State Representative Shaun Scott has framed his proposal for a statewide payroll tax as a response to anticipated reductions in federal social programs under President Donald Trump and a Republican-led Congress. However, the measure extends well beyond bridging budget shortfalls. It would require roughly 5,000 Washington businesses to contribute substantial funds toward expanded state expenditures—just as the local economy begins to show warning signs. Lawmakers should swiftly dismiss this initiative. n nAfter a year in which Scott and fellow Democratic legislators imposed $12 billion in new taxes on the state, this latest plan risks further undermining employment growth. Recent data from the Puget Sound Regional Council reveals that the region lost nearly 13,000 jobs in 2025—the first significant job decline since the Great Recession outside of pandemic-related disruptions. n nThe proposed tax would deepen Washington’s slide in economic competitiveness rankings. Once ranked ninth-best nationally in 2010 by the Tax Foundation, the state now sits at 45th place. n nOn January 22, Scott told the House Finance Committee the bill addresses a specific fiscal challenge—potential cuts to federal aid such as food and health support. Yet 49% of the revenue generated would flow into the general operating budget, subject to unrestricted legislative spending. The funding would exceed replacing lost federal dollars, and there is no expiration clause limiting how long the tax remains in effect. n nUnder the plan, employers would pay a 5% levy on wages for employees earning over $125,000 annually. This mirrors Seattle’s 2020 payroll tax, which prompted some firms, including Amazon, to shift operations across Lake Washington. Over four years, Seattle lost 5,800 jobs while Bellevue gained 4,400, according to regional statistics. n nJoe Fain, CEO of the Bellevue Chamber of Commerce and former state senator, warned during the hearing that the policy could benefit neighboring states like Idaho and Arizona more than Washington itself. n nHouse Speaker Laurie Jinkins, a Democrat from Tacoma, described it as “pretty unlikely” the bill will reach the governor’s desk, especially with momentum building around a potential millionaires’ income tax. Senate Majority Leader Jamie Pedersen, also a Democrat, noted that Senate leaders reviewed a similar payroll tax last year and concluded it “was not the place to look for money.” n nWhile taxation supports essential public services, persistent pressure on business conditions threatens long-term revenue stability. If enacted, the payroll tax could signal to the broader U.S. economy that Washington is no longer a favorable destination for innovative enterprises.
— news from The Seattle Times
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A payroll tax would stunt WA’s economic growth at a vulnerable time
State Rep. Shaun Scott has branded his pitch for a statewide payroll tax as a way to blunt cuts to the country’s social safety net by President Donald Trump and a Republican-controlled Congress. n nBut the Seattle Democrat’s bill goes far beyond filling a budget void. About 5,000 Washington companies would collectively pay billions of dollars to expand state spending — at a time when the state’s economy is showing signs of weakness. State lawmakers should promptly reject this proposal. n nFollowing a year when Scott and Olympia’s other Democratic lawmakers saddled Washington’s economy with $12 billion in new taxes, his proposal is a surefire way to discourage job creation in the state. And at precisely the wrong time. The region shed nearly 13,000 jobs in 2025, according to just-released data from the Puget Sound Regional Council. Other than the pandemic, it’s the first time the region’s job count has been in the red since the Great Recession. n nThe payroll tax would further tank Washington’s economic competitiveness. Heralded in 2010 as the ninth best on that measure by the nonprofit Tax Foundation, the Evergreen State now comes in at 45th in the nation. n nOn Jan. 22, Scott told the House Finance Committee that his bill “responds to a very specific budget reality” — cuts to federally funded lifelines like food assistance and health care. But the bill sends 49% of revenues to the state’s operating budget, which lawmakers can spend however they see fit. Those revenues would go beyond a restoration of federal funding. And there’s no end date to how long the tax can be collected. n nEmployers would pay 5% on wages paid to employees who earn more than $125,000 annually under the proposal. Sound familiar? Seattle established a similar tax in 2020. And we know what happened next: Some companies, including Amazon, shifted operations across Lake Washington. Over four years, Seattle lost 5,800 jobs while Bellevue gained 4,400, according to Puget Sound Regional Council statistics. n n“Our fear and our opposition to this particular piece of legislation is that it will do more for the economies of Idaho and Arizona than it will for the economy of Washington,” Joe Fain, the Bellevue Chamber of Commerce CEO and former state senator, testified at the bill’s hearing. n nHouse Speaker Laurie Jinkins, D-Tacoma, called it “pretty unlikely” that the bill makes it to the governor’s desk, given the current momentum around an income tax on earners who make $1 million a year. Senate Majority Leader Jamie Pedersen, D-Seattle, said Senate Democrats vetted a payroll tax proposal last year and they found it “was not the place to look for money,” he said at a recent news conference. n nTaxes pay for critical public services, but Scott and others must recognize if they keep hammering away at the state’s economic vitality, there will be fewer taxpayers and revenues left to foot the bill. If implemented, the payroll tax would become a flashing beacon to the wider U.S. economy that innovative job creators should look elsewhere to do business.