Blog

New brief: Unemployment Insurance Taxes Will Be a Headwind for the State Economy

Unemployment insurance tax rates are adjusted annually and will be much higher this year due to the COVID-19 pandemic. The amount of unemployment insurance tax paid by Washington businesses is expected to increase dramatically, from $1.12 billion in 2020 to $2.11 billion in 2021 and then to $2.99 billion in 2022. This rising UI tax […]

Another year, another capital gains tax proposal

Gov. Inslee’s 2021–23 budget proposal includes a capital gains tax, which has been introduced in the Senate as SB 5096. The bill will be heard by the Ways & Means Committee tomorrow. SB 5096 would levy “an excise tax . . . on the sale or exchange of long-term capital assets.” The rate of the […]

The prospects for early action on relief this legislative session

Today is the first day of the 2021 legislative session. At the annual Associated Press Legislative Preview last week, Gov. Inslee, House Speaker Jinkins, House Minority Leader Wilcox, Sen. Dhingra, and Sen. Short talked about the session. There seemed to be agreement on the need to act quickly to provide relief, and that the rainy […]

Taxes and competitiveness

On Dec. 31, the preliminary report of the Tax Structure Work Group (TSWG) was published (the technical notes are here). (I wrote about some of the findings after they were presented by the Department of Revenue to the TSWG last month.) As part of the report, the Department of Revenue contracted with Western Washington University […]

New brief: Washington’s Business Taxes Exceed National Average

In fiscal year 2019, Washington state’s tax code relied heavily on businesses, which paid almost half of state and local taxes. Washington businesses paid nearly a quarter more in state and local taxes per employee than the average of their counterparts in other states. On all measures, Washington ranked at or above the national average, […]

How the pandemic is affecting public school funding in Washington and elsewhere in the U.S.

A New York Times article last week looked at public school funding issues related to the pandemic. The new federal aid bill, which was signed by the president on Sunday, includes $54.3 billion for the elementary and secondary school emergency relief (ESSER) fund. (That’s on top of $13.5 billion for this purpose that was part […]

Revenues are expected to keep growing (even without new taxes) and Gov. Inslee’s budget does not include funding for the working families tax credit

Last week the Everett Herald editorialized in favor of Gov. Inslee’s proposed taxes for 2021–23. A few points, for context: First, the editorial states, “Much of the Legislature’s focus when its session begins next month will be on filling an estimated $3.3 billion hole in revenue that the covid-19 pandemic and its economic downturn bore […]

Washington’s state tax revenues have held up well this year compared to other states

Lucy Dadayan and Kim Rueben of the Tax Policy Center consider whether state and local governments need additional funding from the federal government: “Some argue that states do not need assistance because of better than expected tax collections. But the State and Local Finance Initiative’s data show the actual revenue losses experienced by the states […]

A stand-alone corporate income tax would need to be set at a rate of 15.8% to replace the B&O tax

The Tax Structure Work Group (TSWG) met on Friday to review tax modeling work that has been done in preparation for a preliminary report that will be released later this month. The presentation is available here. A 2019 budget proviso required the Department of Revenue (DOR) to include in the report various specified tax alternatives. […]

The fiscal implications of the failure of ESJR 8212

In 2019, the Legislature created a new long-term care insurance program that will be paid for with a payroll tax (effective Jan. 1, 2022). This year, the Legislature passed a constitutional amendment, ESJR 8212, to enable the premiums to be invested, just as several other state funds are. Voters rejected the resolution last month. As […]