(The Center Square) – Rep. Shaun Scott, D-Seattle, on Tuesday held a press conference to announce legislation for a new payroll excise tax on high-income earners, aimed at “protecting Washington’s budget and public services from the severe impacts of H.R. 1, the federal tax package recently passed by Congressional Republicans and Donald Trump,” according to Scott’s press release.
On the steps of the legislative building in Olympia, the first-term Democrat told a dozen reporters that “progressive revenue” is needed to ensure that the ultra-wealthy pay their fair share.
The representative’s payroll excise tax proposal is intended to offset federal funding cuts that President Donald Trump signed into law on July 4.
Scott’s legislation aims to generate more than $2 billion annually for social service programs that are facing funding cuts at the federal level.
The bill would target private employers whose workers earn more than $125,000 a year. It would impose a 5% tax on payroll expenses above that salary threshold. Companies with more than 50 workers, a payroll exceeding $7 million, and gross receipts exceeding $5 million would be subject to the tax.
“Voters in the 43rd District sent me to Olympia as the first open socialist to serve in the Washington Legislature,” Scott said. “More popular were the results of Washington state’s capital gains tax referendum, where two out of three voting Washingtonians elected to continue taxing the ultra-wealthy to fund early learning and childcare in Washington state.”
Joining Scott at the Tuesday press conference were representatives from the Service Employees International Union and Washington Federation of State Employees.
Michele Thomas from the Low-Income Housing Alliance also spoke in support of the new payroll tax.
“I’m here today because progressive revenue is necessary in order to protect the many people across the state struggling to keep a roof over their head,” she noted. “Without significant progressive tax reform, our communities will continue to suffer, and homelessness will grow. The Trump administration is proposing cruel changes to federal homelessness policies that threaten a significant loss of housing in our state. Without state action, over 5,000 who are currently safely housed may lose their housing.”
Business advocates, however, are sounding the alarm.
Max Martin is the government affairs director for artificial intelligence, technology, tax and fiscal policy at the Association of Washington Business.
“Our heads are still spinning from what happened in the last session, so this talk of a new revenue proposal is so concerning. The dust hasn’t even settled on that big, significant sales tax on service bill that still has us in limbo,” Martin told The Center Square the day before Johnson’s press conference. “This payroll tax feels like we’re sending a signal that Washington is becoming increasingly more challenging for employers to offer those high-quality, high-wage jobs.”
During Tuesday’s press conference, The Center Square asked Scott if he’s concerned that large corporations like Microsoft and Amazon will move higher-paying jobs out of Washington to avoid the payroll tax.
“When we have very well-funded public programs, when we have well-funded health care in Washington state, and housing that’s very affordable, that’s going to attract a lot of people to come to Washington state, and when those investments have been made historically, that has been something that has benefited major corporations anyway,” he replied. “One thing that’s good for business is when people have money to spend, and they have a roof over their heads.”
Pressed further, Scott did not directly address the question.
The Center Square also asked Scott if he intends to attach an emergency clause to the legislation, making it referendum-proof, such that only a statewide initiative could overturn the tax.
“An emergency clause to offset some of the impacts that have already taken effect [from HR-1] and some of what we know will be taking effect is definitely something we will be exploring,” Scott said.
Martin said businesses of all sizes are struggling under the current burden of taxes and regulations and can’t handle much more.
“There’s got to be a better way for us to strengthen the economy that doesn’t jeopardize the employer ecosystem,” he said. “We need to fundamentally understand that our employers are essential partners. Our businesses here contribute 50% of all state and local taxes, and that’s before all the new taxes from this past session.”
This is a developing story.
