Welcome news: A state payroll tax that harms many workers will decrease, not increase, in 2024


At the end of a meeting today about how the payroll tax collection was going for WA Cares — a mandatory, state-imposed social program — I received a news release declaring that the burdensome payroll tax for another state-imposed program would decrease slightly in 2024. Since I would have said it was bad news if the Paid Family and Medical Leave tax increased, as I have the past few years, I felt I should say this is good news. After all, in its short lifetime, the tax rate for Paid Family and Medical Leave (PFML) has doubled for workers. A legislative bailout also occurred. 

For the PFML tax, the rate will go from 0.80% to 0.74% in 2024. That’s a decrease of less than 1 percent, of course, and paying 74 cents of every $100 is still burdensome. (It's also on top of other payroll taxes.) A worker making $50,000 in 2023 had to pay $291.04 in payroll taxes for the PFML program. The worker’s employer paid an additional $108.96 for the employee. A lot of us can think of a better way to invest nearly $300 for one of the many life needs we have, not just a select few. It should also be noted that the employer's payment could have gone to a worker's wages or other benefits. (See how much you pay for PFML and WA Cares with the state’s “contribution” calculator.)

Repeal payroll taxes that penalize work

Better than continuing to administer a costly program that decreases workers’ wages, of course, would be repealing the state’s Paid Family and Medical Leave. Workers should be able to choose which life needs they save for and how rather than have the state tell them what to save for. After taking a portion of a worker’s earnings, the state often sends those wages to people with more resources. Seriously. 

While the state’s Employment Security Department (ESD) celebrates that “more than 125,000 individuals have claimed Paid Leave benefits in 2023 thus far, totaling more than $1 billion dollars," it didn’t give us a breakdown of the people who benefitted from the taxpayer-provided fund in 2023. When program utilization has been discussed before, it was not low-income workers who were primarily benefiting from the mandatory social program workers have to pay into — regardless of their need or what their employer already provides. No, the state created a safety net for people in need and people who are not in need. (It did this again with the creation of WA Cares, which extracts an additional 58 cents from every $100 a worker makes.) I have asked ESD for the breakdown of PFML recipients’ wages. They are getting me that information.

As for the 2024 PFML payroll tax rate, which the state erroneously calls a “premium,” employers with 50 or more employees will pay 28.57% of the tax and employees will pay 71.43%. That’s a mix that is similar to the 2023 breakdown. By law, ESD recalculates the rate each year based on program usage and taxes collected. (Businesses classified by ESD as having fewer than 50 employees are not required to pay the employer portion, but they must still collect the employee portion and send it to the state.) 

Am I glad the combination of usage and higher taxes last year has the payroll tax going down? Yes. Less than 1% of me is celebrating.


* See an update on PFML usage here: https://www.washingtonpolicy.org/publications/detail/paid-leave-isnt-primarily-helping-people-in-need-its-going-to-middle-and-upper-income-wage-earners.

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