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The 2025 Tax Tsunami in Washington State

About the Author
David Boze
Communications & Strategy Director

Two groups of people are carrying burdens up a mountain.  One is comprised of low-to-middle income working families who carry their burdens on their backs. The second consists of highly paid professionals whose burdens are carried by drones and hired help, so they are not hindered in the climb.  

Politicians see these groups and are outraged that working families would bear such a burden. 

“This is unfair,” they declare. “We must ease the burdens of those hardest hit!”  

Immediately, they add rocks to the packs of those in the second group until their climb is also hindered and call it a job well done. 

This absurd story illustrates the approach of Washington State Progressives who started the year expressing dismay over the state’s “unfair” tax code yet ended the 2025 legislative session with the largest tax increases in state history.  In fact, Washington’s reality is even crazier than the scenario above. In the State of Washington, rocks would have been added to the working family group too. 

Washington relies on its state sales tax for revenue.  While this practice has left the state budget more stable during times of economic upheaval, it’s also been a progressive battle-cry for ostensibly placing an unfair burden on the poor and those with middle incomes. 

One might think an easy way to lessen that burden would be to remove some of it.  

Not here.  

Washington state hasn’t seen a broad-based cut to the state sales tax rate since E.T. was the number one movie at the box office and Survivor’s “Eye of the Tiger” was rocking the billboard charts. A small and tentative sales tax reduction was proposed along with this year’s massive tax increases, but it disappeared faster than a MAGA hat at an NPR convention.  

This lack of a state sales tax cut isn’t because Washington hasn’t had the revenue.  Since 2013, the state budget has ballooned more than 51 percent after accounting for inflation and population growth, from $33.6 billion to $71.9 billion (not including the growth from the 2025 legislative session).  

The inevitable conclusion to draw is that tax relief has never been the motivator. It’s revenue. 

And that brings us to the state record-breaking tax increases of the 2025 legislative session.  

Despite state projected revenues estimated to increase by more than 7 percent without any tax increases, the Democrat-controlled Legislature passed $9.55 billion in new taxes and $3 billion in local taxes. That does not include the 6 cent per gallon hike to the gas tax or the 12 cent per gallon hike in diesel taxes found in the state transportation budget. (Or policies that make third parties absorb costs for the state through mandates instead of taxes – like rent control.) 

In a joint statement issued by the Washington Roundtable, a nonprofit organization of private sector senior executives, Joe Fain, president and CEO of the Bellevue Chamber of Commerce observed, “The legislators are voting on these tax increases, and can’t even tell us how big they are” but the Roundtable estimated the impact at “nearly $2,000 per year for a family of four.”  

Before this legislative session, CNBC ranked Washington state 42nd in business friendliness. It has not since improved. 

The Legislative majority wanted Washington businesses to pay more via an increase in the state’s Business and Occupations tax on gross receipts. After supporting the legislature’s massive tax hike in the so-called Climate Commitment Act and the legislature’s sophistry in obtaining the capital gains tax, this year The Seattle Times’ editorial board expressed shock that the legislature wanted even more, opining their astonishment that proposed new B&O taxes “target child care, home construction, assisted living and even those operating treatment centers for drug addiction.”  

Their reaction gives hope to the idea that the legislature may finally have crossed a line too far for center-left Washington. 

Car licensing fees, “Discover” passes for state parks, hunting and fishing licenses, and car registration fees are all going up. As one colleague put it, “It’s unfair. They passed so many taxes they drive you to drink, then they increased taxes on the liquor too.” There was even a love tax proposed on dating apps.   

Recent election results suggest dissatisfaction with current leadership has not reached a point where suburban voters in the greater Puget Sound Metropolitan area are willing to consider voting for a Republican, so legislative leadership need not fear losing significant seats via voter reprisals.  

Fortunately, Washington state has an initiative process which has held the taxing ambitions of politicians in check. Unfortunately, the legislature found a way around that obstacle by adding biased “fiscal impact” language to ballots, language added by the state that in the last election was used to advise repealing a given tax would result in a funding cut to schools, even though a tax repeal does not cut the funding to anything since state revenue is fungible and legislators set priorities with the monies they receive. Such ballot language has no doubt made it easier for advocates to keep the taxes they want.   

In his inaugural address, new Governor Bob Ferguson warned it was time to end the reckless and unsustainable spending of the past. He forced the removal from the negotiating table a new tax on innovators (the “wealth” tax) and a proposed lifting of voter-approved property tax caps.  

But he ended up passing the largest tax increase in state history and a big new tax on gas and diesel. Further, the ink from his veto pen was so light it was almost invisible. 

The new spending sheriff in Washington is still looking a lot like the old.  

What happens in Washington will not stay in Washington.  Progressives have made Seattle and its surrounding communities a political petri dish from which they can cultivate radical policies and seed them nationally. In the meantime, Washington state residents are going to feel the pinch of higher costs. The only question is, will they awaken to where those costs are coming from?  

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