Espresso for the road: Howard Schultz, job creators to flee Washington state’s millionaire tax

Seattle resident Howard Schultz, the founder and longtime face of Starbucks, has announced that he will be drinking his vanilla soy latte in Miami from now on, driven off by a threatened millionaire income tax in Washington state.

Schultz built the coffee house chain into a worldwide phenomenon that now has 33,833 stores. He has been a centerpiece of Seattle life and commerce for over 40 years.  

But the new tax is the final straw. The bill is making its way, inevitably, through the state legislature. Gov. Bob Ferguson has indicated he will gleefully sign it into law.

Many Californians don’t realize the state of Washington is one of nine without a personal income tax.  Politicians in Olympia are aiming to change that in a unique manner — by taxing those with federal adjusted gross income above $1 million in a year. 

The proposed new tax would take effect for the 2028 tax year. The tax rate will be 9.9% of income above that magic number.  Someone making $10 million must hand over nearly $1 million that they currently don’t pay.  

The elected officials are providing the public with the usual class warfare arguments. The tax supposedly will only hit 0.5% of taxpayers. Politicians also pull at the public’s heartstrings by stating that the new funds will be used for K-12 education, health care, and housing.  

The public at large may cheer this on, until reality hits — or several realities hit.

The first reality is how many accountants like me will make sure their Washington clients never get near that magic number of $1 million. And if they do get close, we will make sure they dip below that level.  

The promoters of the tax say it will bring in more than $3 billion annually. Let’s see if that happens.  

The second reality is that the residents of Washington will never see any impact from the promised spending on education, health care, and housing.

The third reality is that the departure of Schultz is not an isolated event. One of the other iconic Seattle business leaders has already landed in Miami — Amazon icon Jeff Bezos. 

That leaves Bill Gates. He may not leave, but rest assured others are already packing up their houses.

No state or country can afford to lose its richest residents. Other states have passed taxes that target millionaires — and have watched them leave.

With them go thousands of jobs that they create, both personally and through their companies. These jobs are the true foundation of prosperity. They are jobs that the children of the politicians voting for these new taxes will never have.

The fourth — and arguably most important — reality is that this is just the beginning. The next target is people with lower incomes, who will be made to pay additional taxes. 

And this is why. It is currently illegal to establish an income tax in Washington. That comes from a 1933 Washington state Supreme Court ruling.  

It is a sure thing that this new tax will be tested in the courts, and probably get to the Supreme Court level. 

Gov. Ferguson has stated that he welcomes the court challenge. The same voters that have elected Democrat governors since 1984 and almost two-thirds majorities in both houses have put left-leaning justices in office who will most likely overturn the 93-year-old ruling. 

Once that happens, Democrats will have an opening to start moving down the level at which income is taxed overall. It will not take long, once the rules have changed.

Just like the proposed billionaire tax in California, proponents of Washington state’s new tax are deluding themselves about the economic harm this law will cause.  

The people will never get the added benefits or revenues promised. The elected officials will conceive new arguments for increased taxes on more people. And the state will see more high earners moving to those other eight states with no income tax — taking their employees with them.  

Bruce Bialosky, a two-time presidential appointee, is a certified public accountant specializing in taxes.

Download The California Post App, follow us on social, and subscribe to our newsletters