Washington state recorded a net loss of 5,875 residents earning $200,000 or more in the latest IRS migration data, according to a report published by the Washington Policy Center. The analysis argues that the state's shift toward higher taxes on top earners and businesses has driven high-income residents away and damaged the state's competitive position. Over the same period, Washington's tax-competitiveness ranking plummeted from sixth place in the 2014 index to 45th in the 2026 index, a decline that unfolded as lawmakers introduced a capital gains tax, raised business taxes, and enacted a 9.9% income tax.
The report examines migration patterns and economic performance across states with different tax structures. From April 2020 through July 2025, the 10 states ranked most regressive by the Institute on Taxation and Economic Policy gained a combined 1.53 million net domestic migrants, while the 10 least regressive states lost 3.32 million people. Income followed the same pattern: during IRS filing years 2022 to 2023, the 10 most-regressive states saw a net gain of $21.9 billion in adjusted gross income from interstate movers, while the 10 least-regressive states lost $29.8 billion. Economic growth also diverged sharply. From 2019 through 2025, median real GDP growth among the 10 most-regressive states reached 19.1%, compared with just 11.2% among the 10 least-regressive states. Median payroll employment grew 6.6% versus 1.6%, and median real GDP per resident climbed 13.1% versus 8.8%. Tax burdens told another story: using 2022 estimates, the 10 least-regressive states averaged 12.45% of income in resident tax burden, compared with 9.68% for the most-regressive states—a difference of 29%. The average burden per resident was $8,302 versus $5,790, a 43% gap.
The report challenges the Institute on Taxation and Economic Policy's "Who Pays?" study, which ranks Washington as having the nation's second-most regressive tax code and is frequently cited by advocates pushing for higher taxes on top earners. The Washington Policy Center argues the ITEP conclusions "fail a basic common-sense test" by suggesting that Tennessee, Texas, Nevada, and Florida are doing tax policy wrong while California, Minnesota, New York, and New Jersey are doing it right—even as people and income consistently move in the opposite direction. The authors note that Washington's operating budget has climbed from $33.6 billion in 2013–15 to $80.2 billion today, and that when strong revenue growth couldn't keep pace with spending demands, lawmakers increasingly argued that wealthy households weren't paying their fair share. That argument, the report says, helped produce the new taxes now in place.
The report traces Washington's recent tax shift to choices driven by the state's own spending priorities rather than economic necessity. For two decades, Washington's economy grew rapidly under a tax system without a broad-based personal income tax, attracting people and employers while state tax collections climbed. Every governor since 1985 has been a Democrat, and Democrats controlled both chambers of the Legislature for most of those two decades—meaning they governed under and largely chose this tax structure. The consequences of abandoning that approach are now visible, the report argues. Six of the 10 most-regressive states gained residents through domestic migration in the period studied, while among the least-regressive states, only Maine and Vermont did. The report contends that lawmakers can debate how taxes are distributed, but must also account for how much people pay, what tax changes do to the economy, and whether they make Washington a better place to live and do business.
After years of rapidly rising spending, tax increases, and worsening outcomes, the report concludes that Washington's new approach isn't working. The authors argue these real-world outcomes—where people move, where income flows, and where economies grow—belong in any honest debate about tax policy but are currently absent from discussions among the majority party and its supporters. The bottom line: states that focused on lower tax burdens rather than progressivity attracted more residents, more income, and stronger economic growth.