Just days after Thanksgiving, Washington Democrats served up another bitter dish for the state's economy. Rep. Shaun Scott (D-Seattle) is proposing a 5% payroll tax, dubbed the "Well Washington Fund". The measure aims to raise taxes an estimated $2.2 billion to $3 billion annually on workers.
Modeled after Seattle's controversial JumpStart tax, it would slap the levy on payroll expenses exceeding $125,000 per employee at firms with over 50 workers, annual payrolls above $7 million, and gross receipts surpassing $5 million. Scott claims this targets the top 1% of employers, including tech giants like Amazon and Microsoft, but in reality, the proposed legislation will tax smaller employers anyway as benefit packages will push many employees over the $125,000 threshold.
The fact that the additional tax will be passed to the employee in the form of lower compensation, less working hours or layoffs, is apparently lost on Representative Scott.
Proponents frame the legislation as a progressive fix to an "upside-down" tax code, shielding working families from austerity while making the ultra-wealthy "pay their fair share."
But in reality, this isn't fairness, it's a jobs-killer dressed up as compassion. Washington is already hemorrhaging businesses and talent due to relentless tax hikes, and the legislation would pour gasoline on the fire. As small business owners shutter doors and major corporations’ eye the exits, this proposal threatens to turn the Evergreen State into a cautionary tale of over-taxation.
Look no further than Seattle for a preview. The city's JumpStart payroll tax, enacted in 2020, was supposed to fund affordable housing and education without harming growth. Instead, it triggered a predictable backlash: Seattle lost 5,800 jobs while neighboring Bellevue gained 4,400, as companies like Amazon relocated thousands of positions eastward to dodge the burden.
Last year, Seattle's payroll tax revenue fell $47 million short of projections, a direct result of large employers offloading staff beyond city limits.
With a statewide tax policy, companies will pack up for friendlier climates like Texas or Florida, where no state income or payroll taxes exist. Microsoft's President Brad Smith recently warned in a Bloomberg interview that if Washington's tax load becomes "prohibitive," the company will "rethink where they locate jobs."
We've already seen this with Jeff Bezos fleeing to Florida in 2022 to avoid the capital gains tax, costing the state an estimated $610 million in lost revenue.
While the proposal spares smaller outfits on paper, the ripple effects will crush Washington's 600,000-plus small businesses who employ nearly half the workforce.
Owner Nikhil Singhal cited the hikes as the final straw, echoing sentiments from Seattle's Project Bionic, which shuttered in October for similar reasons.
Business leaders are sounding the alarm in recent interviews with Komo News. Bellevue Mayor Lynne Robinson called the proposal "detrimental to everybody," pointing to Seattle's tax-fueled job drain as a stark warning.
Rachel Smith of the Washington Roundtable labeled it "short-sighted" and "tax first, plan later," arguing it won't lower family costs in an already unaffordable state.
Seattle Chamber Interim President Gabriella Buono decried the "damaging cycle" of rising costs pushing employers out, shrinking the tax base, and prompting yet more taxes.
And Bellevue Chamber President Joe Fain warned it would erode Eastside competitiveness, with Meta already nixing expansion plans in the Spring District.
House Republican Deputy Leader Chris Corry called it "insane," noting businesses are "already moving" and would "think twice" about staying or starting here.
If enacted, the tax, effective July 1, 2026, with no sunset, would compound this exodus.
Washingtonians deserve better than a state that taxes itself into oblivion. The proposal needs to die before it drives more jobs, and dreams, across state lines. Our economy can't afford another progressive experiment.
