Democrats Signal Retreat on Washington Estate Tax as Exodus Fears Mount

Policymakers warned that aggressive tax policies are driving away wealth creators and businesses, risking broader economic damage.

Published on Feb. 17, 2026

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According to policy analyst Mark Harmsworth, recent moves by Washington state lawmakers to roll back the estate tax reflect growing concerns about high-earners and businesses leaving the state. Harmsworth argues that cumulative tax burdens, including a new state income tax and Seattle's excess compensation tax, are pushing individuals and companies toward the exits, with some citing a 'tipping-point scenario' where families and businesses flee due to the stacked taxes. While the estate tax rollback is a start, Harmsworth says true reform requires prioritizing growth over punitive levies to prevent further 'filthy rich' residents from becoming 'formerly here.'

Why it matters

Washington state has long prided itself on its lack of a state income tax, which has helped attract and retain high-earning individuals and businesses. However, a series of new tax policies, including an estate tax hike, a state capital gains tax, and Seattle's excess compensation tax, are threatening that competitive advantage and raising concerns about an exodus of wealth creators and job providers.

The details

Recent articles in the Seattle Times highlighted two key tax policy changes in Washington: a rollback of the state's estate tax, and the implementation of Seattle's 5% excess compensation tax. While these policies may seem disparate, they both reflect a growing reckoning among policymakers about the potential economic damage caused by aggressive tax increases. Senate Majority Leader Jamie Pedersen admitted that 'a lot of people [are] looking at redomiciling themselves,' while former Senator Reuven Carlyle warned of a 'tipping-point scenario' where families and businesses flee the state due to the cumulative tax burden.

  • In 2025, Washington state increased its estate tax from 10%-35% to 10%-35%.
  • In 2026, the Washington state legislature passed Senate Bill 6347, reducing the estate tax to 10%-20%.
  • Seattle's 5% excess compensation tax, which yielded $115 million, far above projections, was implemented in 2025.

The players

Mark Harmsworth

The director of the Small Business Center at the Washington Policy Center and the author of the opinion piece.

Jamie Pedersen

The Senate Majority Leader in Washington state, who admitted that 'a lot of people [are] looking at redomiciling themselves' due to the state's tax policies.

Reuven Carlyle

A former Washington state senator who warned of a 'tipping-point scenario' where families and businesses flee the state due to the cumulative tax burden.

Brian Heywood

A hedge fund manager who reported that dozens of couples are eyeing moves out of Washington state due to the new state income tax.

Katie Wilson

The mayor of Seattle, who was criticized by the Washington Policy Center for using the 'filthy rich' label for Seattle residents.

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What they’re saying

“A lot of people [are] looking at redomiciling themselves”

— Jamie Pedersen, Senate Majority Leader (Seattle Times)

“Tipping-point scenario' where families and businesses flee due to stacked taxes”

— Reuven Carlyle, Former Senator (Seattle Times)

“Dozens of couples eyeing moves”

— Brian Heywood, Hedge Fund Manager (Seattle Times)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.