A notable technology entrepreneur from Washington is part of a growing trend of business leaders leaving the state. They cite significant changes to the tax landscape, particularly following the enactment of a contentious “billionaire tax.”
Jesse Proudman, who created Venice.ai— a platform focused on privacy-oriented generative AI— shared his concerns about what he once viewed as a “startup mecca.” It has become, in his words, increasingly hostile towards those who contribute to its economy.
“I’ve founded three companies here. This has been my home as an entrepreneur,” Proudman noted. “When I launched my first business, the environment was quite welcoming to entrepreneurs, and the startup community was valued. But, honestly, that has changed a lot in recent years.”
Proudman previously established Blue Box, a private cloud service, and Makara, a cryptocurrency investment firm, where he remains a spokesperson. There’s now a significant effort underway to gather signatures for a repeal on this tax before it takes effect.
The new tax, introduced by the Democratic-majority Legislature and approved by Governor Bob Ferguson earlier this year, imposes a 9.9% tax on earnings exceeding $1 million annually. While it won’t activate until January 2028, with payments due starting in 2029, the anticipation of this tax is already affecting the state’s demographics.
“We need about 325,000 signatures by July 2 to get this on the November ballot,” said Harry Hertzberg from Let’s Go Washington. “People deserve to vote on this. It’s pushing businesses, employees, and families out of our state.”
This marks a significant change for Washington, which historically has not had a personal income tax. However, the state Supreme Court’s recent decision to uphold a 7% capital gains tax has shifted the legal landscape, leading critics to argue that this new income tax violates the state constitution, which requires a flat-rate tax on assets.
Senate Majority Leader and bill sponsor Jamie Pedersen, however, dismissed fears of wealthy individuals relocating due to this new tax.
After the bill was signed, Pedersen stated, “It’s unlikely that companies will leave because of the billionaire tax.” He later mentioned to a platform that there’s “no evidence” suggesting that high-income earners move to places with lower taxes.
Contrarily, data from the Association of Washington Business suggests that 44% of business leaders are considering relocating. Moreover, companies in Washington are now reportedly more inclined to expand outside the state as opposed to within it.
For Proudman, the choice is made. He plans to transition his personal and business interests to Austin, Texas. “It’s just not a friendly environment for business anymore,” he explained. “Startups feel like they’re being attacked. We weighed our options and ultimately chose Austin.”
Proudman warned that the tax is currently framed as a “millionaire’s tax” to garner public support, but he believes its longer-term economic consequences will adversely affect middle-class residents as the tax base diminishes.
“They’re aiming at a highly mobile group,” he pointed out. “When these folks leave, everyone will face the tax burden. Voters might not realize they’re setting themselves up for a tough situation. Washington is already near the bottom when it comes to taxation. This tax could be deemed unconstitutional and will eventually affect everyone.”
As of now, no response has been received from Pedersen’s office concerning recent inquiries.
