The time is not right to impose a tax on millionaires

There is no right time for a state to punish success and encourage its residents to leave, yet Washington state appears poised to test this idea at the worst possible moment. In November, voters will decide on a ballot initiative to repeal a new tax on millionaires, just as the state’s largest housing market, Seattle, is losing its luster.

Real estate has long been one of the most important sources of wealth for residents of the region, but the picture has changed. Home prices have declined compared to the previous year in seven of the state’s 19 major metropolitan areas, with Seattle recording the steepest drop.

Data from Attom, as reported by the Seattle Times, indicates that the returns homeowners once almost guaranteed upon selling have become a thing of the past. Last year, 5% of single-family home sellers in the Seattle area sold their properties for less than they had paid, a rate more than double that of 2022. The situation was even worse for condominium and townhouse owners, with one in ten selling at a loss in 2025.

Under these conditions, homeowners may not be pleased with the policies of the state’s Democratic government. Democrats approved a 9.9% tax on income exceeding $1 million, set to take effect in 2028. Critics argue that the government has overstepped a stable interpretation of the state constitution, which the Supreme Court has since 1933 ruled prohibits progressive income taxes.

Consequently, voters launched a campaign to repeal the tax and prevent the state and local governments from imposing income taxes in the future. However, Democratic Attorney General Nick Brown drafted a description of the initiative that will appear on the ballot, stating that its passage would lead to reduced funding for education, healthcare, and human services.

Here, the author poses a simple question: How can repealing a tax that has not yet been implemented lead to reduced funding? The tax will not take effect until 2028, meaning the revenues said to be lost do not yet exist. The author views this wording as an attempt to mislead voters, since raising income taxes is not a particularly popular idea.

The significance of the November vote lies in the possibility that a downturn in the real estate market may prompt voters to reconsider state policies. Do Washington residents really want to impose a new barrier to the migration of wealthy individuals and businesses into the state, precisely when its largest housing market is weakening?

As the author suggests, the result could be a “rebellion” by homeowners who watch their wealth decline while the government asks them to bear additional burdens. If the tax fails, it may be because voters have decided they have had enough.

Meanwhile, in Los Angeles, climate obsession has not yet been sufficiently tested, as the two left-wing candidates for mayor compete to present more ambitious climate plans, despite the fact that these policies could increase the cost of living.

Nithya Raman boasts of her support for banning and phasing out new oil exploration, as well as a law prohibiting most gas appliances in new buildings. In contrast, Mayor Karen Bass speaks of eliminating coal-generated electricity, solar energy projects, and converting the city fleet to electric power. However, a University of California, Los Angeles poll showed that the environment ranks low among the priorities of county residents.

At the same time, resident satisfaction with quality of life has reached its lowest level in over a decade, amid deteriorating education, transportation, traffic congestion, and cost of living.

The paradox, according to the author, is that residents are already struggling with an affordability crisis, while politicians compete over policies that could make life even more expensive.

In Washington and Los Angeles alike, left-leaning politicians are betting on voters’ willingness to endure more, but the November elections may prove that voters’ patience, like their ability to afford basic necessities, has its limits.

* James Freeman is a columnist for “The Best on the Web,” a daily feature published on weekdays in The Wall Street Journal. He co-authored “Idle Hands: Two Centuries of Boom, Bust, and Bailouts at Citigroup,” which was selected as a New York Times Editor’s Choice and named a Financial Times Business Book of the Month. Freeman contributes to Fox News and is a Yale University graduate.