Progressive group’s study debunks myth that ‘wealth tax’ drives rich residents out of WA

A progressive think tank is dismissing the claim that if a wealth tax is established in budget plans aimed at closing a $16 billion shortfall, the wealthiest Washingtonians would leave the state in droves. They say that’s just not true.

A study by the Institute of Policy Studies (IPS) found that the “millionaire class” grew by 38.6% in Massachusetts despite a wealth take and 46.9% in Washington despite a capital gains tax. Their wealth grew by more than $580 billion in current dollars in Massachusetts and $748 billion in Washington state between 2022 and 2024.

This financial growth happened despite Washington having a capital gains tax while Massachusetts was operating under a progressive taxation on million-dollar incomes.

“Both Massachusetts and Washington serve as critical test studies on the actual impact of fairly taxing the rich,” IPS researcher Omar Ocampo said in a prepared statement. “Taxing high-income individuals at a higher rate is not disruptive and did not cause a mass exodus of millionaires.”

Washington saw more millionaires

According to the IPS study, Washington’s “millionaire class” expanded from 463,000 in 2022 to more than 681,000 by 2024. The number of residents with a net worth of over $50 million increased from 2,060 to 2,939, a 42.6% increase.

The capital gains tax raised $1.2 billion from 2022-2024.

“A wealth tax that targets ultra-high net worth individuals—those with $50 million or more—puts a minor constraint on their rate of accumulation, but has the potential to raise significant revenues that can be used to support broad healthcare, economic, and educational programs that benefit all state residents,” IPS stated.

What a ‘wealth tax’ could create in revenue if increased again

IPS even claimed that if the wealth tax increased by another 2% for individuals with a net worth of more than $50 million, it could generate $8.2 billion for the state. Similarly, it would hypothetically raise $7.4 billion in Massachusetts, $21.9 billion in New York, and $700 million in Rhode Island.

“This new analysis confirms that when the rich pay their fair share of taxes, we all benefit—including the wealthy,” Amber Wallin, the executive director of the State Revenue Alliance, said in a press release for IPS. “For years, we’ve had so-called experts claim that higher taxes will mean that wealthy people flee—it’s never been true, but these results show how wrong they were.”

This study comes after one of Washington’s most famous billionaires, Jeff Bezos, Amazon’s founder and executive chairman, moved from Washington to Indian Creek Village—an exclusive area in Miami, Florida. also known as “Billionaire Bunker,” famous for its celebrity residents including Tom Brady, Ivanka Trump and her husband, Jared Kushner. He allegedly saved nearly $1 billion in just one year in taxes after calling Florida his primary residence instead of Washington.

Washington lawmakers just passed a massive $77.9 billion operating budget for the next two years, and it’s now on Governor Bob Ferguson’s desk to sign and pass. Ferguson previously warned the legislature he wouldn’t pass a budget plan that relies too much on taxes. The current budget proposal includes roughly $7 million in cuts and $9 million in new taxes.

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