A newly introduced legislative proposal in Washington aims to implement a statewide payroll excise tax targeting high-income earners, drawing criticism for potentially replicating Seattle’s controversial tax model. Proponents argue the measure would safeguard the state budget from potential reductions in federal funding, a strategy labeled as “Trump-proofing.” However, opponents warn that such a policy could discourage business investment and accelerate job migration out of high-tax areas.
The core argument against the legislation rests on economic mobility: capital and skilled labor tend to relocate to regions with more favorable tax climates. Without a thriving private sector generating revenue through innovation and employment, public programs cannot be sustained over time. While Washington benefits from abundant natural resources, it lacks the oil-dependent revenue stream seen in states like Alaska, making private-sector productivity even more critical.
Seattle’s 2020 “JumpStart” payroll tax, designed to make large corporations like Amazon contribute more, targeted high-wage positions—ironically undermining the very jobs that support robust tax collections. In response, Amazon halted construction in Seattle and transferred over 14,000 employees to Bellevue, with plans to expand to 25,000. Other major firms followed suit: TikTok secured nearly half a million square feet in Bellevue for its regional growth, and The Pokémon Company International signed one of the area’s largest office leases there.
By late 2025, downtown Seattle faced an office vacancy rate of approximately 35%, while Bellevue maintained a tighter market, illustrating how policy decisions influence corporate location choices. The JumpStart tax initially promised dedicated funding but saw revenues diverted into the general fund by former Mayor Bruce Harrell, reflecting a broader trend where new tax streams lead to expanded spending rather than fiscal restraint.
Despite these outcomes, Seattle voters approved Proposition 1A in February 2025, adding a 5% levy on compensation exceeding $1 million, layering additional burdens on high earners. Now, state lawmakers propose extending a similar model statewide, imposing a payroll tax on all jobs paying above $125,000 annually.
Previously, companies affected by Seattle’s taxes could remain within the Puget Sound region by relocating to nearby cities like Bellevue or Redmond. A statewide tax would eliminate this flexibility. If operating costs rise uniformly across Washington, businesses may choose to move entirely out of state—opting for locations such as Texas, Utah, or Tennessee, which offer lower tax environments.
Rather than increasing levies on local employers, critics suggest that应对 federal funding uncertainty through budget discipline—trimming inefficiencies and prioritizing essential services—would be a more sustainable approach. Relying on higher taxation risks triggering an economic downturn, as demonstrated by Seattle’s shrinking commercial real estate demand and weakening fiscal base. Lawmakers are urged to avoid adopting a strategy that has already shown signs of failure at the municipal level.
— news from Washington Policy Center
— News Original —
New proposed legislation aims to adopt Seattle’s failing economic strategy
Rep. Shaun Scott, a Seattle Democrat, held a press conference Tuesday to announce a proposed statewide payroll excise tax on high-income earners. The justification is “Trump-proofing” the state budget against potential federal funding cuts. What this proposal really does is export Seattle ‘s failed tax experiments across the entire state.
The proposed legislation ignores basic economic tenets: Capital investment is highly mobile – it goes where it ‘s welcomed and leaves where it ‘s punished. Further, without a strong private sector generating economic activity and revenue, the public sector cannot be sustained.
While Washington has an abundance of natural resources, we are not Alaska. We cannot rely on oil revenues to fund our state budget. The reality is that government spending is sustained entirely by the productivity of the private sector. Public programs do not generate wealth; they rely on the economic activity created by private businesses and their workers. If lawmakers incentivize those employers to leave, there is no financial backstop. When the private economy contracts, the resources available to the state vanish with it. Seattle has spent the past five years demonstrating what happens when you tax high-paying jobs. The city ‘s “JumpStart” payroll tax, passed in 2020, was sold as an effort to make big companies like Amazon pay their fair share. It targeted high-wage employment, penalizing exactly the kind of jobs that build a strong tax base.
Amazon, the primary target of the JumpStart tax, paused Seattle construction and shifted over 14,000 employees to Bellevue, with plans to reach 25,000. The company didn ‘t leave Washington, just Seattle. TikTok leased 450,000 square feet in Bellevue for its Pacific Northwest expansion. The Pokémon Company International signed one of the region ‘s largest office leases in years in Bellevue. The concentration of these major investments in Bellevue proves, yet again, that capital moves where it is welcomed and away from where it is penalized.
Downtown Seattle ‘s office vacancy rate sits around 35% as of late 2025, while Bellevue ‘s market remains substantially tighter. This is the direct result of policy choices that made Seattle more expensive and less attractive for business.
Revenue generated by new taxes rarely remains in its promised, dedicated fund. Former Mayor Bruce Harrell has already diverted JumpStart funds into the general fund to cover basic operations, fueled by massive revenue losses in other areas. As Washington’s 2025 legislative session proved, when government gains access to new streams of tax dollars, its spending expands immediately to consume it.
Rather than learning from empty storefronts and departing businesses, Seattle voters approved another tax in February 2025. Proposition 1A adds a 5% tax on compensation over $1 million. The city is layering taxes on top of taxes, giving businesses more reasons to pack up and leave.
State lawmakers now want to apply this failing strategy across Washington through a statewide payroll tax on all jobs paying more than $125,000 per year, supposedly to buffer against potential federal funding changes.
The Puget Sound economy hasn ‘t collapsed under Seattle ‘s tax burden only because companies had an escape valve. They could move to Bellevue or Redmond and stay in the region. A statewide payroll tax eliminates that option. If employing a software engineer or biotech researcher costs more across the entire state, businesses won ‘t move to another city in Washington. They ‘ll move to Texas, Utah, or Tennessee.
Concerns about potential federal funding cuts don ‘t justify raising taxes on Washington businesses. If federal money decreases, the appropriate response is fiscal discipline. Trim the state budget, eliminate inefficient programs, and focus resources on core services. Trying to offset federal cuts by taxing local job creators creates an economic spiral. Seattle has shown how this story ends: vacant office towers, a shrinking tax base, and budget problems that more taxation can ‘t solve. State lawmakers should reject this tax and ensure the rest of Washington does not follow Seattle into fiscal failure.