Opinion: Internal emails reveal the real plan for a statewide income tax

Ryan Frost argues internal emails show a multi-step strategy toward a statewide progressive income tax in Washington. Photo by Nils Huenerfuerst on Unsplash

Ryan Frost says the public and internal communication from Democrats is clear. The ‘millionaires’ tax’ is not the goal. It is just the next step in enabling lawmakers to reach into every Washingtonian’s paycheck

Ryan Frost
Washington Policy Center

The sales pitch for Democrats’ proposed 9.9% income tax is a polished, oft-repeated one: it will finally lower “regressive” taxes for the working class and will only ever apply to millionaires.

Both statements are untrue.

While Democrats offer platitudes and deflections in press conferences, their internal emails tell a different story. One such email from the prime sponsor of the income tax bill – Sen. Jamie Pedersen – reveals a calculated, multi-year strategy to bypass the state constitution and impose a statewide tax on everyone, not just the wealthy.

In 2020, my predecessor, Jason Mercier published a trove of legislative public records revealing what lawmakers really thought about the capital gains tax. Among the documents was a 2018 email from Senator Jamie Pedersen to Dick Nelson, a former Democratic state legislator from Seattle.

In the email, Sen. Pedersen laid out the roadmap for a statewide income tax.

First, he told Nelson that “the major use of new revenue from a capital gains tax would be to reduce property and/or sales taxes.” He framed it as a trade: roughly 12,000 taxpayers paying the capital gains tax versus 4 million paying property taxes.

The capital gains tax passed. Revenue started flowing to the state. But the trade never happened. Property taxes kept increasing, sales taxes remained among the highest in the country, and the new revenue was immediately swallowed up by new spending.

We now have three years of evidence that these tax relief promises are false. The state collected $1.8 billion in capital gains revenue from 2022-2024, and not a dime of it went to reducing your property taxes or sales taxes.

Sen. Pedersen’s email was revealing in another way, too. He admitted the “more important benefit” of the capital gains tax was on “the legal side.” The goal was to provoke a court challenge that would give the Supreme Court a chance to overturn prior rulings that income is property under the state constitution. If they could reclassify income, it would “make it possible to enact a progressive income tax with a simple majority vote.”

This brings us to the second falsehood: that this is just about taxing the millionaires.

In his correspondence with Nelson, Sen. Pedersen didn’t describe the goal being a targeted or limited tax on millionaires. He described the goal as a progressive income tax that could be enacted with a simple majority vote. This represents a classic political strategy in enacting gradual policy change:

1. Pass a Capital Gains tax to break the legal seal. (Complete)

2. Pass a 9.9% “Millionaires Tax” to build the administrative infrastructure. (In Progress)

3. Lower the threshold to capture the middle class once the system is fully operational.

When politicians ask you to support a brand-new tax in exchange for lowering the ones you already pay, look at their track record. When have lawmakers ever actually honored that commitment? And when has a “temporary” or “targeted” tax in Washington ever remained that way?

The public and internal communication from Democrats is clear. The “millionaires’ tax” is not the goal. It is just the next step in enabling lawmakers to reach into every Washingtonian’s paycheck.

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