Seattle’s socialist Mayor Katie Wilson has a message for prosperous people leaving Washington over the state’s soaring tax burden. “Bye!” she says with a laugh, to cheers from a largely progressive audience. Entrepreneurs and investors will certainly take that comment into account as they consider where to live and do business. We can be sure of that fact because recent research further supports the commonsense idea that people often leave high-tax states in search of lower tax bills.
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Wilson’s comments came during an April 16 discussion about “The New Progressives” as part of Seattle University’s Conversations series. Wilson and King County Executive Girmay Zahilay fielded a series of questions by host Joni Balter and graduate student Ari Winter.
Asked about major companies leaving or threatening to leave over Seattle’s and Washington’s escalating tax burden, Zahilay acknowledged that “everything is a tradeoff” and “of course I think taxes can make companies make decisions about staying or leaving.” You wouldn’t necessarily want to live under his policies, but he sounds like he understands that his decisions may drive people out and impose costs on the community.
Wilson, a self-described “socialist,” was presented with a follow-up question by Winter. She was asked, “do you still think progressive taxes are an easy and promising solution?”
Wilson responded that it was “very, very exciting to see the billionaire tax pass the legislature” and described her history of advocating for higher taxes. She then cut to the heart of her response.
“I think the claims that millionaires are going to leave our state are, like, super overblown. And if, you know, the ones that leave, like, bye!,” she said with a wave and a snicker. The audience at the university event joined in with whoops and applause.
Wilson may want to practice her goodbyes. Fisher Investments moved from Washington to Texas to escape a new capital gains tax. Starbucks is building a corporate hub in Tennessee and moving jobs there, largely over tax concerns. Billionaire Jeff Bezos fled the state for Florida, also motivated by taxes.
“Jeff Bezos sold about $15 billion in stocks before the new law took effect, potentially saving over $1 billion in taxes,” the Washington Policy Center’s Chris Corry noted. “Moving his primary residency to Florida would ensure that any future stock sales would not be subject to the excise tax.”
Tech giant Microsoft criticized Washington’s tax environment and threatened to move jobs elsewhere.
On top of an already high burden, including the recently adopted capital gains tax, Washington Gov. Bob Ferguson in March signed a “millionaire’s tax” that imposes a 9.9 percent tax on income over $1 million. These stiff levies add up—especially when socialists make policy for a major city. Before the latest tax passed, the Tax Foundation warned that the “proposed 9.9 percent ‘millionaire’s tax’ in Washington would yield a top rate of 18.037 percent on wage income and restricted stock units (RSUs) vesting in Seattle, the highest rate in the country.” That’s painful. And people don’t have to stick around to be mugged. Historically, many leave when taxes get too burdensome.
“Analysis of the latest state-level migration data reveals a continued and pronounced domestic shift: millions of Americans, along with significant amounts of income and economic activity, are moving from high-tax states to those with more competitive tax systems and lower overall costs of living,” the Tax Foundation’s Abir Mandal reported last month.
Crunching IRS data, Mandal found that “states with no income tax or lower overall tax burdens not only gained population but also attracted a disproportionate share of adjusted gross income. Florida led with a net AGI gain equivalent to roughly $184,771 per new resident. Texas, South Carolina, North Carolina, and Tennessee also recorded strong income inflows, with net AGI per new resident typically ranging from $49,000 to $70,000.” He also found that “in contrast, high-tax states suffered substantial AGI losses per departing resident. California lost approximately $59,440 in AGI per person, New York lost $62,633, New Jersey lost $85,562, Illinois lost $110,618, and Massachusetts lost $141,672.”
Interestingly, the county that gained the most tax filers between 2022 and 2023 was tax-hungry New York County (Manhattan). But it also lost $922 million in adjusted gross income, meaning that high-income people left and were replaced by those with less money to tax.
Overall, population and money moved from higher-tax states to those with lower tax burdens.
This isn’t exactly a revelation. We always knew that taxes matter when people decide where to live or work. But it’s important to see that research continues to support the point that “certain segments of the labor market, especially high-income workers and professions with little location-specific human capital, may be quite responsive to taxes in their location decisions,” as the authors of a 2020 paper in the Journal of Economic Perspectives found.
While remote work and modern mobility encourage people to move to where they feel happy, this isn’t a new phenomenon. A 2024 paper by Traviss Cassidy, Mark Dincecco, and Ugo Antonio Troiano found that across the U.S., from 1900 to 2010, “the introduction of the income tax induced significant outmigration to non-income-tax states by middle- and high-earning households.”
The lesson, the Tax Foundation’s Mandal summarizes, is that “states that maintain competitive, low-burden tax systems continue to attract population and income, while those with higher and more complex tax structures experience sustained outflows.”
Seattle’s Katie Wilson appears to be replicating the mistake of New York Gov. Kathy Hochul, who in 2022 invited Republicans to “just jump on a bus and head down to Florida where you belong.”
In March, she was reduced to speculating that maybe New York officials should “go down to Palm Beach and see who we can bring back home because our tax base has been eroded….I have to look at the fact that we are in competition with other states who have less of a tax burden on their corporations and their individuals.”
Hochul was motivated by politics, rather than by Wilson’s disdain for success, but the lesson is the same: If people are made to feel unwelcome or abused, they can leave. Heavy taxation is one very effective way of pushing people toward the door.
