Washington enacts massive tax increases to pay for government pay raises

There was a lot of intrigue in Washington state as citizens and businesses waited to see what Governor Ferguson would do with the record tax increases lawmakers sent to his desk this year. Despite speculation that the new Governor may veto these massive tax increases, in the end, he signed them into law on May 20.

Though supporters of this nearly $10 billion tax increase package (over four years) will point to many things it's supposed to pay for, the reality is that a significant portion of these taxpayer funds will be redistributed to government pay raises.

As reported by the Washington Research Council:

“In both budgets, compensation increases for state employees and collective bargaining agreements with non-state employees make up the largest share of the total increases—$1.882 billion (40.2%) in the Senate and $1.899 billion (46.0%) in the House.”

While neighboring states like Idaho and Montana spent the year adopting record tax relief, Washington has instead decided to follow the questionable strategy of trying to tax its way to economic growth.

Here are the nearly $10 billion in tax increases Washingtonians will now face (over four years):

• Business tax increases – $5.7 billion
  

• Excise and sales tax increases - $2.6 billion
  

• Capital gains income and death tax increases - $655 million
  

• Repeal of targeted tax breaks - $385 million
  

• Tesla tax increase - $281 million.

  
  

Expect to see taxpayers vote with their feet in response to these massive tax increases. As warned by the Association of Washington Business (AWB) last month:

"It’s difficult to comprehend how state lawmakers could think this is a good time to enact $12 billion in new taxes that we know will hurt businesses, make it harder to retain employees, and raise prices for everyone. It’s alarming, tone-deaf and short-sighted.”

An AWB survey of Washington businesses found:

"And more businesses say they want to relocate out of state (12% now versus 9% in the winter). Idaho is the most-listed destination for businesses planning to move out of the state. Nearly two-thirds (61%) of those planning to move cite taxes as the main reason they want to leave Washington."

Along with the operating budget tax increases, Washingtonians will also be subject to billions in new tax and fee increases for the enacted transportation budget, including a gas tax increase.

To paraphrase Benjamin Franklin, in this world, nothing can be said to be certain, except death and Washington state endlessly raising taxes.