‘We don’t have a revenue problem’: Seattle venture capitalist urges voters to repeal WA’s income tax

Matt McIlwain, the managing director of Seattle venture capital firm Madrona, argued that Washington needs to rein in spending rather than impose an income tax, urging voters to support Initiative 645.

“We really have a spending problem in the state,” McIlwain said on “The Jake and Spike Show” on KIRO Newsradio. “We don’t have a revenue problem.”

The venture capitalist contended that Washington’s existing tax system has generated substantial revenue while encouraging investment and job creation. KIRO host Jake Skorheim supported his call for repeal, while KIRO host Spike O’Neill challenged McIlwain to explain how schools could reduce spending without sacrificing essential services.

McIlwain points to revenue growth since 2010

McIlwain framed his opposition to the income tax around economic opportunity. He described entrepreneurs from different backgrounds as deserving access to capital and the chance to build businesses, arguing that an income tax would discourage the risk-taking that creates jobs and new products.

He pointed to Washington voters’ rejection of a state income tax in 2010, contrasting warnings about insufficient funding then with the revenue growth that followed.

According to McIlwain, the state’s biennial revenue budget has grown from approximately $26 billion then to about $80 billion today.

“And by the way, the fear-mongering that was put out back in 2010 was, if we don’t have an income tax, we’re never going to have enough tax revenue to fund education and healthcare,” McIlwain said.

He credited Washington’s investment-driven economy and existing taxes, including sales taxes and the business and occupation tax, with generating money for state services.

Spike challenges the spending argument

Spike questioned how rejecting the income tax would address continued funding concerns in education and healthcare.

“How do you solve this deficit?” Spike asked.

McIlwain responded that the state should examine its spending and the outcomes that spending produces. He said Washington’s annual spending per student rose from a little more than $10,000 in 2010 to more than $20,000 today.

He argued that increased funding should come with greater accountability for educational results.

Spike pressed for specific reductions, emphasizing that schools still need maintenance, utilities, and teachers.

“You can’t cut the cost of maintaining schools. You can’t cut the cost of utilities to keep schools open. You can’t pay teachers less because you got to be competitive to get the best teachers. Where do you cut?” Spike asked.

McIlwain identified administrative staffing as an area to scrutinize. He argued for directing more money into classrooms and using technology to help students learn, including tools that could provide more personalized instruction.

Jake compares Seattle’s budget and enrollment

Jake backed McIlwain’s argument by citing Seattle Public Schools figures that he described as evidence of spending growth disconnected from enrollment.

According to Jake, the district’s budget increased from $611 million in 2014 to nearly $1.2 billion in 2025. Over that period, he put enrollment at 48,529 students in 2014 and 48,570 in 2025.

“It’s a 0% increase in students. It’s a 96% increase in budget,” Jake said.

He also said the district had added about 1,000 staff members, arguing that staffing growth deserved closer examination before officials sought additional revenue.

McIlwain maintained that taxpayers were frustrated with the results they received from increased government spending.

“They’re also disappointed with the results that they’ve gotten for being taxed more and having more resources tied up in the government, being, you know, administered less effectively,” McIlwain said.

Warning that the tax could expand

McIlwain also predicted that an income tax initially targeting wealthy residents would eventually reach a broader share of Washington households. He presented that concern as another reason to vote for repeal, though the interview did not establish that such an expansion would occur.

Jake explicitly endorsed McIlwain’s recommendation.

“I really do hope that people vote yes to repeal this,” Jake said.

Spike closed by encouraging listeners to read McIlwain’s GeekWire opinion piece, noting that it also discusses concerns about potential effects on philanthropic donations.

“I recommend people go read this thing,” Spike said.

Watch the full discussion in the video above.

Listen to “The Jake and Spike Show” weekdays from noon to 3 p.m. on KIRO Newsradio 97.3