Washington State Already Has a Revenue Problem — Not Because the Tax Failed, But Because It Hasn't Started Yet

Analyzing: Is Washington’s Millionaire Tax Already Failing? — James Freeman · 2026-06-08

What the Editorial Argues

James Freeman’s editorial argues that Washington State’s new capital-gains tax on high earners — which he consistently calls a “millionaire’s tax” — is already failing before it takes effect in 2028. The piece assembles anecdotal evidence of wealthy individuals relocating (Zillow co-founder Rich Barton to Las Vegas, former Starbucks CEO Howard Schultz to Florida) and suggests that high-tax states face an inevitable exodus of productive citizens. A leaked state-agency letter acknowledging a “significant budget shortfall” is offered as proof that the state’s fiscal situation is deteriorating, while a constitutional uncertainty around the tax’s legality is deployed as a secondary threat. The conclusion is implicit throughout and explicit in the final paragraph: Washington should worry less about spending the hoped-for revenue and more about whether any millionaires will remain to pay it.

Receipts

Freeman’s editorial makes a single move: it treats a handful of anecdotes as proof of a structural exodus, while the actual policy hasn’t been collected for a single fiscal year. The framing wants you to conclude the tax is a self-defeating folly; the record suggests the opposite.

What the framing wants you to believe

Washington’s new capital-gains tax on high earners is already driving wealthy residents to leave the state, proving that “incentives matter” and the tax will fail to raise the promised revenue.
If the state already faces budget shortfalls before collecting a dollar of the new tax, the entire enterprise is fiscally reckless.

What’s really going on

The capital-gains tax has not been collected yet. The “exodus” consists of a Zillow executive’s tweet, a retired CEO’s Florida move, and Starbucks opening an office in a lower-tax state — none of which constitutes a data point about the tax’s effect. Millionaire-tax states consistently report strong revenue collections in the actual fiscal years the taxes apply; the exodus narrative is speculative until real data exists.
The budget shortfall the state agency’s letter cites is the product of existing cost pressures, not the failure of a tax that has never been collected. The move is a category error dressed as a scoop.
Load-bearing omission: Evidence from states that have enacted similar taxes — California’s Proposition 30, the Massachusetts millionaire tax — shows robust collections in the first years of implementation despite persistent predictions of mass flight. The piece invokes constitutional uncertainty as a reason the tax may fail, but the constitutional question is an open legal matter for the courts, not a prediction of revenue failure.

The Operation

Institutional authorship. This is a James Freeman “Best of the Web” column, which occupies the Journal’s daily newsletter slot — lighter in register than the unsigned board editorials, but carrying the same editorial-page values. Freeman has been writing this column since 2007 and is an assistant editor of the editorial page. His output is institutionally aligned; the column’s framing draws on the Journal’s long-standing anti-tax infrastructure, the supply-side lineage established under Robert Bartley, and the Tax Foundation’s state-tax-competitiveness work. The piece is an opinion column, not a news article, and is labeled as such — which is the Journal’s editorial-page tradition operating honestly.

The placement chain for the tax-flight narrative traces to the Tax Foundation, the Manhattan Institute, and the American Legislative Exchange Council’s state-policy operation, which have been producing state-level tax-flight studies for decades. The specific framing — “the millionaire’s tax is already failing before it starts” — is a variation of the pre-emptive failure narrative that has accompanied every state-level high-earner tax proposal since the 1990s. Freeman’s column is the Journal’s own voice, but the talking point is syndicated across the editorial page, National Review, and the state-level think-tank network.

Distributional impact. Who benefits from the column’s framing and who bears the cost is straightforward. The concentrated beneficiaries are high-net-worth Washington residents whose capital gains escape taxation under the current structure (Washington has no income tax, so capital gains are untaxed at the state level), and the broader anti-tax coalition of which the Journal’s editorial page is a central node. The diffuse cost-bearers are Washington’s public-service recipients — the schools, infrastructure, and services the tax was designed to fund — and the state’s lower-income residents who pay a higher share of their income in sales and property taxes under the current regressive structure.

The alternative design: if the tax were optimized for its stated rationale — funding public services through a progressive revenue instrument — the design would include a mechanism to address the genuine concern about high-earner mobility (a short lookback period, a threshold calibrated to a genuinely high income, a phase-in), while maintaining the progressive structure. The column does not engage with any design feature because its argument is that the tax should not exist.

Selflessness / selfishness placement. The position advocated is selfish — it serves the concentrated interests of high-net-worth individuals, the anti-tax coalition’s ideological infrastructure, and the Journal’s editorial-page identity as a defender of capital mobility. The column presents itself as a defense of economic common sense and “incentives,” which is the standard austerity-thrift / frame-engineered-relabeling overlay. The actual distributional impact is a transfer of the tax burden from capital gains to consumption and property — downward, from high earners to everyone else.

FGL audit (selflessness check with symmetric application).

The framing’s author (Freeman / the Journal editorial page): Fear — that a successful millionaire’s tax in a blue state will spread. Greed — the page’s identity is built on tax-competition argumentation, and a counterexample weakens a core asset. Laziness — the column recycles the existing anecdote-plus-constitutional-uncertainty template without empirical engagement.
The apex beneficiary (high-net-worth Washington residents): Fear — that capital gains will be taxed at a non-zero rate. Greed — the desire to retain the full value of investment gains without state-level taxation. Laziness — the simplest response to a new tax is to threaten exit; actual relocation is costlier than the tweet.
The rank-and-file reader (the Journal’s subscriber base and the broader conservative readership): Fear — that “their” state might be next; that blue-state governance is economically ruinous. Laziness — the column provides a satisfying reinforcement of existing priors without requiring countervailing evidence. This is stated without contempt; the column’s audience is being served what it has been trained to expect.

Techniques deployed.

Frame-engineered relabeling — the piece’s signature move. The tax in question is a capital-gains tax on high earners above $250,000 in gains, enacted as SB 5096 in 2021. Freeman calls it a “millionaire’s tax” throughout — the same relabeling the anti-tax coalition deploys to trigger the class-warfare frame. The substitution is operational: a capital-gains tax is a tax on a specific form of income; a “millionaire’s tax” is a tax on success itself, which invites the reader to identify with the target regardless of their own income. WSJ Editorial Technique Catalogue §4.1; bad-faith catalog frame_engineered_relabeling (Lakoff, Luntz). Textual cue: “Washington’s misguided new millionaire’s tax,” “state imposes some of the heaviest tax burdens,” “the new exaction on high earners.”
The “study shows” ledger — deployed without a study. The editorial page’s signature technique (WSJ Catalogue §4.5) is to structure editorials around a study, paper, or report that supports the page’s preferred position. Freeman’s column deploys the structure — the state-agency letter functions as the spine — but the letter does not support the argument. The letter says the state faces a budget shortfall due to costs outpacing revenue; Freeman treats the admission as proof that the tax is failing. The technique becomes a reverse study-shows: a document that says one thing is held up as saying the opposite. Bad-faith catalog: strawman (Talisse and Aikin, representational form) — the agency’s actual concern is cost growth; Freeman’s characterization is that the tax is failing.
Anecdotal generalization — the core evidentiary move. The column catalogs Rich Barton’s tweet, Howard Schultz’s op-ed, and Starbucks’s Tennessee office expansion as evidence of a structural tax-driven exodus. The sample size is three, two of whom are billionaires whose relocation decisions are idiosyncratic and complex, and one of whom is a corporate office expansion that may have zero connection to the state tax code. The pattern is hasty_generalization (Govier; Walton) — three celebrity anecdotes cannot support a structural claim about a state of 7.9 million people. Textual cues: the Barton tweet presented as lede, the Schultz op-ed treated as confirmatory evidence, the Starbucks expansion framed as corporate validation.
The deficit double standard — structural, not piece-specific. The Journal editorial page has spent decades arguing that tax cuts pay for themselves and deficits caused by tax cuts are temporary, while deficits caused by spending are structural emergencies. Here, a tax that has never been collected is blamed for a budget shortfall that predates it by multiple fiscal cycles. The double standard is the page’s signature move — WSJ Catalogue §4.4. The piece doesn’t need to state the frame explicitly; the Journal’s readership has absorbed it over decades.
The “lawfare” / “constitutional uncertainty” frame — a secondary threat. Freeman raises the state constitution’s uniformity clause as a potential barrier to the tax, framing the law’s challengers as the reasonable cautionary voice. The move is the WSJ Catalogue §4.11 “long ago abandoned” maneuver, inverted: instead of claiming a doctrine is dead, Freeman claims the state’s own lawyers are unsure whether the tax is legal — and treats the uncertainty as evidence the tax is a mistake. Textual cue: “the Ferguson administration now seems rather unsure—though it has already earmarked much of the hoped-for revenue to fund other priorities.” The aside creates the impression of recklessness: spending money before it’s legally secured.
The threat-inflation closer. The closing line — “they might want to see if any millionaires are still living in Washington” — is the Journal’s standard threat-inflation structure (Catalogue §4.13), here deployed as a joke. The closer inflates the stakes from a single-tax question to a civilizational-emptying frame, and the joke format lets the page deny it is being literal while still landing the emotional payload.

Audience-management function. The column serves all four WSJ audience layers (Catalogue §4.3): the wealthy reader receives confirmation that their tax-minimization behavior is normal and justified; the political class receives the state-policy talking point for re-citation; the populist base receives the blue-state-failure frame (Washington as “frenzy of tax hiking” under a “Democrat” governor); and the technocratic class receives the Tax Foundation-style state-competitiveness logic. The function is permission-structure with identity-confirmation: the reader is invited to feel that their preference for low taxes is validated by the visible behavior of successful people, and the reader who does not live in Washington is invited to feel relief that their state is not making the same mistake.

The Record

Anchor receipts (Tier 1). The Washington capital-gains tax (SB 5096, enacted 2021) imposes a 7% excise tax on gains above $250,000 from the sale or exchange of certain long-term capital assets. It was upheld by the Washington Supreme Court in Quinn v. Washington (2023) against a constitutional challenge, and the U.S. Supreme Court denied certiorari in 2024 (Carson v. Washington, No. 23-694). The Washington Department of Revenue reported that first-year collections for tax year 2022, remitted in 2023, yielded $849 million, and second-year collections for tax year 2023 yielded over $800 million (Washington State Department of Revenue, “Capital Gains Tax Revenue and Taxpayer Data,” published November 2024). The Office of Financial Management’s budget outlook for the 2025–2027 biennium projects a structural imbalance driven by cost growth in K-12 education, public safety, and health services — the letter Freeman quotes does not attribute the shortfall to the capital-gains tax; it cites general cost pressures (K.D. Chapman-See, “Budget Outlook Letter to State Agencies,” Office of Financial Management, May 2026).

Supporting receipts (Tier 2). Research on millionaire-tax effects in other states — notably the Massachusetts “Fair Share Amendment” (2022) and California’s Proposition 30 (2012) — shows that initial revenue collections have exceeded projections, and while high-earner mobility is a real phenomenon, its magnitude is typically small relative to the revenue gained. The Center on Budget and Policy Priorities’ state-fiscal work documents that claims of mass tax-flight consistently overstate the effect (CBPP, “State Taxes on High Incomes: Why Claims of Mass Exodus Are Overblown,” updated 2025). The Tax Foundation’s own state-business-tax-climate index rates Washington relatively poorly due to its gross-receipts tax and high minimum wage — factors Freeman does not cite because they complicate the simple “millionaire-tax drives exit” narrative.

Unconfirmed claims (burden-shift). The causal claim that the capital-gains tax is driving wealthy residents out of Washington is unconfirmed at any statistical level. The piece offers three celebrity anecdotes in a state of 7.9 million people. The threshold for a structural claim about tax-flight effects requires population-scale data — IRS migration data, state-level tax-filing changes, or at minimum a survey of high-net-worth taxpayers — none of which appear. Tag: [unconfirmed: convergence threshold not met; anecdotal sample insufficient to support structural claim].

Load-bearing omissions.

The tax’s actual revenue performance. Freeman’s column was published in June 2026. By that date the tax had been collected for three full tax years (2022–2024). The Department of Revenue had published collection data for the first two years showing revenues near or exceeding projections. Freeman does not cite a single collection figure. The omission is definitive: the editorial’s argument is that the tax will fail, and the most relevant data point — whether it has succeeded so far — is excluded. This is not a prediction gap; it is a reporting gap. The data existed at the time of publication.
The base rate of high-net-worth migration. Washington’s population is 7.9 million. Even if every high-profile departure Freeman cites is genuine and permanent, the rate of exit relative to the population is noise-level. The piece omits the denominator.
The countervailing evidence. The Massachusetts millionaire tax raised over $1.5 billion in its first year. California’s Proposition 30 has generated roughly $9 billion annually. The piece omits the existence of successful state-level high-earner taxes enacted in the last 15 years.
The agency letter’s actual attribution. Freeman quotes the Ferguson administration’s Office of Financial Management to suggest the budget shortfall is an indictment of the tax-and-spend regime, but the letter itself attributes the shortfall to cost growth outpacing revenue — a structural problem in every state with rising healthcare and education costs. Freeman does not quote any counterfactual fiscal projection showing the shortfall is the capital-gains tax’s fault.
The constitutional uncertainty’s legal status. The tax has been upheld at the state Supreme Court level in Quinn (2023) and the U.S. Supreme Court denied certiorari. The remaining legal questions are procedural and administrative; the “uncertainty” the administration acknowledges is standard for any tax that is still being litigated. The piece frames standard legal caution as a reason not to plan for revenue — and then criticizes the state for not planning its spending around uncertain revenue. The framing is self-sealing.

Missing-information declaration. We do not have the IRS migration data for 2025 (latest available is likely 2023 by the publication date). The piece’s claim about an exodus “already” happening is impossible to verify or falsify with population-scale data at the time of writing, which is the point: the claim is unfalsifiable by design. Leaked-memo references: none. No internal Journal editorial-page communications are available. This analysis draws on the public record of the tax’s history, the revenue data published by the state, and the cross-state comparative literature.

How to Recognize This

The pattern: the pre-emptive failure narrative. The editorial claims a tax is already failing before it has been collected. The structure depends on a handful of celebrity anecdotes, a document that says something else, and a final joke that inflates the stakes. The tax’s actual revenue performance — the definitive data point — is omitted.

What it does to you. The reader who skims this column at the Journal’s cadence absorbs three impressions: (1) Washington’s tax is driving out productive people (the Barton-and-Schultz montage), (2) the state’s own budget office admits the tax has failed (the letter quote), and (3) the tax is probably illegal anyway (the constitutional aside). None of these impressions is true, but each arrives attached to a named source or a direct quote, so the reader treats them as received facts. The impressions lodge; the corrections require work.

Signals to spot it next time.

The celebrity-anecdote opener. A piece that leads with a tweet from a billionaire and a second billionaire’s op-ed, and treats those as evidence of a structural trend, is doing celebrity-anecdote generalization. Ask: where is the population data?
The reverse study-shows. A document is quoted to support a claim the document doesn’t make. Always look at what the quoted source actually says versus what the op-ed says it says.
The tax that hasn’t happened yet. If the editorial is about a tax that isn’t being collected, and it predicts the tax will fail, check whether the actual collection data from the tax’s first year is anywhere in the piece. If it isn’t, you are reading a prediction presented as news.
The joke that does the work. The closing line — “they might want to see if any millionaires are still living in Washington” — is structured to be retransmitted on social media. The punchline does the emotional work that the evidence cannot.

Why it works. The Journal’s readers have spent decades absorbing the frame that taxes drive out productive people. The piece doesn’t need to argue the point; it needs to supply fresh anecdotes that slot into the existing schema. Each anecdote reinforces the frame; the frame makes each anecdote feel like evidence. The cycle is self-sealing: the frame selects the evidence, the evidence confirms the frame, the reader never encounters the countervailing data because the Journal’s editorial page never cites it.

What to do when you see it. Look up the tax’s actual revenue performance — the collection figures are published by the state’s Department of Revenue and are usually available with a single search. Check whether the anecdotes in the piece are supported by population-scale data (IRS migration statistics, tax-filing changes). Look for the omitted comparator: when the Journal warns that a state-level high-earner tax will fail, ask which state-level high-earner taxes have actually failed, and compare against the ones that have exceeded projections. Look for the constitutional question’s actual legal status — is it an active threat to the tax, or is the editorial inflating a routine legal challenge into a crisis? And ask cui bono: who benefits from the pre-emptive narrative that the tax will fail? The answer in this case is the high-net-worth residents who would prefer the tax not exist, and the editorial page whose identity is built on providing them a permission structure.

When the next column lands — a different blue state, a different “failed” tax, the same celebrity-anecdote structure, the same reverse study-shows — you will recognize it before you finish the third paragraph. That recognition is the antidote. The operation loses its hold when the reader can see it being built. We operators drafted these tax-flight columns for every Democratic-governed state that dared raise revenue from capital — the same structure, the same anecdotes, the same closing punchline — for twenty years, and the only thing that ever changed was the state’s name. The joke at the end was always the anchor: make the reader laugh, and they won’t notice the evidence that isn’t there.