Washington's Business Climate Under Scrutiny as Survey Reveals Nearly Half of Leaders Consider Leaving

A stark warning about Washington state's economic competitiveness emerged this week, as a prominent business group released data showing nearly half of the state's business leaders are considering leaving. The findings signal growing friction between the private sector and state policymakers over taxation and affordability.

The Association of Washington Business (AWB), the state's oldest and largest business organization, unveiled its latest survey Thursday. Drawing from responses of over 400 employers, the report paints a picture of eroding confidence. Some 44% of business leaders are now thinking of relocating their personal residence outside Washington—a sentiment that underscores broader anxieties about the state's direction.

The data reveals a tangible shift in corporate planning. Companies are now more than twice as likely to expand outside Washington (30%) compared to a year ago (14%). Perhaps more alarming, the percentage of businesses with concrete plans to leave the state has nearly doubled, jumping from 9% to 17% year-over-year. The primary drivers, according to the AWB, are the state's overall tax burden and the ballooning cost of living.

This discontent follows closely on the heels of the largest tax increases in state history, passed during the 2025 legislative session—a move met with broad opposition from business groups. The state's economic prestige has also taken a hit, recently falling out of the top 10 on CNBC's annual "Best States for Business" ranking for the first time in over a decade.

"The message from employers, particularly our mid-sized and small businesses, is that they are under severe strain," said AWB President Kris Johnson in a statement. He pointed to ongoing discussions in Olympia about new taxes, including a Democratic proposal often dubbed the "millionaires tax." Johnson urged lawmakers to pivot towards policies that grow the economy, warning that the current path risks "stagnant employment, worsening competitiveness, and businesses leaving our state."

When asked where disaffected leaders might go, the survey pointed to Idaho, Arizona, Wyoming, and Montana as likely destinations.

Democratic House Majority Leader Joe Fitzgibbon offered a counterpoint, noting that three of those four states levy a personal income tax—a tax Washington lacks. He also cited the latest U-Haul Growth Index, which ranked Washington 6th in the nation for inbound moves in 2025, as evidence of the state's enduring appeal. "Lawmakers are focused on making Washington a great place to sustain or start a business," Fitzgibbon said, framing the proposed tax on high earners as part of a strategy to reduce living costs and foster growth.

However, the survey suggests other pressures are mounting. Over half (54%) of respondents reported feeling strain from federal tariffs. Furthermore, the state's overall tax burden rocketed from employers' fourth-largest challenge in late 2024 to their primary concern by last spring, where it has remained.

State Representative Jim Walsh (R-Aberdeen), who also chairs the Washington State Republican Party, framed the issue as one of mobile capital. "Capital is restless. It will move to places with the fewest burdens," Walsh told McClatchy. He expressed concern that while established giants like Microsoft may not leave, the state risks losing the "next Microsoft" to more business-friendly locales like Austin or Orlando. "Washington has been a hub for software and AI," Walsh noted. "But will we be a big part of AI as it matures into a real industry? Maybe not."

Voices from the Community

Michael Chen, Small Business Owner (Seattle): "This survey confirms what I hear every day at my shop. The calculus is changing. When you combine high B&O taxes, soaring rents, and now talk of more taxes, it forces you to look at maps of Idaho and Arizona. It's not a threat; it's survival arithmetic."

David Rodriguez, Economic Policy Analyst (Olympia): "The data is concerning but requires context. Washington still has immense strengths: a skilled workforce, major research institutions, and a legacy of innovation. The policy challenge is balancing necessary revenue for public goods with maintaining our competitive edge. The 'millionaires tax' proposal is one attempt at that balance."

Sarah Jenkins, Tech Sector Manager (Bellevue): "This is a five-alarm fire for Washington's future. We're actively subsidizing the growth of other states with our short-sighted policies. Chasing away founders and investment isn't 'progressive'; it's economic self-sabotage. The politicians in Olympia seem more interested in virtue signaling than in keeping the lights on and the paychecks coming."

Priya Sharma, Non-Profit Director (Spokane): "The focus solely on business climate misses the human impact. If strategic public investment funded by fair taxes improves schools, infrastructure, and healthcare, that creates a better, more stable society for everyone—including businesses. We can't race to the bottom on taxes and expect a high quality of life."