Opinion: Gov. Ferguson has abandoned his own tax relief demands

Ryan Frost of the Washington Policy Center argues that Gov. Bob Ferguson’s support for the state’s proposed income tax contradicts his earlier demands for broader taxpayer relief.

‘The governor’s willingness to fold on a bill that so clearly violates his own public statements suggests that his commitment to taxpayer relief was more a matter of optics than a genuine legislative requirement’ – Ryan Frost, Washington Policy Center

Ryan Frost
Washington Policy Center

Governor Ferguson announced today that he will sign the latest version of what supporters are calling the “Millionaires’ Tax,” a politically convenient label for a state income tax. If signed, this governor will have enacted the largest tax increase in state history and a brand-new income tax, all within his first two years in office.

The governor’s statement frames the revised bill as a win for affordability, touting expanded Working Families Tax Credit eligibility, free school meals, childcare funding, and new sales tax exemptions. But the state could fund every one of those priorities today if the legislature exercised spending discipline on its existing $80+ billion operating budget.

Instead, these provisions are being used as justification for an entirely unnecessary new tax, bundled with a poison pill that repeals the meager tax relief if the income tax is ever struck down or repealed by voters.

Does It Meet Governor Ferguson’s Requirements?

Gov. Ferguson has requested that a majority of the ~$3.5 billion in annual income tax revenue, around $1.9 billion, be returned to taxpayers.

Here are how his requests compare to the version of the income tax bill he says he will now sign:

Gov. Ferguson Request	Tax Relief	Verdict	House Floor Provisions 3/6/2026
Majority of revenue returned to taxpayers	$1.9 billion or 50%	NOT METOnly 27% of revenues go to tax relief, or $950 million/yr.	Est. relief: B&O (~$130M) + Working Family Tax Credit (~$230) + sales tax exemptions (~110M) + ESSB 5814 repeal (~$480M) = $950M total.
B&O small business relief—exempt first $2.5M in revenue (Impacts ~170K businesses)	$1 billion	NOT METRoughly 9x smaller, est. $130 million/yr.	B&O credit: $55→$125/mo. (non-service), $160→$375/mo. (service). Exempts ~$250K, phases out ~$500K.
Working Family Tax Credit (WFTC) expansion—reach 460K additional households	$230 million	MET	Age lowered to 18+. 3/6/26 Striker adds new income ceiling: greater of federal EITC max or monthly need standard x12.
Sales tax exemptions—hygiene, baby products, diapers	$110 million	MET	Grooming/hygiene and diapers. 3/6/26 Striker adds over-the-counter drug exemption.
Two annual sales tax holidays (3-day + 2-day, items <$1K)	Unknown	NOT MET	No reference to sales tax holidays in bill.
ESSB 5814 service sales tax repeal	~$480 million	MET	All service taxes except advertising repealed Jan 1, 2029. 3/6/26 Striker expands earlier partial relief with additional live presentation exclusions.
$1 million threshold placed in state constitution	$0	NOT MET	All proposed amendments to limit the income tax to those making over $1 million per year have been rejected.

It is not clear why Governor Ferguson would support the current bill under consideration, given that it represents a significant departure from what he said he wanted to see in the bill. Worst of all – despite the Governor’s insistence that at least $1.9 billion (a majority of the revenue) be returned to taxpayers, the current bill only provides around $950 million in relief, meeting only half of that goal.

The Governor’s willingness to fold on a bill that so clearly violates his own public statements suggests that his commitment to taxpayer relief was more a matter of optics than a genuine legislative requirement.

Ryan Frost is the director of Budget and Tax Policy at the Washington Policy Center.