It turns out that even the wokest billionaires are just like you and me — they don’t much like paying taxes, either.
The latest example is Howard Schultz, the former CEO of Starbucks, who is reportedly spending some $44 million for a penthouse apartment at the elite Surf Club in Surfside, Fla. Schultz simultaneously announced that he and his wife were leaving their longtime base in Seattle.
The Schultz family is skipping town just as Democrats in charge of the Evergreen State have rammed through a new tax to make wealthy residents “pay their fair share.” By leaving, the Schultzes will avoid a 9.9 percent “millionaires” tax that Washington’s Democrat governor promises to sign into law.
Schultz is known not only for putting America’s most famous cup of Joe on the map; he also flirted with running for president. His main goal if he ran? Fixing our country’s income inequality, which had, in his words, gotten “out of control.”
“If I run for president and am fortunate to win, what I can promise you is I will address the issues of inequality in many ways,” Schultz told an interviewer at the time.
One way Schultz planned to fix inequality was by hiking taxes. “The government in Washington and the president of the United States needs to demonstrate to the American people we’re going to raise taxes on the wealthy,” Schultz said in another interview.
I guess he just didn’t mean the wealthy of Washington state.
Washington’s new tax will apply to income earned in excess of $1 million per year, starting in 2028. Backers of the tax promise, as they always do, that the funds will go to things like health care, schools and free meals for needy children. What Grinch could possibly deny such laudable ambitions? Certainly, no good Democrat hoping to be reelected. But even The New York Times admits the levy is mainly to fund “core government services” — i.e., bureaucratic bloat — and that a mere 5 percent might go to child care services.
Even several Democrats joined Republicans in voting against the new tax, probably because they know that such tax hikes often backfire, driving out the very people who keep government motors running. Also, with an ever-expanding budget, they expect the levy will soon morph into a statewide income tax. Washington is one of the few states that has no such tax; voters over time have rejected an income tax on 10 separate occasions.
Ocasio-Cortez laid it on even thicker, claiming that Republican politics involves “lying to and screwing over working and middle-class Americans so that they can steal from our healthcare, Social Security, and veterans’ benefits to pay for tax cuts for the wealthiest and bailouts for their crypto billionaire friends.”
The tiny little problem for progressives is a wonderful thing called federalism. States have to compete for residents, with a host of different policies, including taxes. People can move out of states that impose onerous penalties on their citizens and, like Schultz and his family, many of them do.
Washington is late to the tax game, but its spending and budget problems mirror those of other Democrat-run states. The Evergreen State is expected to amass a budget deficit over the next four years of more than $13 billion. Opponents of the new tax note that Washington’s budget has doubled in the last decade, driving spending per person 40 percent higher.
And the new tax is actually worse than it looks. The Tax Foundation writes: “The proposed tax would yield a top rate of more than 18 percent in Seattle when combined with two Seattle wage taxes and a statewide uncapped payroll tax, making it the highest rate on wage income in the country.” The levy would fall mainly on “small business owners and on tech workers receiving Restricted Stock Units in compensation, and would be particularly detrimental to employees at startups.”
In other words, this new tax takes particular aim at the very kind of innovators who once made Washington state synonymous with entrepreneurship.
Schultz is not the only billionaire abandoning Seattle. Jeff Bezos left Washington in 2023 for a mansion in Miami. The Amazon founder said he was relocating to be near his parents; it was probably just a coincidence that, in 2022, Washington passed a capital gains tax. As CNBC put it bluntly last year, “Bezos plans to unload 50 million shares of Amazon before Jan. 31, 2025. Posting those sales in Florida will save him at least $610 million.”
Even for a billionaire, that’s a very large number and a powerful motivator.
Meanwhile, billionaires escaping California (such as Meta founder Mark Zuckerberg), Illinois (such as hedge fund leader Ken Griffin) and other blue states are mostly settling in Florida and Texas, which have no state income taxes, are business-friendly and have kept local spending under tight control.
“These nomadic entrepreneurs are sending Democrats a loud and unmistakable message: Higher taxes will ultimately create a doom-loop, pushing away successful residents, resulting in lower revenues and thus requiring even higher taxes to keep up with basic services.”
This column originally appeared on The Hill.
