Let’s take a brief break from our run of posts regarding the massive corruption and fraud in government programs and return to one of the hottest topics we have been covering over the past few years, coverage that has intensified recently: which major city or state government will get to bankruptcy court first? Our primary cities in the race to bankruptcy include New York City, Chicago, Los Angeles, San Francisco, and newcomer, Seattle. The state governments that we think are soon heading into bankruptcy include New York, New Jersey, Illinois, and California with Washington state a newcomer to the race.
The reason for returning to this topic in the midst of our corruption series is because there have been some significant developments in the race to bankruptcy court. However, before reviewing the latest news and seeing which state or city is making the best progress towards government bankruptcy, let’s review how these cities and states got themselves into this financial death spiral position to begin with:
A government entity keeps expanding its budget, eventually putting pressure on the tax revenue stream it receives.
At some point, rather than cut government spending or make its programs more efficient financially, the politicians in charge raise taxes to meet the ever growing government expenditures.
The raising of taxes causes some residents and businesses to leave the city or state for less tax burdensome areas, reducing the tax base and reducing the revenue stream.
Rather than cut expenses and become more efficient to match the reduced tax revenue stream, politicians in the above cities or states raise the tax burden even more.
This causes more residents and businesses to flee the city or state, further reducing the tax base and tax revenue stream.
At some point politicians panic and raise taxes more and start cutting vital government services (e.g. police, fire, education) in order to try and balance government spending against the shrinking tax base and revenue stream.
The reduction in quality of government services in particular and quality of life in general drives more residents and businesses out of the area.
Eventually, the expenses, costs and financial liabilities outstrip the reduced tax stream and bankruptcy occurs.
Okay that’s the process, now lets check the progress some of the above listed government entities are making to achieve this bankruptcy goal against this process:
1)For the longest time Seattle was not in our discussion and analyses of which major city would go bankrupt next. However, with the election of Katie Wilson as Mayor earlier this year along with a political class that does not understand basic economics or human nature, Seattle has been making a late run in the race to bankruptcy. Consider:
We have already discussed the reality that Starbucks is moving over 2,000 high paying and tax paying jobs out of Seattle and taking them to Tennessee, weakening an already weak city tax base.
Analysis of IRS migration data showed that more 68,000 tax filers left King county, the home county of Seattle, in 2023.
You can probably safely assume that the majority of those jobs that left the county were from the city of Seattle.
Those taxpayers who left took $2.19 billion in adjusted gross income (AGI) with them, AGI that the county and city can no longer tax, as reported by the Puget Sound Business Journal.
The migration of those jobs has continued since 2023 as witnessed by the Starbucks move and other corporate job moves.
The good news at least for the state of Washington is that a lot of those who left King County stayed in the state, just in other state cities and counties, but many migrating taxpayers also left the state itself.
The IRS data also suggested that while some people are moving into Seattle proper, those newcomers are on average earning less than the people who are leaving, reducing the taxbase and reducing the amount of disposable income to expand the city’s economy.
Downtown Seattle Association, Jon Scholes, has stated that more than 13,000 jobs left Seattle in 2025, citing business and resident taxes as a prime driver of the out immigration.
Business realtor, Cushman & Wakefield, estimates that the business real estate vacancy rate was a whopping 33% during the first quarter of 2026, higher than the vacancy rate in both Los Angeles and San Francisco, two of our top city candidates to go bankrupt.
Investment company Blackstone recently sold its U.S. Bank Center in DSeattle for about $270 million, a 54% decrease from what it paid for the space in 2019,
Amazon, Meta/Facebook, and of course, Starbucks, have either downsized their employee counts in the city or have announced plans to do so, further decimating the city’s tax base.
As you can see, the accelerating bad economic conditions in Seattle perfectly fit into our financial death spiral model above: high taxes drive higher earning residents and businesses out of the city which results in a smaller tax base and lower tax revenue which drives politicians like mayor Katie Wilson to raise taxes to makeup for the tax revenue shortfall which drives out more businesses and taxpayers, further reducing the tax base and the race to bankruptcy, thanks to Seattle, just got more interesting.
2) The website, https://newsusstareverydays.com, recently commented on what Katie Wilson is doing and what the negative impact is likely to be:
We have previously reported that when the mayor was asked if she was concerned that millionaires were fleeing the city because of high taxes, she condescendingly replied “Bye.”
Weeks later she finally acknowledged that her flip answer was not in the best interests of the city and its tax base.
Nick Hanauer, a local Seattle billionaire, has allegedly told local reporters that just about every wealthy friend of his has already left Washington or is actively planning to leave, many of whom live or lived in Seattle.
A major driver of this wealthy out migration are not only the historically high taxes but the new state government 9.9% income tax on high earners.
Howard Schultz, founder of Starbucks and a recent ex-resident of Seattle, accused Wilson of being an enemy of businesses rather than partners in growing the city economy.
The same day he made those statements, Starbucks announced 61 Seattle layoffs and the moving of 2,000 jobs to Tennessee.
Apparently an approaching budget shortfall of $140 million is becoming a reality for the 2027 budget planning process.
Microsoft, a big employer in Seattle, has offered some employees voluntary retirement packages.
Oracle has almost 500 jobs in the Seattle area this past April.
At the same time, Meta/Facebook cut 168 Washington state jobs.
Boeing is moving 300 jobs out of the Seattle area to South Carolina.
As you can see, the financial death spiral laid out above at the start of this post is now playing out in Seattle. And so far, no politician including the mayor seem to have any plans to reduce the tax burden that is driving the out immigration trend and reducing government spending to match the smaller tax base which means the spiral will accelerate going forward. Seattle, once not considered as a candidate to go bankrupt quickly, is quickly making up for lost time.
The full discussion on the situation in Seattle can be accessed at the following link:
3)But it is not just high technology companies that are moving their operations and taxpaying employees out of Seattle and Washington state:
Rise, a baking company headquartered in Minnesota, recently announced that it was shutting down its Kent, Washington location, eliminating 120 Washington based jobs in the process.
The functions and jobs at the Kent location will move to an expanded company manufacturing location in Utah.
The expansion will create an additional 170 positions in Utah, not Washington.
Just another nail in the coffin of a company that decided expanding its operations was better done outside of Seattle and the state of Washington.
That will do it for now. The bad news is Seattle is doing a great job of hollowing out its taxable resources, residents and businesses. The good news is that Seattle is making a great run at being the next major American city to go bankrupt.
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If you agree that we need to deseat every member of Congress for their lack of success and accomplishment, then please consider going to the following petition link to help the cause:
https://www.change.org/p/deseat-congress-reset-freedom
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