The “No” campaigns against initiatives to repeal our state’s capital gains tax and Climate Commitment Act last fall threatened the inability to fund education and roads if the initiatives passed. The initiatives failed. Despite those “creative” revenue sources being preserved, the public was surprised with an approximate $12 billion budget deficit. In response, Senate Republicans proposed a budget described as having no new taxes, no drastic cuts and increased education funding.

But the majority party believes a better approach is to increase budgets and impose still more creative taxes. I believe those taxes will worsen our local housing situation and drive away job creators, jobs and associated revenue. We simply cannot afford that approach.

Over the last 10 years, the Democratic-controlled legislature doubled our state’s two-year budget, exceeding the rate of inflation by 40%. The new two-year Democratic budget proposal increases spending by $5.4 billion and relies on a suite of new taxes. Let’s examine three of those proposed new taxes. All were subject to public committee hearings March 31-April 3. The status may have changed by the time it goes to print.

The annual increase in our state and local property taxes is currently capped at 1% in aggregate, excluding new construction and home improvements, unless voter approval is sought. Two competing bills would increase that cap. HB 2049 would increase the 1% cap to 3%. SB 5798 would increase the 1% cap to the sum of the annual inflation rate plus the two-year rate of population increase.

Why should population growth serve as a basis to increase property tax rates? New residents must live somewhere and it would seem that there would be a corresponding increase in the real estate tax base. SB 5798, if passed, could subject property owners to increases as high as seven to eight percent. If you own a home, reflect on how much your property taxes (excluding local levies) have increased the last few years.

Now consider your situation if those increases were to triple, or to go up eight-fold. If you are a renter, be assured that such property tax increases will also be seen in your rental rates. We have far too many individuals in our community that live on the financial edge, and such increases in housing costs may push them over.

Another new tax proposed by SB 5797 would impose a 1% tax on all intangible assets (stocks and bonds, with some exceptions) owned worldwide by Washington residents owning over $50 million of such assets. I doubt that Jefferson County has any residents this would personally impact. But legislators should recall that the individuals meeting that threshold are primarily the innovators who created and grew the thriving businesses on which our state relies. And those individuals are highly mobile. If faced with such a “wealth tax,” they will simply move out of state, and may take their business operations with them. Proof can be seen in the fallout from Washington’s novel capital gains tax, which initially generated $847 million in revenue for the State in FY2023. WA DOR. But in the second year, the tax raised only $433 million. WA State Standard, May 21, 2024.

I personally know several entrepreneurs who relocated out of state to avoid those taxes. Governor Ferguson disfavors this tax and the democratic legislative leadership suggest changes to the capital gains tax may instead be relied upon.

Finally, SB 5796 would impose a 5% payroll tax on all earnings above the social security wage limit (currently $176,000). A similar high income earner payroll tax was imposed on Seattle businesses beginning in 2020. This “Jump Start” payroll tax contributed to business decisions to move from Seattle to Bellevue, with Amazon alone moving 12,000 jobs. If imposed state-wide, you can bet that states like Texas would be inheriting more of Washington’s high-paying jobs that drive our economy.

Washington’s business stars, including Alaska Airlines, Amazon, Costco, Microsoft, Nordstrom, PSE, Zillow, T-Mobile, Redfin, Virginia Mason, WaFd Bank, Weyerhaeuser, Puget Sound Energy, and the Seattle Mariners, penned a letter to our governor and legislators imploring them to not adopt the proposed wealth and payroll taxes.  If even some of these drivers of our state’s economic engine pull out of the state, you can be sure that rural occupants of the back seat such as Jefferson County will be amongst those stuck on the side of the road.

Marcia Kelbon is an attorney and engineer based in Quilcene.