WA Democratic lawmaker unveils proposed tax on big businesses
Washington state Democratic lawmakers are mulling plans for new taxes to help the state resolve a persistent budget shortfall.
On Dec. 2, first-term state Rep. Shaun Scott of Seattle held a news conference on the steps of the state Capitol to announce his revenue pitch.
Scott’s payroll excise tax proposal aims to mitigate federal-funding cuts imposed by H.R. 1, the tax and spending legislation President Donald Trump signed into law July 4. Scott says that his new progressive revenue legislation would help protect the state’s public services and budget from the “severe” effects of congressional Republicans’ controversial tax package.
“The way for Washingtonians to fight back is to build a bolder Washington: a Washington that defends the programs that people depend on, while the other Washington defunds them,” the Democratic Socialist lawmaker said Dec. 2.
Scott was joined by representatives from pro-tax groups, the Service Employees International Union and Washington Federation of State Employees (WFSE). Also joining him: professors and housing advocates.
WFSE President Mike Yestramski said the state is home to one of the country’s most regressive tax codes. Agencies are understaffed and public workers are getting burned out, he added.
“Working families are drowning while the wealthiest can’t even spill a single drop of their champagne,” Yestramski said. “Well, guess what? That ends with us.”
Scott’s legislation seeks to generate more than $2 billion annually, with the money benefiting health care — particularly Medicaid — plus education and human service programs that are seeing reduced federal dollars from H.R. 1, as first reported by the Washington State Standard. The proposal is modeled after Seattle’s JumpStart tax on companies with high-earning workers and big payrolls.
Although backers of progressive revenue have applauded the measure, some business advocates are sounding the alarm. Asked by reporters about the bill’s business implications, including concerns over whether it could prompt corporations like Microsoft to move jobs out of state, Scott said companies including Amazon and Microsoft have already been scuttling jobs amid a broader push toward AI.
“We have seen many times in the state Legislature the threat of jobs being relocated hung over the head of state lawmakers, most famously perhaps in the example of Boeing,” he said, adding that the state had granted the aerospace giant a handsome “corporate welfare package” before it cut jobs anyway.
Rachel Smith, president of the Washington Roundtable economic policy group, said in a statement that the proposal seems to portend that the legislative session beginning Jan. 12 will be “built on the same budget playbook as last year.”
She noted that in 2025, state lawmakers shepherded through the largest tax hike in Washington history while small businesses floundered, also citing federal-level economic uncertainty.
Smith said Washington families understand that when employers face higher taxes, the costs eventually trickle down to them.
“Washington is already one of the least affordable states in the nation — ranking 46th in affordability — and we cannot afford policies that make living, working, or running a business here even harder,” she said.
Scott’s bill would take effect July 1 and create a new fund, called the “Well Washington Fund,” according to the Washington State Standard. It would affect some 4,300 businesses, going after private employers with employees counting an annual salary of more than $125,000. A 5% tax on payroll expenses exceeding that income benchmark would be imposed.
Companies already subject to the Seattle levy would be exempt, the Standard reported. Employee earnings couldn’t be deducted to cover the tax. And businesses with payroll in excess of $7 million, more than 50 employees and gross receipts of over $5 million would be on the hook, according to the article. However, there would likely be an exemption for Washington’s largest providers of health care and social services.
Joe Fain, president and CEO of the Bellevue Chamber, argued in a Dec. 2 statement that the bill’s Seattle-business exemption means that employers and taxpayers elsewhere in the state would be subsidizing the Emerald City’s budget.
“Seattle would keep the revenue it raises locally, while payroll tax dollars from businesses in Bellevue and communities across the state would be turned over to the state,” said Fain, who’s also a former Republican state senator. “Despite not paying the tax Seattle would still receive the benefit.”
Scott’s proposal is similar to a proposed payroll tax that majority-party senators introduced, but ultimately nixed, last session.
Washington Democrats are also considering a potential income tax on millionaires heading into 2026 and may rekindle a “wealth tax” that sputtered out earlier this year.
This story was originally published December 2, 2025 at 1:58 PM.
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