Comment: State Senate Democrats’ tax plan built on fantasy
Published 1:30 am Saturday, March 29, 2025
By Ron Muzzall / For The Herald
Fantastic. That’s the only way to describe the latest tax proposal from the Senate’s Democratic majority in Olympia. Not fantastic as in wonderful, but fantastic as in beyond the realm of possibility, remote from reality, based on fantasy. Merriam-Webster defines it perfectly: “so extreme as to challenge belief.”
We’ve heard budget shortfall numbers like $12 billion or $15 billion before, but as nonpartisan budget staff estimate, the real deficit is closer to $6.7 billion. Now, the legislative majority is proposing a staggering, near $20 billion in new taxes over the next four years. This isn’t just a tax plan; it’s a fantasy budget built on revenue streams that are uncertain at best and a burden on Washingtonians at worst.
Breaking the tax proposals down:
Wealth tax of $12.2 billion: At the heart of this proposal is a 1 percent annual property tax on intangible assets (stocks, bonds, patents) over $50 million. This tax is so unreliable that even Gov. Bob Ferguson has expressed skepticism: “I am deeply skeptical that we can rely on balancing the budget through an untested wealth tax.” Yet, here we are, betting the state’s fiscal future on a tax that the Department of Revenue’s own study warns is uncertain and unwise.
Payroll tax of $6.6 billion: The plan includes a new 5 percent payroll tax on businesses for wages above the Social Security cap, targeting businesses with payrolls over $7 million annually. This will hit major employers like Costco, law firms, and health care providers; industries deeply rooted in Washington. But what happens when these businesses pass these costs down to consumers or relocate jobs out of state? Even the Senate Majority leader admitted in January: “Now, do we want to risk having really significant employers shift jobs outside of Washington? That’s the conversation we need to have.”
Eliminating tax preferences of $1 billion: As usual, the plan includes eliminating tax incentives, but there’s little detail on what breaks will be axed, potentially putting more strain on small businesses and essential industries.
Property tax hikes of billions upon billions: Perhaps the most egregious part of this proposal is the massive property tax increase. Last year’s attempt to raise property tax growth limits met overwhelming public opposition, yet the Senate majority has come back with an even bigger hike. Instead of capping growth at inflation (up to 3 percent), they now propose allowing growth based on inflation and population, with no cap.
To put that in perspective, had this policy been in place since 2010, the average allowable tax growth per year would have been 4.5 percent. This compounding effect means taxpayers would see ever-increasing bills with no relief in sight.
A small sales tax cut (that won’t happen): To sweeten the deal, the majority proposes lowering the state sales tax from 6.5 percent to 6 percent, but not until 2027. Given that this cut is contingent on everything else passing, it’s likely to be the first thing sacrificed when their fantasy revenue projections don’t materialize. More likely is that junior taxing districts will gobble up that savings so it doesn’t matter what the state does; you will be paying more.
What does this mean for Washington residents?
This plan is built on unstable ground. It bets the budget on an untested wealth tax that even the governor doubts. It introduces a payroll tax that could drive jobs out of the state. It hikes property taxes higher than ever before. And it dangles a minor sales tax cut that won’t take effect for years; if ever.
Washingtonians deserve a budget rooted in reality, not one conceived by unrestrained fantasy. We cannot afford to chase tax schemes that will ultimately fall short, leaving working families and small businesses to foot the bill. It’s time to reject this fantastic proposal and demand a budget that prioritizes responsible spending over reckless taxation.
State Sen. Ron Muzzall, R-Oak Harbor, represents the 10th Legislative District.
