Julia Chirkova
Washington’s public-sector unions are mounting a significant financial defense of the state’s newly enacted high-earners income tax, injecting millions of dollars into the campaign to preserve the levy and combat an initiative seeking its repeal. The Washington Education Association (WEA) recently contributed $2 million, escalating its total investment to $3 million, thereby establishing itself as the largest single donor in the impending November ballot battle. This substantial financial commitment from labor organizations underscores the critical importance they place on the tax’s survival, which they argue is essential for funding vital state services and protecting their members’ livelihoods.
The pushback against Initiative 645, the measure aimed at nullifying the income tax, is being spearheaded by a coalition of influential public-sector unions. Beyond the WEA, unions representing state employees and publicly funded healthcare workers have also made seven-figure contributions. These financial infusions are fueling a robust advertising campaign, including television commercials that began airing this week, designed to sway public opinion against the repeal effort.
H2: A Financial Imbalance in the Ballot Measure Fight
The current financial landscape of the campaign surrounding Initiative 645 reveals a significant disparity in fundraising. The "No on 645" campaign, which advocates for retaining the high-earners income tax, has amassed $7.8 million. This figure stands in stark contrast to the $1.3 million raised by the "Vote Yes Repeal the Income Tax" campaign, which supports Initiative 645. An additional $3.7 million has been raised by "Let’s Go Washington," the organization that spearheaded the signature drive to qualify the initiative for the ballot. This group’s fundraising efforts have also supported other ballot measures concerning issues such as transgender athletes and parental rights.
The substantial financial backing from public-sector unions highlights the high stakes involved. For these organizations, the revenue generated by the high-earners income tax is directly linked to the state budget, which underpins the salaries of their members and the continuation of public services they provide.
Steve Gordon, a retired trucking company owner and executive who chairs the "Yes on I-645" campaign, criticized the role of public-employee unions in funding the opposition. "It’s a self-sustaining money machine for the interests that are funding it," Gordon stated, also referencing the unions’ consistent financial support for Democratic elected officials.
H3: Understanding the High-Earners Income Tax
The tax in question, often referred to by supporters as the "millionaires tax," imposes a 9.9% levy on annual household earnings exceeding $1 million. Projections indicate that this tax could generate over $3 billion annually for the state. However, tax collections are not slated to commence until 2029, and the entire implementation hinges on the outcome of the vote on Initiative 645.
This tax was enacted amidst growing financial pressures on the state budget, despite the approval of billions in new taxes over the past two years by Governor Bob Ferguson and the Legislature. These measures included various tax increases aimed at bolstering state revenue.
H3: Union Concerns and Motivations
The financial commitment from public-sector unions stems from deep-seated concerns about the potential repercussions of repealing the high-earners income tax. Members of these unions, including teachers and healthcare workers, fear that the loss of this revenue stream would necessitate significant cuts to essential public services and could jeopardize their own job security and compensation.
The Washington Federation of State Employees (WFSE), for instance, recently engaged in walk-offs to protest Governor Ferguson’s assertion that the state cannot afford to grant pay raises next year. Mike Yestramski, president of the WFSE, articulated the union’s position: "Saving the income tax will help fix the state’s regressive tax code and prevent ‘austerity cuts’ to state services."
Similarly, Tani Lindquist, vice president of the Washington Education Association, expressed educators’ anxieties. She warned that a repeal of the new tax would create a multibillion-dollar deficit in the state budget, directly impacting funding for K-12 education. Lindquist defended the WEA’s $3 million contribution, funded by union dues, as a necessary investment. "We are super-conscious that every penny we spend comes straight from our members’ pockets," she stated. "They know it will be devastating to public schools and social programs if this gets repealed."
SEIU 775, representing long-term care workers, is also actively engaged in negotiations with the state for improved wages for its members, who provide care for the elderly and disabled. Adam Glickman, SEIU 775 secretary-treasurer, emphasized the perceived fairness of the tax. "We think it’s entirely reasonable to ask the wealthiest among us to pay a little bit more," Glickman said. He pointed out that union caregivers, earning approximately $22 an hour, pay about 16% or more of their income in taxes, largely due to Washington’s reliance on sales taxes. In contrast, he argued, the wealthiest residents pay a significantly lower percentage of their income in taxes.
H2: The Projected Impact and Allocation of Funds
The high-earners income tax is anticipated to affect an estimated 25,000 households. The revenue generated is primarily designated for the state’s general operating budget. A notable portion, 5%, is earmarked for childcare and early learning subsidies. Additionally, some funds will be allocated to expand the state’s Working Families Tax Credit, a program designed to provide financial relief to low-income households.
"It’s clearly going to benefit low-income workers and working families," Glickman of SEIU 775 asserted, highlighting the intended positive impact of the tax on vulnerable populations.
SEIU has contributed nearly $2 million to the "No on 645" campaign, while the state employees union has donated $1 million. Contributions have also come from national union organizations and prominent local philanthropists, further bolstering the campaign’s financial resources.
H3: The Opposition’s Narrative and Concerns
The campaign advocating for the repeal of the new income tax, Initiative 645, is largely financed by individual business owners and corporations who oppose the tax. Their central argument is that the tax will erode Washington’s competitive advantage as one of the nine states in the U.S. that currently has no state income tax.
Opponents of the tax are pointing to economic indicators such as tech layoffs and an increase in home listings as potential signs that wealthy individuals and businesses are considering relocating from Washington. They contend that the imposition of the high-earners tax contributes to a negative business climate and a perceived "demonization of businesses."
Matt McIlwain, managing director of Madrona Venture Group, a Seattle-based venture capital firm specializing in healthcare, artificial intelligence, and startups, expressed his concerns. "All the politicians don’t want to believe that – they are going to suffer the adverse consequences of what is happening on the ground," McIlwain stated. Madrona Venture Group recently donated $250,000 to the "Yes on I-645" campaign, making it one of the campaign’s significant contributors.
Meg Gluth, owner of Catalynt, a chemical and manufacturing company based in Edmonds, shared a similar sentiment. She indicated that the current business and tax climate in Washington is prompting her to reduce investments in the state and explore relocating her business. "In this world of remote work, there is this conversation of do I even need to be located here anymore… I am getting to a point personally where I can’t afford to," Gluth explained. Her company has contributed $50,000 to the income tax repeal campaign.
H3: Notable Absences and Other Key Donors
Notably, some of Washington’s largest corporate players, including Microsoft and Amazon, have remained on the sidelines of the Initiative 645 debate. These companies have reportedly focused their advocacy efforts on opposing other proposed tax measures from Democrats, such as a wealth tax or a statewide payroll tax similar to Seattle’s JumpStart tax.
On the "Yes on I-645" side, Steve Gordon and his associated businesses have collectively donated $800,000 to the campaign and "Let’s Go Washington." Other significant donors include Bellevue developer Kemper Freeman and Brian Heywood, the Redmond hedge fund manager who leads "Let’s Go Washington."
"Let’s Go Washington" has also reported receiving over $145,000 in smaller donations. These contributions, according to the campaign, reflect broader public apprehension that the high-earners tax may eventually be expanded to encompass lower income brackets. Jaime Herrera Beutler, a former Republican member of Congress from Southwest Washington who is now serving as a spokesperson for the I-645 campaign, echoed this concern. "All the writing is on the wall that they are going to expand this to more income levels in Washington," she stated.
The I-645 campaign has launched radio advertisements promoting this argument, which tax supporters have dismissed as fearmongering. Governor Ferguson has publicly pledged to veto any attempts to expand the tax to lower income brackets.
The upcoming vote on Initiative 645 represents a critical juncture for Washington’s fiscal policy, with deeply entrenched interests on both sides pouring significant resources into shaping the outcome. The debate centers not only on the fairness and economic impact of taxing high earners but also on the broader implications for public services, economic competitiveness, and the state’s overall tax structure.
