OLYMPIA, WA – Democratic lawmakers in Washington are beginning to lay out the buffet of tax increases they want to use to fill most of a $16 billion state budget shortfall.
There are hikes in business and capital gains taxes, new sales taxes on services and greater property tax collections by the state and local governments.
Other selections include an increase in a surcharge on technology companies, an expanded tax on nicotine products, and a mandate for some large businesses to make a one-time pre-payment of sales tax owed to the state.
Major financial institutions will pay a little more, too. And there’s a surcharge on corporations with more than $250 million in annual revenue that starts Jan. 1, 2026, and lasts four years. Among those exempted from that surcharge is Boeing.
A pivotal question now is whether Democratic Gov. Bob Ferguson endorses the slate of tax measures. His office did not immediately respond to a request for comment.
Last month, House and Senate Democrats rolled out separate packages to raise up to $21 billion.
But Ferguson threw cold water on their desire to tax those with more than $50 million, a pillar in both approaches. The governor said this proposal was “untested, difficult to implement, and most importantly, for purposes of adopting a sustainable budget, will face an immediate challenge in court.”
That sent legislators searching for new options. They came up with a whole bunch.
They also discarded a payroll tax modeled on Seattle’s JumpStart tax that would have been levied on companies with large payrolls and highly-paid employees. This was another central plank in their earlier tax plans.
The new approach still relies on many of the state’s corporate and banking giants to pay more.
It also still targets wealthier individual taxpayers with the addition of a second tier of the state’s capital gains tax, which took effect in 2022 and has been upheld in court.
Washington imposes a 7% tax on gains over $270,000 from the sale or exchange of long-term assets like stocks, bonds and business interests. Senate Bill 5813 and House Bill 2082 call for a new 9.9% tax on gains greater than $1 million, an idea Senate Democrats discussed in December. This would bring in an additional $280 million for the budget, $560 million over four years.
The Senate Ways and Means Committee will hold a hearing on several bills at 5:30 p.m. Wednesday.
This is a developing story
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