Architect of WA's millionaire tax defends strategy revealed in leaked emails
Architect of millionaire tax defends new law
State Senator Jamie Pedersen, the primary architect of the Washington millionaire tax, defends the new law as a way to fix a regressive system and discusses the future of a progressive income tax in the state.
OLYMPIA, Wash. - The primary architect of the new ‘millionaire tax’ dismissed concerns of a "wealth exodus" from Washington due to the income tax.
State Senator Jamie Pedersen asserted there is no evidence that his signature legislation is driving the rich or their businesses out of the state. Pedersen instead says business groups have identified two other taxes impacting the business climate.
"The reality is the millionaire tax is not likely to result in businesses leaving. The drivers that we heard about from them are concerned about the sales tax on services, concern about the estate tax. Both of those things the legislature took action on in the last session...I do not have any indication that the millionaire's tax is going to cause some significant exodus," Pedersen said.
The legislature increased the estate tax or death tax to the highest in the country in 2025 to 35% for the wealthiest residents. In 2026, they rolled it back to 20%, admitting it was causing the rich to leave Washington, leading to less revenue.
Gov. Bob Ferguson presents the "millionaires tax" bill after signing it into law on March 30, 2026. (FOX 13 Seattle)
Business owners have voiced concerns to FOX 13 over ESSB 5814, which expanded the retail sales tax to capture advertising and digital services. The measure was originally sponsored by Senator Noel Frame and supported by Pedersen, both of whom represent Seattle.
What they're saying:
FOX 13 interviewed multiple business owners who said they were forced to shut down their small businesses due to the new retail sales tax making it hard to survive.
The legislature revised the measure in 2026 and now the expanded retail sales tax is expected to partially roll back in 2029, but only if the "millionaire tax" goes into effect by 2028 with money generated the following year as intended.
Pedersen is also facing scrutiny over leaked internal emails first reported by Center Square showing he worked closely with the Attorney General’s office to trigger a legal challenge to force the state Supreme Court to reconsider a 1933 ruling. The landmark decision defined income as property applied in a uniform way, not exceeding 1% per year.
Senator Jamie Pedersen
The millionaire tax is a 9.9% rate on income exceeding $1 million for an individual or household.
In the leaked email, Pedersen wrote: "I’d like to force the Washington State Supreme Court to reconsider its case law that considers income to be property. Do you have any other suggestions about how to bolster the argument that this would be an excise tax and not a property tax?"
Dig deeper:
Former Attorney General Rob McKenna and former state Supreme Court justice Phil Talmadge have sued over the millionaire tax, saying it is unconstitutional. The decision on that is pending.
McKenna is calling Pedersen’s exchange with the AG’s office an inappropriate use of state resources to circumvent voter protection.
Talmadge, also a former Democrat state senator, says there are lawyers in Olympia for legal advice, and he agrees with McKenna that lawmakers should not be working with the AG’s Office on how to circumvent parts of the constitution.
But Pedersen pushed back, saying he did nothing wrong and only engaged in standard practice for lawmakers who draft bills.
"That is a regular part of the process, and everyone in the public should be relieved that legislators are seeking advice from counsel before we draft laws," Pedersen said.
The senator also claimed the 1933 state Supreme Court ruling was "wrongly decided" as he defended his use of the Attorney General’s office.
"It is absolutely the regular role of the legislative branch not just to roll over when there's a bad decision, but to push back to try to make good policy that is consistent with our understanding of the Constitution," Pedersen said.
Lawmaker defends bypassing voters on millionaires tax
Leaked emails reveal a Washington state senator worked to bypass voters on the millionaires tax. The state Supreme Court ruled voters cannot use a referendum to overturn the tax due to a necessity clause. Sen. Jamie Pedersen is defending his coordination with the Attorney General's office to challenge a 93-year-old constitutional law.
Leaked emails revealed that Pedersen got advice from the AG’s office to include a so-called emergency or necessity clause to the millionaire tax, which bars it from a voter referendum.
Let’s Go Washington (LGW) sued over the referendum issue but the state Supreme Court ruled this week that the constitution does not allow a referendum if the government deems the tax necessary to support the government.
"The Constitution says measures that support state government and its existing institutions...are not subject to referendum, period. End of story," Pedersen said.
Pedersen pointed out that voters will still get to weigh in through an initiative process.
The other side:
On Friday, LGW released information saying they received their initiative ballot titles and have begun mobilizing efforts to gather signatures to qualify to get the issue on the ballot. LGW will need to gather hundreds of thousands of signatures in a short amount of time to qualify.
As for the constitutional issue of the millionaire tax, Pedersen defended it.
"The millionaire tax is, in my opinion, completely consistent with that because it's not a tax on owning something. It's a tax on doing something. It attacks on earning your income. It's not different from the business and occupations tax. It's no different from a capital gains tax," Pedersen said.
Pedersen says he does not see income as property.
"If you can't tax income, why can you tax gross receipts? Are a business' gross receipts not its property? I mean, just think about that and how nonsensical that is. But they twisted their way into finding that the business and occupation tax was constitutional, whereas the voter-approved income tax was not," Pedersen said.
What's next:
As we look ahead to next year’s legislative session, FOX 13 asked if lawmakers could lower the millionaire income tax threshold, Pedersen answered:
"The legislature could also repeal the sales tax or the legislature. I mean, there are a lot of things that the legislature can do in the future that are not constrained by the Constitution."
Although he personally supports a universal income tax, Pedersen says most of the legislature would not support that.
"I support a progressive income tax that has a substantial deduction at the bottom. But there's not support even for that in the legislature. That's just the reality. It is supported in my district. My legislative district is strongly in support of a progressive-income tax," Pedersen said.
The senator revealed a desire for an overhaul of Washington's entire fiscal system. He says Washington should look to Idaho.
"If we just blew up our tax structure and took Idaho's tax structure, put onto our economy, Idaho's tax structure instead of $76 billion a year for our state budget, we would have...$88 billion for our state's budget," Pedersen said.
Idaho has property taxes, a lower sales tax than Washington and a flat income tax of 5.3%.
The Idaho State Capitol building in Boise home of the government of the state of Idaho . (Photo by: Education Images/Universal Images Group via Getty Images)
For now, Pedersen says the millionaire tax is one way of fixing a regressive tax system where it’s only fair the rich pay more.
Pedersen also points out that the millionaire tax will provide revenue to offset B&O taxes for many businesses and cut sales taxes for hygiene products, diapers and over-the-counter drugs.
If regressive taxes are a concern, FOX 13 asked why lawmakers are not lowering taxes that directly impact low- and middle-income people, like gas, sales tax and property taxes.
"I think this is a great conversation for the people to have with their elected representatives," Pedersen said.
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The Source: Information in this story came from the Washington State Legislature, Let's Go Washington and original FOX 13 Seattle reporting and interviews.