Schultz Exits Washington With 1 Warning on State's Anti-Business Turn

(P1) Former Starbucks Corp. Chairman Howard Schultz has left Washington state, issuing a sharp rebuke of the region’s increasingly “hostile” climate for business and a new 9.9% tax on capital gains that he argues threatens future economic growth. In a Wall Street Journal op-ed, the high-profile billionaire who built Starbucks into a global brand said he is no longer a resident, a move that highlights a growing rift between the state’s government and its top job creators.

(P2) "I feel a responsibility to speak up about the business and job climate in a city and state that gave me so many opportunities," Schultz wrote. "That ecosystem is fractured today. Seattle and much of Washington face serious problems: chronic homelessness, disorder in core business districts, persistent budget deficits, declining public-school outcomes and a slowing technology hiring cycle."

(P3) The policy shift drawing the most fire is a 9.9% tax on income over $1 million, which critics have dubbed a "millionaires tax." This comes on top of what Schultz calls a "deeply regressive" reliance on sales taxes, which reach 10.55% in Seattle. The departure follows announcements from tech giants Microsoft Corp. and Amazon.com Inc. of slowed recruitment and reduced headcounts, while Starbucks itself is shifting hundreds of corporate roles to Tennessee.

(P4) The core risk, as articulated by critics, is a potential "downward spiral" for one of America's most dynamic economic zones. If successful entrepreneurs—the most mobile segment of the tax base—leave, Washington may face significant budget challenges. This could force the state to either cut services or increase taxes on the remaining population, undermining the long-term job creation that companies like Boeing, Amazon, and Starbucks historically provided.

A Widening Rift

Schultz’s public exit puts a spotlight on what he describes as a deliberate pivot by local leadership away from a partnership with the private sector. He singled out Seattle Mayor Katie Wilson, who he said has "chosen to cast business as a foil rather than a partner" with "socialist rhetoric that vilifies employers."

This sentiment is echoed by other local entrepreneurs. Jesse Proudman, founder of the AI platform Venice.ai, which employs 35 people, is also considering relocating. He pointed to a recent forum where Mayor Wilson, when asked about wealthy residents leaving, said "if the ones that leave, like, bye," to audience laughter. "It’s just not a friendly jurisdiction to be in when you are villainized for being an entrepreneur here," Proudman said in a local media interview, adding he is exploring options in Texas, Nevada, and Florida.

Tax Policy in Focus

Washington's new capital gains tax marks a significant departure for a state that has long avoided an income tax. Supporters argue it makes the tax system more equitable and funds public services. However, opponents contend it disproportionately targets a small, mobile group of entrepreneurs and investors, creating revenue uncertainty.

"By targeting that population of the state, you are targeting the most mobile people, and you’re building a revenue projection based on the reality that you’re thinking those people aren’t going to leave," Proudman said.

The debate extends beyond income. Washington lawmakers have also recently clashed over tax breaks for data centers, another critical industry for the state's tech sector. The discussions pit the promise of high-tech jobs against the immense power consumption of these facilities, reflecting a broader tension in the state's economic strategy.

A Complex Economic Picture

While high-profile figures like Schultz sound the alarm over an exodus from Seattle, the economic picture across Washington is not uniform. Just 60 miles from the city, Mason County was recently named one of the fastest-growing micro-areas in the U.S., adding over 1,400 residents between July 2024 and July 2025.

Local officials there attribute the boom to a lower cost of living and investments in infrastructure. The growth is fueled by manufacturing, healthcare, and an expansion of the nearby Puget Sound Naval Shipyard. This suggests that while the political and economic climate in Seattle may be souring for some, other parts of the state are actively attracting new residents and businesses, creating a more complex and fragmented economic narrative for Washington.

This article is for informational purposes only and does not constitute investment advice.