Over the weekend, the Washington Post offered a welcome dose of clarity in the debate over who really bears the burden of higher taxes. As the Board put it:

Taxing ‘the rich’ would affect most private-sector workers, who are employed by pass-throughs but are not rich themselves. Jacking up taxes on small employers isn’t going to help make the American economy fairer or more competitive.

This is a big issue that we touched on just last week. S&P 500 companies employ roughly 18 percent of the U.S. workforce, while privately-owned firms employ nearly 80 percent.

 

Most of those businesses are organized as pass-throughs that pay tax at the individual rates on their business income. You can say you’re taxing the rich, but really you’re just taxing the job creator down the street.

So welcome, the Washington Post, to the fight for Main Street!

Washington State, meanwhile, is moving in the opposite direction.  Long a home for business-friendly tax policies, the state appears to be racing to see if it can outpace California, New York, and New Jersey for the title of the worst place in the country to do business.

What are they up to?  Check out this laundry list of punitive tax hikes the state has embraced in just the last couple of years:

  • The state just increased its estate tax rate to the highest in the country. Washington’s estate tax exemption, meanwhile, is far below the federal threshold, so some solidly upper-middle income taxpayers will now be subject to very high estate tax rates. For those residents who do trip the federal thresholds, their combined marginal estate tax rate is also the highest in the country at up to 75 percent.
  • The state also has a newly minted capital gains tax, which starts at 7 percent and jumps to 9.9 percent for gains over $1 million. The Washington State Supreme Court in 2023 ruled the tax was constitutional, clearing the way for it to go into effect at the start of last year.  At 9.9 percent, Washington state only trails California, New Jersey, and New York for the highest rate in the nation.
  • The state expanded its tax on investment income in other ways. The state’s Department of Revenue and Supreme Court joined forces to overturn a long-standing exemption of investment income from the state’s gross receipts (B&O) tax. The 2024 decision, Antio, LLC v. Department of Revenue, results in a new tax on investment income originating in Washington state. In 2025, the state legislature both increased the B&O tax rate and codified the court decision.
  • The state also expanded its already high sales taxes to include many online services and products.
  • Finally, Olympia is eyeing a “millionaires tax” – a 9.9 percent levy on individual income above $1 million annually. The state Senate passed the measure in February and the Governor has expressed support. While it faces near-certain legal challenges – the Washington Supreme Court barred graduated income taxes in 1933 and voters passed an initiative in 2024 prohibiting personal income taxes – the Antio decision suggests the court will view this challenge creatively too. The new tax is expected to pass and survive any legal challenge.

This just in – Jeff Bezos is now a resident of Florida.

Seriously, view this onslaught from the business owner’s perspective. You already pay the existing gross receipts tax, only now at a higher rate. You have to collect the newly expanded sales tax from your customers. You have to pay federal income taxes (lower, thanks to the Working Families Tax Cuts), but now those likely include a new 9.9 percent state tax. If you sell the business, you’ll pay a combined capital gains tax of around 35 percent. And when you die, the state and federal governments will seize up to three-fourths of whatever you have left.  Here’s the local FOX affiliate on the challenge:

Business owner Nikhil Singhal is calling it quits over the state’s new $9 billion tax package passed earlier this year by lawmakers in Olympia. “The math simply doesn’t add up for us to continue doing this business,” Om Spark owner Nikhil Singhal said…. Singhal says the latest increase in taxes is hitting him in several different new ways, including an increase in the business and occupation tax and an expansion of the retail sales tax that now captures online digital ads.

As noted above, these sorts of policies don’t just affect business owners, they hurt workers too.  More from Fox:

Back in October, FOX 13 spoke with Josh Dirks, who shut down Project Bionic in Seattle’s Ballard neighborhood. Dirks was forced to lay off his staff at his social media digital ad agency after 16 years in business. He says the latest tax increase was the last straw and he could not keep his business viable.

So as the Boss warned us, it’s one step up and two steps back. The Washington Post has newly embraced Main Street and the practical benefits of reasonable tax policies, while Washington state has lost its collective mind and is telling the family business community to pack up and leave, you’re not wanted here.

Spoiler alert – that’s exactly what they’re going to do.