Blog

Proposed Seattle bill would make the payroll expense tax permanent and add reserves to address the tax’s volatility

A bill (CB 120912) has been introduced in the Seattle City Council that would make several changes to the city’s payroll expense tax (PET). We wrote in detail about the tax, which is highly concentrated and volatile, in a policy brief last year. The tax is levied on compensation paid in Seattle to employees, and […]

Seattle is considering a 2% capital gains tax

A bill has been introduced in Seattle City Council to impose a 2% capital gains tax on the sale or exchange of long-term capital assets. The bill is being discussed today as part of Seattle’s budget process, and it looks like the Select Budget Committee could vote on it next week. The bill is mostly […]

Election results do not change our estimate of a $5 billion state budget shortfall

On election night, the Seattle Times reported that I-2109, I-2117, and I-2124 had been rejected. The story added that the results “mean that Washington’s Legislature will likely avoid a major budget shortfall in the upcoming legislative session.” That is not accurate. Our estimate of the substantial projected operating budget shortfall did not assume passage of […]

Washington’s state and local taxes and spending per capita ranked 14th and 15th highest among the states in 2022

The tax burden on businesses in Washington is above the national average, as we wrote in a policy brief earlier this week. New data from the U.S. Census Bureau allows us to compare total state and local taxes and spending in Washington to other states for fiscal year 2022. The two main ways to compare […]

Audit recommends changing the paid family and medical leave rate formula again

In 2022, Washington’s paid family and medical leave (PFML) program experienced cash deficits. Solvency concerns resulted in several program changes that year, including actuarial reporting requirements. (We discussed the program and its solvency problems in a 2022 policy brief.) In 2023, the Legislature appropriated $200 million from the general fund-state to the family and medical […]

New brief: The Business Tax Burden in Washington is Above the National Average

State business and occupation (B&O) tax collections are up 258% since 2000. But businesses also pay sales, property, and many other state and local taxes. Indeed, businesses paid 49.7% of total state and local taxes in Washington in fiscal year 2022, according to a report from the Council on State Taxation. (Nationally, businesses paid an […]

WA Supreme Court: B&O deduction for investment income applies only to investment income that is “incidental to the main purpose of a business”

State statute allows a business and occupation (B&O) tax deduction for “amounts derived from investments”—unless they are “amounts received from loans” or “amounts received by a banking, lending, or security business” (RCW 82.04.4281). Nevertheless, today the state Supreme Court held that “Businesses can claim only the deduction for investments that are incidental to the main […]

Our policy briefs on the initiatives, in one place

Ballots for the general election are being mailed out this week. Three initiatives on the ballot would have fiscal impacts for the state, and we’ve written policy briefs on each of them: The briefs explain what the initiatives would do and provide important context about how they would affect state revenues and programs.

A new transportation revenue forecast: the great, the good, and the ugly

On Friday, the new Transportation Economic and Revenue Forecast Council (TERFC) approved its first transportation revenue forecast. This is great news for the public because it’s a huge improvement in transparency. It’s good news for the Legislature because the transportation revenue forecast is no longer on autopilot. But it’s also bad news because revenues are […]

New brief: I-2109: Repealing the State Capital Gains Tax

Initiative 2109 would repeal the state capital gains tax statute. The Office of Financial Management estimates that repealing the capital gains tax would reduce state revenues by $424 million in FY 2025, by $820 million in the 2025–27 biennium, and by $919 million in the 2027–29 biennium. The reductions would only affect the education legacy […]