(The Center Square) – Patrick Connor, Washington state director for the National Federation of Independent Business, fears that tax increases passed by the state Legislature this session will translate into job losses.
“I worry that our state’s largest tax increase in history, which rolls out over the next 15 months, will continue – and likely accelerate – the local job losses Washington small businesses have experienced since 2022,” Connor emailed The Center Square in commenting on NFIB’s latest jobs report that says the economy is growing but jobs are lagging.
He continued: “As Main Street is forced to send more hard-earned dollars to Olympia, there will be fewer resources available for wage and benefit increases or new hires. Leaving open positions vacant may be the least painful way for mom-and-pop establishments to make ends meet in the short run. Cutting hours and positions may be unavoidable as additional tax increases and surcharges take effect in January 2026 and 2027.”
The new taxes, which are predicted to generate billions in revenue, include adjustments to the capital gains, business and occupation taxes, and estate taxes, as well as an expanded sales tax on services.
Majority party Democratic lawmakers justified the tax increases by pointing to a projected budget shortfall and the need to fund essential public services.
Washington’s latest near general fund revenue forecast for the 2025-27 and 2027-29 biennia has been lowered by more than $900 million due to slower national economic growth and reduced residential construction activity.
“The September revenue forecast even hinted at this, citing lower retail sales, slower employment growth, and an uptick in unemployment among the factors likely to reduce state tax receipts this budget cycle and next,” Connor noted.
He doesn’t think the Evergreen State’s employment picture will improve anytime soon.
“For background, Washington small businesses shed 14,600 jobs between October 2022 and 2024, according to an Intuit QuickBooks Small Business Index,” Connor said. “Main Street employment continued its downhill slide in 2025, with nearly 11,000 positions lost in just the first quarter. Recent monthly reports show our smallest employers are still hemorrhaging jobs. Placing almost the entirety of a $9.4 billion tax hike squarely on the shoulders of Washington businesses can only make a bad situation worse.”
