Harger: Gov. Ferguson won’t let the income tax drop below $1 million. A payroll tax could start at $125,000
Oct 13, 2026, 7:33 AM | Updated: 11:40 am
Last week, Gov. Bob Ferguson made a promise on Facebook. “I’ve said it before many times, and will say it again, I will veto any attempt by the Legislature to lower the threshold below a million dollars.”
He’s right that he’s said it before. Back in May, he put it in capital letters. So long as he’s governor, he’ll veto ANY attempt to lower the threshold or raise the rate.
It’s shaping up to be the third legislative session in a row he’s opened with a promise about taxes.
Ferguson plays chess, and he plays it well. So look at the whole board. Say the million-dollar line holds. Add his no-new-taxes pledge and a budget hole measured in billions. If lawmakers can’t lower the threshold and don’t want to make deep cuts, the money has to come from somewhere else. Could a statewide payroll tax, or its cousin, the head tax, be the fix lawmakers go for? One proposal already in the mix would tax wages above $125,000. That’s a long way down from a million. Senate leaders said the votes aren’t there for it. But they don’t quite rule it out.
Watch the piece he’s holding up, and you might miss the one that’s about to move.
Gov. Bob Ferguson’s chess game on the income tax
Ferguson is a two-time state chess champion. I wrote about that recently, and some readers on the right took it as praise. It wasn’t. I was watching how he plays.
I’m no chess expert. I know the basics, how the pieces move and which ones you protect. That’s enough to follow this game.
In 2025, Ferguson was the new governor. In his first session, he made a promise about taxes: He wouldn’t propose new ones. Republicans welcomed it as a sign Olympia might finally tap the brakes on spending. Then, in May, he signed the largest tax increase in state history. Technically, he never proposed those taxes. He just signed them. He had the veto pen in his hand that day, too. He used it to cut $25 million in spending and left roughly $9 billion in new taxes over four years right where they were.
Heading into 2026, the promise got more specific. “I will not support an income tax for people who make less than $1 million in a year.” A lot of people heard a governor who opposes an income tax. Look at how that sentence is built. It’s a yes wearing a no’s clothing. It announces support for one, capped at a million.
Then look at what the signed law actually does. The income tax on millionaires gives a single person a full million-dollar deduction. A married couple gets one deduction between them. So two people who each earn $525,000, neither one a millionaire, pay the income tax on millionaires, because the fine print adds them together.
Now, I’d love to have that problem. I’ve been married a long time, and I can report that my household isn’t sweating the million-dollar line. Neither is yours, probably. That’s the whole reason the threshold sits where it does, at least for now.
Now it’s 2027’s turn, and both promises are back. In June, with a roughly $4 billion shortfall on the horizon, Ferguson told reporters, “I won’t be proposing new taxes,” and “my expectation is we get through this budget cycle this next session without raising taxes.” Asked whether that meant cuts, he said, “Well, of course.” He stopped short of promising a veto.
Sound familiar? It’s the same promise he opened 2025 with. Add last week’s veto vow, and you’ve got the same shape twice. A firm-sounding line with a little room built into it.
The I-645 repeal vote and a Supreme Court challenge come first
Two more pieces are already in motion. In three weeks, voters decide I-645, which would repeal the income tax on millionaires. Repeal isn’t faring well. A DHM Research poll last month found 57% want to keep the tax and 35% want it gone.
If it survives the ballot, the tax still has to survive the courts. A lawsuit led by former Attorney General Rob McKenna argues it violates the state constitution, and it’s expected to land in front of the Washington Supreme Court.
One fix is budget cuts. In one-party Olympia, that’s the hardest move on the board
Ferguson already named the alternative to new taxes: cuts. “Well, of course.” Spending less is the oldest move in the book.
It’s also brutal. Real cuts land on people. A program that gets trimmed is somebody’s kid losing a service, somebody’s parent losing a caseworker, somebody losing a job they’ve had for years. Anyone who talks about budget cuts like they’re easy or clean hasn’t met the families on the other end. This is painful stuff.
For years, Olympia stacked program on top of program without a durable way to pay for all of it. Budget forecasters saw this coming cycles ago and said so more than once. The Washington Research Council, a business-backed research group, says the last two budgets “only papered over known budget problems.”
And when one party holds the governor’s office and both chambers, the cutting almost never happens. Nobody in the majority wants to be the one who killed a program or laid off the workers. So the pressure runs the other direction. Find new money.
Could a statewide payroll tax fill Washington’s budget hole?
So back to the question from the top. If the threshold holds, caveats and all, and nobody in the majority wants deep cuts, where does the next move come from?
The board is tight. The Office of Financial Management warned agencies in June that significant shortfalls loom for the 2027-29 budget. OFM Director K.D. Chapman-See wrote that it “will likely be the most challenging budget any of us has yet faced.”
This hole is massive. Even with deep, painful cuts, and I’m skeptical lawmakers will make them, there will likely still be a big gap left to fill.
Rep. Shaun Scott, a Seattle Democratic Socialist, is pushing a statewide payroll tax: 5% on wages above $125,000. Senate Majority Leader Jamie Pedersen has said the votes aren’t there, so this is a fight inside the party, and nothing’s settled. But the fight is live, and the budget hole is real.
The “tax on employers” label leaves something out. Employers don’t eat that cost. It comes out somewhere, in smaller raises, fewer hires, or prices that creep up. Economists across the spectrum agree workers end up carrying most of a payroll tax. So a tax sold as hitting businesses lands on the same middle that got promised protection on the income side.
If that’s the play, the million-dollar income tax threshold holds, exactly as promised. The burden spreads anyway, under a different name.
Watch the 2027 session’s first bills on Dec. 7
Ferguson may keep every word of his veto promise. That’s the thing about chess. You can guard one square all game and still take plenty off the board.
Pre-filing for the 2027 session begins Dec. 7. If a payroll tax shows up, watch who proposes it. Then watch if it gets signed.
Charlie Harger is the host of “Seattle’s Morning News” on KIRO Newsradio. You can read more of his stories and commentaries here. Follow Charlie on X and email him here.
