Leslie Goeres, a 37-year-old Seattle entrepreneur, has been house-hunting in Nashville, Tenn., and expects to move by October.

The attraction? Tennessee doesn’t have an income tax, while Washington will levy a 9.9% “millionaires tax” on household income above $1 million, starting in 2028.

Goeres owns the Soak & Sage spa in Renton. She had already decided to open a second, larger location in Nashville because of its lower business taxes and operating costs, and signed a lease in February.

Until state lawmakers passed the new high-earners income tax in March, Goeres says, she and her fiancé had planned to remain in Washington, where she owns other rental properties, has lived since 2011 and raised her two children.

But the new income tax would “impact us,” Goeres said. “Really, that was what pushed us over the edge.”

Washington voters will pass judgment on the new tax this fall, weighing Initiative 645, sponsored by Redmond hedge fund manager Brian Heywood, which would repeal the levy before it takes effect.

As the initiative debate heats up, Goeres’ story — and similar accounts from other wealthy Washingtonians — are getting a lot of play among critics of the new tax.

But whether they really add up to a widespread tax rebellion is one of the more contested questions of the November election.

The Democratic majority Legislature and Gov. Bob Ferguson enacted the tax, citing a need to pay for services including education and healthcare and broaden a revenue base that leans heavily on business and sales taxes.

Republicans and other opponents say the tax — stacked atop other recent tax increases — is already spurring wealthy residents to leave or at least think about it. They point to high-profile exits by billionaires, including Howard Schultz, who has criticized Washington’s taxes and business climate, as evidence that Washington is at risk of losing its entrepreneurial mojo.

Supporters say few of the thousands of residents subject to the tax will actually flee. Officials actually project a slight increase in the state’s millionaire population after the tax takes effect.

Studies of so-called “wealth flight” suggest some Washington millionaires will leave to avoid the tax. But a leading national researcher predicts the effect won’t be large, citing decades of data on how rich people respond to tax shifts.

Still, with so much uncertainty about how the tax will play out in Washington — which historically has had no income tax — supporters and critics are making dramatic claims often based on anecdotes and incomplete data.

“Taxes are about politics and power,” said Jeffrey Hoopes, research director at the University of North Carolina’s Tax Center. Even when advocates lack solid evidence, Hoopes said, “few ever let minor details like those stop them from advocating for, or against, a tax proposal.”

According to the state Department of Revenue’s latest estimate, 25,000 Washington households will pay around $3.5 billion a year once the tax kicks in. Most live in the Seattle area.

Financially speaking, these households are Washington’s 1%, with average annual incomes of $3.2 million, according to state estimates. They run the professional and social spectrum — CEOs and tech founders, developers and venture capitalists, attorneys and pro athletes. Many are major players in the community, funding political campaigns and supporting philanthropies.

For most of the past decade, Washington’s millionaires club has grown at a faster clip than the nation’s as a whole, according to IRS data for tax returns with $1 million or more in adjusted gross income.

As of 2023, the most recent year for which data is available, Washington boasted 6.2 millionaires for every 1,000 taxpayers, compared with 5 per 1,000 nationally. In 2015, we were just below the national average of 3 per 1,000.

In an era of rising income inequality, taxing the rich has obvious political appeal, and Democrats cite polling suggesting the concept has broad support.

But opponents warn of unintended consequences, saying Washington’s status as one of nine states without a personal income tax has helped attract entrepreneurs who’ve kept the economy humming.

That Washington now risks losing that edge has become a key theme of critics, amplified by a chorus of business figures and social media influencers ever since the tax was proposed last year.

“It’s a catastrophe,” said Seattle-based venture capitalist Nick Hanauer in a GeekWire op-ed, arguing that an array of recent state tax changes and proposals like a “wealth tax” aimed at the ultrarich are “producing a stampede to other states — virtually every wealthy friend I have has either left or is planning to.”

Hanauer’s comments were striking as he has generally championed progressive economic policies, including a higher minimum wage and the state’s capital gains tax on investment profits, which was enacted in 2021.

Already, some brokers, accountants and financial planners say they’re seeing a surge in clients exploring relocation, or “redomiciling,” to lower-tax states like Nevada, Arizona and Texas.

In King County, listings for homes priced at $5 million or more are up this year versus last year, according to TrendGraphix, a real estate data company.

Others may be waiting to see what happens with the tax repeal vote.

“If the millionaires tax gets repealed, then they’re going to stay put,” said Dean Jones, owner of Realogics Sotheby’s International Realty, a Seattle-area luxury real estate brokerage. “If it plays out, then they’ve got their listing ready to go.”

The doomsday scenarios predicting a massive wealth exodus don’t match what tax researchers have observed elsewhere after tax hikes on the rich. Most wealthy people stay put.

Recent studies of tax returns from millions of high earners nationwide found that, on average, every percentage-point increase in a state’s top income-tax rate resulted in a net loss of less than 0.2% of millionaires.

Cristobal Young, the Cornell University sociologist who co-authored those studies, estimates that Washington’s new 9.9% income tax on the rich would result in a net loss of 1.9% of the state’s $1 million-plus earners. That works out to 475 of Washington’s 25,000 high-earners.

That’s not zero, but in Young’s view, it’s still a relatively tiny share. “There’s going to be a handful that move,” he said in an interview. But “98% of millionaires are staying and paying that higher tax.”

More broadly, supporters say, many states have imposed taxes that specifically target the wealthy and have not seen massive losses of millionaires.

Of the top 10 locations for millionaire density, the top six — Washington, D.C., Connecticut, Massachusetts, New York, California and New Jersey — all have imposed some form of high-earners income tax.

In Washington, supporters also point out the sky didn’t fall after the state imposed a capital gains tax.

“We’ve seen no mass exodus after we passed — and voters overwhelmingly defended — our capital gains tax,” said Rian Watt, executive director of the Economic Opportunity Institute, a progressive Seattle think tank, referring to the tax on investment profits.

Research suggests most rich people stay put for the same reason everyone does: They don’t want to lose family, social and professional connections they’ve spent decades cultivating.

Another factor: Decamping to a low-tax state isn’t as easy as booking an extended vacation. 

To avoid taxation in Washington, tax émigrés must be able to document they’ve established residency elsewhere.

“You can’t fake moving here,” said Julia Grambo, a self-described “relocation specialist” in Las Vegas who has fielded calls from Washingtonians looking to redomicile to Nevada and often has to caution them about the technical hurdles.

The reality, Cornell’s Young argues, is that while a small number of high earners do decamp to lower-tax states, the vast majority try to minimize their taxes by hiring accountants, not movers.

In 2021, Washington’s millionaire density surged. Young speculates that the spike was partly due to high earners selling stock before Washington’s capital gains tax took effect.

Young says that’s the kind of tax strategy most rich people use.

“If you ranked tax-minimization strategies by how costly or disruptive they are to implement, realizing a capital gain just before a new tax takes effect would be the easy end of the spectrum,” Young said.

“Moving to another state is a much bigger deal.”

Tax opponents argue its supporters are leaving out inconvenient data.

They note the potential shock effect of Washington’s new tax.

Many states with high-earner income taxes ratcheted up their rates incrementally. But Washington’s effectively goes from “zero to 60” overnight — a fiscal body blow that could spur more tax flight than studies have found in other states.

More broadly, critics say supporters are treating the millionaires tax as if it were the only tax wealthy Washingtonians are upset about. In reality, they say, it is the latest in a series of increases pushing more wealthy residents toward a tipping point.

Even without the millionaires tax, Washington ranks 45th in overall competitiveness due in large part to its high taxes on individuals and businesses, according to the latest survey by the Tax Foundation, a Washington D.C.-based think tank generally critical of new taxes aimed at the wealthy.

That was part of the rationale for Goeres, the spa owner. She says her decision to move to Nashville started as an effort to escape the state’s high business taxes, as well as permitting and other regulatory challenges.

“It just became more and more apparent that things are not heading in a direction that (is) business friendly in Washington,” Goeres said. “And the personal income tax is just … the cherry on top.”

Mark Harmsworth, a former Republican state legislator and director of small business policy at the Washington Policy Center, a conservative think tank, said many small-business owners are at a similar tipping point.

They tell Harmsworth, “I don’t want to wait to find out what happens next,” he said. “So I’m moving my business and my employees out of the state, or (I’m) laying off and rehiring in the destination state.”

Democrats in Olympia tacitly acknowledged at least one new tax they passed — a sharp increase in the top estate tax rate — did trigger wealthy residents to consider moving. They rolled back the tax rate in the recent legislative session.

For now, this debate will be settled by voters, not tax experts.

Republicans and other supporters of I-645 say Washington is squandering its strength as an entrepreneur-friendly, no-income tax state.

An Association of Washington Business survey of 400 employers this year found nearly 1 in 4 were considering leaving, citing taxes as a top concern. The AWB has endorsed I-645.

Democrats and allies, including public-sector unions, are banking on voters retaining the tax this fall because they support public services. The billions of dollars raised annually will largely fund K-12 schools, universities, healthcare and other programs.

They are also betting Washington’s other attributes, like its mild climate and scenic beauty, will outweigh the financial benefits of a low-tax haven like Nevada or Texas.

Indeed, as some real estate brokers like Jones note, while luxury-home listings are up, so are sales, including to out-of-state buyers who still see Washington as an attractive market.

As Jones told The Seattle Times in July, “Not everyone is afraid of the tax.”

Bryan Kirschner, a tech executive working in AI who supports the tax, said marginal tax concerns don’t dominate the minds of most wealthy people, like him, who will potentially owe it.

“Many rich people could shave four or five figures off their property taxes by moving to a place with a lesser view. No one does that,” he said. He pointed to the very rich who already choose to live in high-tax places like New York and California.

If some people leave because they can’t stand paying higher taxes to fund public services, Kirschner argues they’ll be replaced by the more civic-minded millionaires who stay.

“To some extent this is an opportunity for an upgrade of our rich people,” he said.