'An economic chill': Seattle architect says 'millionaires tax' fears killed major project

SEATTLE - Unintended consequences from tax policies don't stay at the top—they cascade fast, according to a local small business in Seattle. 

Mark Elster, owner of Seattle-based firm AOME Architects says as Washington lawmakers push forward with the "millionaires tax," he and others are drafting a formal letter to Governor Ferguson.

Their message? The mere anticipation of the tax is creating an economic "chill," driving high-net-worth clients to pull the plug on major projects before they even break ground.

The backstory:

If the millionaires tax survives the ballot this November, the 9.9% tax on any household or individual making more than a million will be collected starting 2029.

The income tax is expected to generate nearly $4 billion annually. Supporters say the tax is needed and makes the wealthy pay their fair share to fund various social services and education.

They tout small businesses will also get a break on their B & O taxes.

What they're saying:

Although the tax hasn’t been collected yet, Elster says it’s driving a business decrease across the construction industry, especially for high-end home construction.

"They're all reporting some anecdotal evidence of a chill in client activity, the number of projects going on, and projects being canceled after they've started," Elster said.

AOME says they just lost the largest project in their office, with the client citing concerns over the millionaire tax. Hundreds of people tied to that project were impacted.

"Our revenue has declined by over 50% in a matter of months," Elster said.

AOME says they had to lay off three employees recently.

Elster says he wants to raise public awareness to the direct impact, especially on ancillary businesses and average workers, saying the people impacted in various fields tied to construction are not millionaires.

"I wish those lawmakers had a better practice of consulting impacted stakeholders...and learning about the second- and third-order impacts before they enact legislation," Elster said.

Local perspective:

Elster has been in the business for decades and the veteran says the decline is not the typical seasonal slow down or can be explained away by global events.

"Largely our economy is doing pretty well nationally. It seems to be kind of an outlier here in the Northwest," Elster said.

The architecture firm says he’s heard some politicians and supporters of the millionaire tax dismiss the wealth exodus, calling it overblown. He says he can personally vouch and declare that a wealth exodus is happening, but quietly. 

"It's kind of like they've looked over there across the little stream and they see the golden geese laying golden eggs. And they want more of those eggs. They wade across the stream and they grab the geese by the neck and squeeze hard to try and get more eggs to come out, and the result is fewer eggs, or the geese flee," Elster said.

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