Washington state is trying to pass a 9.9% tax on income over $1 million. Sounds progressive, right?

Here's the catch: buried in the bill is a provision that accelerates a major corporate tax break, cutting future state revenue by $550 million.

And 13 House Democrats are saying, "Absolutely not."

What's Actually in the Bill

Senate Bill 6346 would impose a 9.9% tax on individual income above $1 million annually. In a state with no income tax, that's a huge deal. Progressive lawmakers have been pushing for this for years.

But here's where it gets messy: the bill also ends a surcharge on the state's Business & Occupation (B&O) tax for large corporations in 2028 instead of 2029.

That one-year acceleration? $550 million in lost revenue.

Why Democrats Are Pushing Back

Rep. Shaun Scott (D-Seattle) led the charge, sending a letter to the House finance committee urging them to strip the corporate tax break before moving the bill forward.

"A tax on millionaires would be a breakthrough that generations of economic justice advocates in Washington have fought for," Scott said. "But pairing that policy shift with what he views as unnecessary corporate tax relief sends the wrong signal and weakens its fiscal impact."

Scott's math is simple: the proposed cuts to child care and K-12 education in the governor's supplemental budget add up to roughly $550 million. The same amount the bill would hand back to corporations.

In other words: tax the rich to fund schools and child care, then immediately give that money to big businesses. It's fiscal policy whiplash.

The Budget Context

Washington state is facing mounting budget pressures. Lawmakers are debating cuts to core programs — child care, K-12 schools, health services.

Scott argues that accelerating the corporate tax break makes those cuts worse, not better. And he's not alone. His letter was co-signed by 12 other House Democrats.

"Working families in our state cannot afford to hand that money over to large corporations that frankly won't miss it," Scott said. "Especially when many of those same corporations just received a significant federal tax break under HR-1 and the Trump administration."

The Senate's Defense

Sen. Jamie Pedersen (D-Seattle), who sponsored the Senate version of the bill, framed it as a response to federal tax policy.

"There is growing anger and frustration as we watch the Trump administration deliver massive tax cuts for the ultrawealthy while slashing funding for health care and food assistance," Pedersen said. "And it is making it impossible for our state budget to keep up with the needs of Washington families."

But that doesn't explain why the bill includes a corporate tax break. If the goal is to make the wealthy pay their fair share, why cut taxes for large corporations at the same time?

What's at Stake

The House finance committee is voting on the bill Friday morning. The legislative session ends March 12, so there's not much time to negotiate.

Scott's amendment would remove the corporate tax break provision, keeping the millionaires tax intact but preserving the $550 million in future revenue.

If the amendment fails, Washington could end up with a millionaires tax that funds programs on one hand while defunding them on the other.

What This Means for Tax Policy

This isn't just a Washington issue. It's a template for how progressive tax policy gets watered down.

Step 1: Propose a popular tax on the wealthy. Step 2: Bundle it with corporate tax cuts to secure business-friendly votes. Step 3: Call it a win for everyone.

The problem? When you tax millionaires to fund schools and then cut corporate taxes by the same amount, you're not actually funding schools. You're just shuffling money around.

Scott's position is simple: if you're going to tax the rich, tax the rich. Don't use it as cover to cut corporate taxes.

The Political Calculus

Here's the reality: passing an income tax in Washington is hard. The state has tried and failed multiple times. So when a bill finally gets traction, there's pressure to pass it — even if it's flawed.

But Scott's argument is that flawed policy is worse than no policy. Because once you set a precedent that every progressive tax comes with a corporate giveaway, you've lost the plot.

"Those programs are going to need not only the current levels of funding that we have but also need to be watered and grown," Scott said.

Translation: if you want to build a sustainable revenue system, you can't undercut it before it even starts.

What CPAs Should Watch

If this bill passes with the corporate break intact, it'll be a case study in how tax policy gets compromised.

And if it passes without the break? It'll show that progressive tax policy can actually stick — even in a state with no income tax.

Either way, Washington's debate is worth watching. Because the same fight is playing out in states across the country.