I wanted I-645 to pass. The early returns suggest it won’t.
As of 9:08 a.m. on November 4, the Secretary of State’s unofficial results showed 58.12% against repeal and 41.88% in favor. Those results are preliminary, not certified, but that is a substantial margin.
The lesson isn’t that Washington voters have no concerns about an income tax. It’s that concerns about what the tax might become weren’t enough to persuade a majority to repeal the tax that exists today.
The Funding Argument Worked. Opponents Need a Better Answer.
Asking people to repeal a tax they don’t expect to pay is hard. The tax falls on someone else. The cost of repeal, as the ballot described it, falls on schools and health care: “This measure would decrease funding for public K-12 education, higher education (including universities and community colleges), and human services (primarily healthcare).”
In September, DHM Research tested that sentence, showing half of 800 Washington residents the official language and half the same description without it. With the sentence, repeal trailed 35% to 57%, with 8% unsure. Without it, 40% to 44%, with 16% unsure. With the funding sentence, support for repeal was five points lower, opposition was thirteen points higher, and the undecided share was eight points lower. The differences suggest the funding language mattered, although the survey cannot tell us how any particular voter would have responded to both versions.
The stated reasons are more striking. Asked in their own words why they would vote no, 44% of opponents who saw the funding sentence cited protecting education funding. Among opponents who didn’t see it, 2% did.
That does not prove the ballot language decided the election. It was an online survey of residents, not likely voters, and repeal trailed in both versions. But it shows where the argument was fought: less over whether millionaires should pay more than over what happens to schools and health care if they don’t.
Opponents need a better answer to that. If we believe a different tax policy would leave Washington better able to support those services over time, we have to explain how.
A Tax on a Million-Dollar Year
Take a founder who normally earns $200,000. In 2028, the company is acquired, and nonqualified option exercises and a transaction bonus add $1.3 million of ordinary income, for a total of $1.5 million. After the $1 million deduction, which spouses and registered domestic partners share, roughly $500,000 is taxed at 9.9%: about $49,500, in a year when the founder’s salary never changed.
Gain on the founder’s shares is treated differently. Section 302 generally removes long-term capital gains from the income-tax base, but taxpayers who owe Washington capital gains tax must add back their taxable Washington capital gains plus the amount of the capital gains standard deduction. A nonrefundable credit coordinates the two taxes. Gain excluded under Section 1202, or covered by the family-business deduction in RCW 82.87.070, generally stays out.
This is not necessarily a tax on people who earn $1 million every year. It can be a tax on a million-dollar year.
The Vote Did Not Decide the Constitutional Question
The tax faces a challenge under article VII of the Washington Constitution in Petter v. State of Washington, pending in Klickitat County Superior Court, with summary judgment set for hearing on February 5, 2027. Voters decided whether to repeal the tax, not whether the Constitution allows it. That is for the courts, and no one should make financial decisions assuming they will strike it down. I’m following the case on the I-645 Tracker.
The election did not settle whether this is good tax policy. It did tell those of us who opposed it that we have not yet persuaded a majority of voters. That is worth understanding. And for anyone planning a business sale, a major compensation event, or a move, the practical task now is to understand the law, not assume it will disappear.
