If you have ever wondered how many warning flares Washington policymakers need before they stop piling new taxes on employers, the answer is always, “At least one more.”
An Association of Washington Business (AWB) survey of more than 400 employers is just the latest indicator that Washington’s tax climate is stifling confidence, investment, and growth. Sixty-five percent of employers now list taxes as their top concern, up from 58 percent just months ago. Roughly three out of four businesses say they’ve been hit directly by the recent sales tax on services or B&O tax increases. More than half are raising prices because of it. The rest are just absorbing the blow and hoping things calm down.
This isn’t happening in a vacuum. Over the last several decades, Washington has slow-walked itself into one of the most punitive, unpredictable employment and tax environments in the country. The state also boasts the nation’s highest minimum wage, highest overtime-exempt salary threshold, and a punishing gross receipts tax that functions like a 15+% corporate income tax — far above anything other states impose.
Employers also face some of the highest unemployment insurance and workers’ compensation costs in the nation, mandatory paid sick leave, and payroll taxes for both paid family and medical leave, not to mention the state’s one-of-a-kind long-term care program.
It’s no surprise that Forbes ranks Washington dead last for business survival at 59.2% (meaning nearly 40% of businesses fail) and 48th for starting a business.
Those rankings were established before the state’s record $9 billion business tax package was rammed through the legislature last spring—at least part of which was arguably illegal. After Washington’s capital gains income tax proved insufficient to satiate revenue demand, the majority party floated a wealth tax during the 2025 legislative session (which failed—for now), but businesses with their ear to the ground also expect a general income tax in place by 2030. The tax avalanche isn’t Washington’s only problem.
Employers are also wrestling with rising health care costs, renewed inflation, regulatory burdens, and ongoing tariff impacts. According to the AWB survey, 52% of employers say tariffs are raising their input costs. Nearly two-thirds of those affected report significant cost increases, and almost a third still face supply-chain disruptions.
It’s no wonder employers are losing faith in Washington’s economic direction. Only 14% of employers plan to expand in Washington, down from 23% a year ago. The share of businesses describing the state economy as weak jumped from 17% to 28%. Expectations of a recession climbed from 32% to 41% percent in one quarter.
None of this should surprise anyone who has watched Washington’s tax debates over the last decade. Each legislative session brings a new attempt to layer another tax on employers: capital gains income taxes dressed up as excise taxes, wealth taxes, payroll taxes, digital ad taxes, local income taxes, and endless rate increases to the B&O system.
The playbook is always the same: Pick a politically convenient industry, claim the tax is “modest,” promise it won’t expand, and insist that businesses won’t really feel it.
But the AWB survey shows that’s not true. Businesses are feeling it. Businesses are leaving. Businesses are failing.
When three-quarters of employers report getting hit by new taxes and only three in five businesses are surviving the state’s economic climate, lawmakers ought to concede that the state is not on the path to prosperity.
Businesses can eventually adjust to tax changes or complex rules, but they cannot plan for a government that keeps shifting the tax base, redefining key terms, and ignoring constitutional guardrails every year. The capital gains income tax made the pattern obvious, and the digital ad tax and ongoing campaigns for income and wealth taxes only reinforce it.
If lawmakers want a healthy economy, the first step is to stop treating employers like adversaries. The second is to quit using the tax code as a laboratory for every economically suspect experiment that wanders out of Seattle.
The businesses that generate our state’s economic prosperity have spoken clearly. Taxes are too high; regulations are too heavy; and the cost of doing business is becoming prohibitive. If lawmakers insist on repeating the same mistakes, they shouldn’t feign shock when businesses stop expanding, stop hiring, or simply move to another state.
The upcoming legislative session is a flash point. Washington can either break this cycle of never-ending tax increases or double down on it. If lawmakers truly care about affordability, competitiveness, and opportunity, the path is obvious.
Stop making Washington unaffordable for the people who create its jobs.
Amber Gunn is a Senior Policy Analyst for the Mountain States Policy Center, an independent research organization based in Idaho, Montana, Eastern Washington and Wyoming. Online at mountainstatespolicy.org.
