Op-Ed: A ‘Millionaires’ Income Tax’ is really a tax on construction cash flow

Opinion 3 min.Read Op-Ed: A ‘Millionaires’ Income Tax’ is really a tax on construction cash flow By By Jeff Tiegs Associated General Contractors of Washington March 3, 2026 FacebookTwitterPinterestWhatsApp Washington’s proposed income tax (AKA “millionaires’ income tax,” Senate Bill 6346) is being promoted as a measure aimed at the ultra-wealthy. But for many small and mid-sized construction contractors, it would function as something very different: a direct tax on the cash flow that keeps their businesses operating. Most construction firms in Washington are not large, publicly traded corporations. They are locally owned LLCs, partnerships, and S corporations — pass-through entities where business income flows to the owner’s individual tax return. On paper, that income may appear to be personal wealth. In practice, it is often the company’s operating capital. Construction is a cyclical, capital-intensive, and low-margin industry. Construction margins are significantly lower than those of the high-tech, financial, pharmaceutical, and other industries. And contractors routinely reinvest earnings into equipment, bonding capacity, payroll, insurance, and safety programs. Income is frequently recognized at the completion of a major project, which can create a temporary spike in reported income after years of reinvestment, borrowing, and risk. That spike may push an owner’s reported income above $1 million in a single year. But that does not mean there is $1 million in idle cas...