Startup companies are being villainized. It's no longer a friendly place.
In the long arc of American federalism, states have always competed for the people who build things — and Washington, long a sanctuary for entrepreneurs, is now testing whether that compact can survive a 9.9% millionaire tax. Jesse Proudman, who founded three companies in the state, is relocating to Austin, joining a quiet exodus that lawmakers insist isn't happening but that surveys and departure announcements increasingly document. The question Washington must now answer is an old one: when a place changes the terms of belonging, who stays, and who bears the cost of those who leave?
- Washington's new 9.9% tax on incomes above $1 million hasn't taken effect yet, but it is already emptying boardrooms and prompting relocation plans across the state's tech sector.
- Jesse Proudman — founder of three Washington companies — is moving to Austin, calling the tax unconstitutional and a signal that the state now views entrepreneurs as liabilities rather than assets.
- A survey found 44% of Washington business leaders are considering leaving their personal residences, and companies report being more than twice as likely to expand outside the state than within it.
- A repeal campaign, Let's Go Washington, is racing against a July 2nd deadline to collect 325,000 signatures and force a public vote before the tax takes permanent hold.
- The bill's Democratic sponsor insists there is no evidence of tax flight, but the departures already underway suggest the debate over evidence may itself be the warning sign.
Jesse Proudman built three companies in Washington — a private cloud firm, a crypto-investing platform, and most recently Venice.ai, a privacy-focused generative AI venture. For years, he saw the state as a startup sanctuary. That view has changed, and he is now relocating to Austin, Texas.
In March 2026, Governor Bob Ferguson signed a 9.9% tax on annual income exceeding one million dollars. Though it doesn't take effect until January 2028, its passage has already begun reshaping the state's business landscape. Washington had long been one of the few states with no personal income tax — a distinction that eroded in 2023 when the state Supreme Court upheld a 7% capital gains tax, opening the door to broader income-based levies. Proudman calls the new millionaire tax unconstitutional and is now serving as a spokesperson for Let's Go Washington, a committee working to repeal it.
The group has until July 2nd to gather roughly 325,000 signatures to place the measure on the November ballot. The urgency is backed by data: a survey by the Association of Washington Business found that 44% of business leaders are considering relocating their personal residences, and Washington companies now report being more than twice as likely to expand outside the state than within it.
State Senator Jamie Pedersen, the bill's primary sponsor, has dismissed these concerns, telling Fox News Digital there is no evidence that high earners will migrate to lower-tax states. Proudman's departure is one of many data points that suggest otherwise.
His deeper warning is about trajectory. The wealthy will leave, he argues, shrinking the tax base and eventually forcing the state to broaden its levies onto middle-class residents. What begins as a millionaire's tax, he contends, rarely ends as one.
Jesse Proudman built his career in Washington. He started three companies there—Blue Box, a private cloud operation; Makara, a crypto-investing platform; and most recently Venice.ai, a privacy-focused generative AI venture where he serves as founder and chief technology officer. For years, he watched the state cultivate what he calls a startup sanctuary, a place where entrepreneurs were seen as contributors to the community rather than obstacles to it. That calculation has shifted, and Proudman is leaving.
In March 2026, Washington Governor Bob Ferguson signed into law a new tax on high earners: a 9.9% levy on annual income exceeding one million dollars. The Democratic-controlled legislature pushed it through during the spring session. The tax doesn't take effect until January 1, 2028, with first payments due in 2029. But the mere prospect of it has already begun reshaping the state's business landscape. Proudman, who once saw Washington as entrepreneurial-friendly, now describes it as increasingly hostile to the people who fuel its economy. He's relocating to Austin, Texas.
The tax represents a seismic break from Washington's historical identity. For decades, the state has been one of only a handful with no personal income tax. That changed legally in 2023 when the state Supreme Court upheld a 7% capital gains tax, effectively opening the door for broader income-based levies. Critics argue the new millionaire tax violates the state constitution's requirement that property—which includes income—be taxed uniformly. Proudman calls it unconstitutional. He's now serving as a spokesperson for Let's Go Washington, a political committee working to repeal the measure before it takes root.
The committee has until July 2nd to gather approximately 325,000 signatures to place the tax on the November ballot. Hallie Herzberg, the group's director of communications, says the effort is urgent because the tax is already driving businesses, employers, and families out of the state. The data supports her concern. A survey by the Association of Washington Business, reported by The Center Square, found that 44% of business leaders in the state are considering relocating their personal residences. Washington businesses reported they are now more than twice as likely to expand outside the state than within it.
State Senator Jamie Pedersen, a Seattle Democrat and the bill's primary sponsor, has dismissed these concerns. He told a local Fox affiliate that the millionaire tax is unlikely to cause businesses to leave, and later told Fox News Digital there is no evidence that high earners will migrate to lower-tax jurisdictions like Florida or Texas. The data suggests otherwise. Proudman's own decision to leave is one data point among many.
Proudman's warning extends beyond his personal relocation. He argues that while the tax is branded as a millionaire's tax to gain public support, the long-term consequences will eventually burden middle-class residents. The wealthy and mobile will leave, he contends, shrinking the tax base and forcing the state to broaden its levy to survive. When that happens, the tax will no longer be a millionaire's tax at all—it will be a tax on everybody. He notes that Washington already ranks 45th worst in the nation from a tax perspective. This new measure, he argues, will only worsen that standing. Pedersen's office did not respond to requests for comment on these criticisms.
Citas Notables
The business climate when I started my first company was very entrepreneurial-friendly, and the startup community was looked upon as a contributing member of the city. Over the last number of years, that has changed dramatically.— Jesse Proudman, founder of Venice.ai
The reality is the millionaire tax is not likely to result in businesses leaving. There is no evidence that high earners will migrate to lower-tax jurisdictions like Florida or Texas.— State Senator Jamie Pedersen, bill sponsor
La Conversación del Hearth Otra perspectiva de la historia
Why is a tech entrepreneur's personal relocation decision significant enough to be national news?
Because Proudman isn't alone. He's a visible marker of a larger movement—44% of Washington business leaders are considering leaving. When someone with his profile and track record says the state is no longer friendly to business, it signals something real has shifted in how entrepreneurs perceive their future there.
But the senator says there's no evidence people will actually leave. Isn't that a fair counterpoint?
It would be, except the data contradicts him. Businesses are already reporting they're twice as likely to expand outside the state. That's not hypothetical—that's happening now, before the tax even takes effect. The question isn't whether people will leave; it's how many.
Proudman says this will eventually become a tax on the middle class. How does that work?
If the wealthy and mobile leave, the tax base shrinks. The state still needs revenue, so it has to tax the people who remain—and they can't leave as easily. You end up with a smaller pool of people paying for the same services. That's the trap he's warning about.
Is there a constitutional argument here, or is that just rhetoric?
The constitution does require uniform taxation of property, and income is classified as property in Washington. The 2023 capital gains tax case opened a door, but many legal scholars argue the millionaire tax pushes further than that precedent allows. It's not settled law.
What does Austin represent to him that Washington no longer does?
Lower taxes, obviously. But also a state that still sees entrepreneurs as assets rather than targets. He's not just moving for the tax rate—he's moving because he feels unwelcome in a place that once celebrated what he does.