Washington lawmakers are proposing a new payroll tax that could raise an estimated $2 billion from large employers in Seattle, according to reporting from The Seattle Times.
The proposal would impose a 5% tax on payroll expenses for companies with more than 50 employees, over $7 million in payroll, and gross receipts exceeding $5 million. State Representative Shaun Scott described the bill as a response to potential federal cuts to public-sector funding, warning that programs such as education, food assistance, and healthcare could face reductions if federal dollars decline.
Under the proposal, companies already paying Seattle’s existing payroll tax would be exempt, along with more than 4,300 businesses and many of the state’s largest healthcare and social service providers. Revenue generated would be restricted for use on Medicaid, cash assistance, and energy and housing programs. Businesses would not be allowed to deduct employee wages to offset the tax.
Opponents argue the tax could push employers out of Seattle and into neighboring cities like Bellevue. The Association of Washington Business has rallied against the proposal, saying it would make the state less affordable and less competitive.
The debate comes as Washington’s largest corporations spent $2.1 million on lobbying last year, with companies including Microsoft, Nordstrom, T-Mobile, and Costco spending more than $1.7 million in two months to defeat earlier tax proposals. Microsoft alone contributed $1 million to a new political action committee opposing similar measures.