effect in 2028 if it survives in court and withstands this likely electoral challenge. Collections would begin the following year from an estimated 21,000 filers.

In anticipation of the turn-in, supporters of the tax were in full campaign mode Wednesday, with dire predictions and personal attacks on Heywood.

Washington Education Association President Larry Delaney, in a 90-second video message, called Heywood a “greedy hedge fund mogul” and warned the measure “would take money from our schools and send housing and healthcare costs skyrocketing. It would take away funding from child care, raise taxes on small businesses and working families, and eliminate universal school lunches.”

Separately Wednesday, a union-backed campaign committee known as “Millionaire’s Tax Washington” put out a release similarly predicting deep cuts in state spending. The group, which has funding from the Washington Education Association, Washington Federation of State Employees and Service Employees International Union, warned that the initiative’s passage would lead to “tax increases on small businesses and working families.”

But the initiative itself does not raise any taxes. Just the opposite.

It would leave in place tax breaks embedded in the income tax law, including elimination of sales tax on diapers, personal care products, like shampoo and deodorant, and many over-the-counter drugs. Likewise, more small companies would be exempted from paying the state’s main business tax and eligibility for the Working Families Tax credit would be expanded.

If the initiative were to win approval, the state would lose an estimated $3 billion a year in revenue from the income tax, as it gains $570 million in expenses. Those costs would rise annually, forcing the Legislature and governor to look for ways to pay for the commitments, or abandon them. A looming budget shortfall would complicate the conversation.

Those fighting the initiative say the only path would be to scrap the new tax breaks and credits, leading to higher taxes.

“Heywood is pretending that he can offer voters something for nothing,” said Erik Houser, spokesman for the newly launched No on 645 committee. “The bottom line reality is that it is highly likely that the tax cuts would have to be pulled back as well as the state grapples with the large fiscal hole that the repeal would create.”

Heywood shrugged off the salvos, saying most of the tax proceeds will go into the general fund with no earmarks for education or healthcare in the legislation. “There is no reason to believe that they will use the money responsibly.”

Opponents’ focus on Heywood, a millionaire who would be subject to the tax, may pay dividends.

In 2024, it was an integral part of their strategy when voters rejected Heywood-sponsored ballot measures to derail the state’s new long-term care insurance program and roll back the state’s capital gains tax and premier climate policy known as the Climate Commitment Act.

“That’s their tactic straight up,” Heywood said of the early name-calling. “The really important thing about the unions that everybody needs to know is that they chunked down $20 million against us last time. They’re gonna throw stuff at me. Bring it, and we’ll see.”

Another pre-election court fight?

The state’s certification process for the ballot initiative is expected to last two weeks.

Then the attorney general’s office will draft a “public investment impact disclosure” statement, a single sentence of no more than 15 words listing the top three categories of state services that would be impacted.

Under a 2022 law, it must be written “using neutral language that cannot reasonably be expected to create prejudice for or against the measure.” 

It is due to the secretary of state’s office by July 23. Any challenges must be filed in Thurston County Superior Court within three days, excluding weekends.

This story has been updated.