Washington business owners fear socialist ‘millionaires tax’ is driving businesses out — and they’re next

SEATTLE—Business owners in Washington state are worried that the recently passed "millionaires tax" will drive economic activity out—and even target them next. 

"There's a lot of fear and trepidation with what's going on in our government when it comes to taxes," Matt Humphrey, a Seattle barber who has locations in the Ballard and Roosevelt areas, told Fox News Digital. 

"This new millionaire's tax is definitely going to impact us," Humphrey said. "We're afraid… they treat us a bit like an ATM when it comes to paying out taxes as a small business." 

Steve Gordon, principal of Gordon Truck Centers, a truck dealer in Pacific, Washington, said he is concerned that the millionaires tax will eventually make its way to those who are not in the millionaire income bracket. 

"The income tax is the latest kind of battle that's happened here recently," Gordon said. "But while they frame it as it's just a tax on millionaires, I mean that's stacked on a whole bunch of other taxes and there's nothing to keep it from expanding to regular citizens. And I think a lot of regular folks realize that what might be just for millionaires today supposedly will be coming for them later as they broaden that tax base." 

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Washington state Democrats last month passed the "millionaires tax," which Democratic Gov. Bob Ferguson signed March 30. It's the state's first-ever income tax, celebrated by progressives and socialists and opposed by conservatives; the Wall Street Journal editorial board called it a "con" after its passage that will "inevitably capture the middle class."

The new tax will impose a 9.9% income tax on households earning more than $1 million each year. T tax applies to any money earned after the first $1 million of someone's annual income. It will take effect on Jan. 1, 2028, with the first payments due in April 2029, KOMO News reported. 

"Adoption of the historic Millionaires’ Tax makes our tax system more fair, and means free meals for K-12 students, the largest tax break in state history for small businesses, eliminating the sales tax for baby diapers, and sending a check to nearly 500,000 working families to make life more affordable," Ferguson said at the time.

His office touted that the new tax "sends significant revenue back to Washington families and small business owners."

But not everyone is thrilled.

"They're all concerned. Everybody's concerned," radio host Ari Hoffman told Fox News Digital.

"And it doesn't matter what kind of business you have, because as I mentioned before with regards to Amazon, if you're a barber and you were reliant on the Amazonians as your customers, now you don't have them anymore. You don't have a barbershop anymore. There were a lot of places that opened up in South Lake Union where Amazon was specifically for Amazon, and they had to close shortly thereafter."

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570 KVI reported Wednesday that Socialist Seattle Mayor Katie Wilson is suggesting she might be pursuing additional taxes on the wealthy and big business. 

"Speaking at a community forum Friday night, Wilson said her administration is exploring new ‘progressive revenue options’ to help close a projected $140 million city budget gap in 2027," the outlet reported, quoting Wilson who said, "My team is very hard at work looking for progressive revenue options, taxing the rich, taxing big business in a way that we think will be politically viable and practical." 

The city of Seattle, according to the Tax Foundation, has the highest combined state and local sales tax rate, sitting at 10.35%. 

The organization points out that Seattle surpassed the city of Tacoma, Washington, which had a 10.3 percent tax rate, when King County, where Seattle is located, adopted a 0.1% additional sales tax to generate additional revenue for nonprofits providing cultural programming.

"I pay two different B&O taxes, a state B&O tax, a city B&O, I pay sales tax," Humphrey told Fox News Digital.

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"They want to tax me on all my equipment that I use here annually, that I've already paid sales tax on," he said. "They come up with the highest minimum wage in the state, if not in the country, that I'm aware of. So the cost of labor, the other thing is our relationship with labor. They put us in a very vulnerable position when it comes to actually being an employer. It doesn't favor the employer."

Washington State’s Business & Occupation (B&O) tax is the Evergreen State’s primary business tax. It is unusual because it is charged on gross receipts, or total revenue, rather than profit, meaning that businesses must pay the tax even if they lose money.

Several Washington cities have a higher minimum wage than Seattle's $21.30 per hour, including Tukwila at $21.65 for large employers and Renton at $21.57.

"Amazon used to be bustling," Hoffman told Fox News Digital. "It was like when I would go down there, I felt like it was in Manhattan. I couldn't find a parking spot anywhere. And now, no problem, I can park wherever I want. It's really sad."

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On Feb. 24, Amazon told GeekWire that it would not renew its lease at 1915 Terry Ave in the Denny Triangle area of downtown Seattle, which had occupied the space for 12 years. 

GeekWire reported that the company is growing its presence outside downtown Seattle in Bellevue, located in King County, Washington, across Lake Washington from Seattle. 

It has opened new office buildings and plans to have 25,000 employees as part of its regional headquarters.

"I mean, I look at my own community," Hoffman said. "When you had a lot of people who lived here specifically for the tech world, and in 2020 they were told they could work remotely, a lot of them went elsewhere and were still collecting a Seattle salary and then found jobs in those other places. They never came back. The jobs aren't going to come back magically. These taxes, these policies are scaring people off and a lot of people are leaving."

Starbucks is another company appearing to lessen its Seattle presence, confirming in March that it will be closing five additional stores in the city. That follows several closures in 2025, including the Starbucks Reserve Roastery on Capitol Hill. 

Additionally, in a March post on LinkedIn, former Starbucks CEO Howard Schultz announced that he and his wife moved to Florida for their "retirement phase," leaving Washington state after almost half a century.

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While Schultz did not mention the millionaires tax, some, like Gordon, speculate his departure could have been due to it. 

"It was pretty ironic that Howard Schultz, who definitely has been a person of the Left nationally with his political profile, announced the day that they approved that income tax in our legislature, he made the announcement that he was leaving for tax-free Miami, Florida," Gordon said. 

"So I don't think that was a coincidence," he went on. "And for people that have watched Jeff Bezos leave and other prominent members of the Seattle business community, you start to see a trend there that's unavoidable that the leaders of the businesses are leaving and the businesses themselves are relocating. Starbucks headquarters, for instance, has just opened up a new second headquarters in Tennessee and the speculation is they're eventually going to move all of their employees out of their Seattle headquarters to Tennessee."

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But State Rep. Shaun Scott of Seattle, a member of the Seattle Democratic Socialists of America since 2017, told Fox News Digital that he doesn’t want to engage in hypotheticals about the future of the millionaires tax trickling down to the less wealthy.

"Well, it's very difficult to legislate with hypotheticals and to legislate thinking about what may happen 10, 15, 20 years down the line in a legislative body that I may not even actually be a part of," Scott said. 

"I believe that it is our role as state lawmakers to legislate according to the issues that are impacting us while anticipating ones that might come down the line," he added. 

Scott continued, "And the fact of the matter is that right now in Washington state we have galling wealth inequality. And underfunded public institutions. And the way that that is reconciled is through basic arithmetic. People who have more could afford to be paying more into the system. And when that happens, I think that Washington will be an even more competitive place to live, work, and do business than it is at present."

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Scott said he believes "taxing the rich" is popular among both Republicans and Democrats. 

"Well, taxing the rich and the idea of taxing wealth in order to fund services that we all use, make no mistake about it, this is about as popular a policy position in Washington state as any other," Scott said.  

"As a matter of fact, it is, I would venture to say, the most popular position that somebody could take," Scott added. "In the November 2024 election cycle here in Washington state, approaching two-thirds of Washington state voters statewide cast their ballots in favor of a capital gains tax upholding our capital gains tax, which funds early learning K-12 schools and child care in our state. So when you talk about taxing the rich in our state, that is something that is staunchly supported in very red conservative legislative districts as well as very progressive blue legislative districts like my own."

Vijay Boyapati, a former software engineer for Google, moved to Seattle in 2006 from California to escape high taxes there.

He told Fox News Digital that he sees taxes consistently rising in the state without "results."

"Taxes have gone up constantly over the last decade. They've almost doubled from about ten years ago, but educational results are much worse, so the money isn't producing the results that they say it will produce," Boyapati said.

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"So the question really needs to be, why are we not getting better results? he asked. "I think we need to look at why our school systems are failing, why 8th graders, for instance, have like a 70% rate of illiteracy and really poor scores on math, those are really important things to look at and throwing more money at it hasn't solved the problem, so I think we need to kind of address the problem first before throwing more at it."  

A June report from the Washington State Standard found that, "More than two-thirds of the state’s 4th graders failed to meet reading standards, and 70% of 8th graders weren’t proficient in math last year." 

Boyapati also said friends of his are leaving the state because of the tax climate.

"I have friends who've left to Texas, friends who left to Miami, friends who've left to Wyoming," he said. "And it's all for the same reason. It's because Washington really went very far left in the last four years, and the policy changes have been really dramatic and that caused a lot of my friends to leave, unfortunately." 

Humphrey, the Ballard barber, said that he would warn others about something similar happening in their state. 

"What I would say to the rest of the country is don't let this happen to you," Humphrey said.

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"Don't become so compassionate around these issues that sound good and don't not do your homework," Humphrey added. "Please look. Look closely at the taxing of small businesses. You can't, you know, what we're doing here in the state – going against the Constitution for an income tax is a terrible decision, and it's going to snowball right towards us, right? I'm next. I'm the next in line. I don't make a million dollars a year for sure, but I'm in line for them to come after for a state income tax. And I guarantee you, I can't afford that." 

In a statement to Fox News Digital about its Seattle presence, Starbucks said, "We regularly review how our coffeehouses serve their neighborhoods and if they are meeting customers where they are. Sometimes that means investing in updates or trying new formats." 

The company added, "Other times, it means making the difficult decision to close a location that no longer fits how people in that community live, work, or gather. These choices are never easy — especially here at home — but they’re an important part of focusing on what we do best and delivering on our Back to Starbucks strategy." 

An Amazon spokesperson told Fox News Digital in a statement that, "Amazon employees will be moving out of 1915 Terry Avenue at the end of May when our lease expires and relocating to other Puget Sound headquarter offices." 

Fox News Digital reached out to former Starbucks CEO Schultz, Seattle Mayor Katie Wilson, and Gov. Bob Ferguson for comment.