Washington Wages War on its Middle Class

A series of property and business tax-hike bills have Washingtonians looking for relief

– Olympia, Washington

It has been a busy three and half months for Washington’s congressional session, but the activities in the last two weeks have set forth two bills that could drastically change the landscape of the state.

In their bid to close the gap on a $12 billion deficit looming on the horizon, law-makers in Olympia have come to the conclusion that only by increasing tax revenue can the goal be accomplished. Thus, two proposed bills began working their way through the houses of congress with a high likelihood that they will end up on Governor Bob Ferguson’s desk before the end of the session.

Senate Bill 5812

The first and most aggressive of the taxation bills gaining momentum in the state senate is a bill proponents call “Investing in the state's paramount duty to fund K-12 education and build strong and safe communities”. Linked with house bill 2049, the senate’s version currently being heard in committee is being peddled as a means to “ensure:

Investing in the state's paramount duty to 1) fund K-12 education and build strong and safe communities by 2) modifying the state and local property tax authority and adjusting 3) the school funding formula. - SB 5812

By stating their purpose this way, senate democrats who proposed and supported the bill hoped to draw attention away from the method of obtaining this “funding”. By tying it to passion projects like education – see their insistence on calling it a “Paramount Duty” of the state to provide up to 13 years of education – and “community safety,” senators employed a tactic of shaming their opposition into silence.

But the people of Washington have not been so easily fooled.

At the heart of this bill are two striking changes to the tax structure. The first is a tripling of the limits of levies that can be put on ballots in the coming years. Up until now, the cap on levies was limited to 1% of annual growth within any given community. This bill, if passed and signed into law, would increase that to 3%.

The second change, which is made possible by the first, is that property tax rates in the state would also be increased by 3% instead of the limitation of 1% currently under law.

The change to the property tax code is even deeper, though. Under current law, the change to the property tax is 1% based on the previous year’s amount. But the new calculation would also include population growth to add to the base amount, arguing that inflation is also being impacted by the rate of growth in any community.

The devil in this detail, though, is the assumption that inflation should ever constitute an increase of government funding. A problem brought on by excessive government spending, creating real problems for citizens at the grocery store and gas station, is then solved by pinching their wallets even harder by ratcheting up taxes on their homes.

An Example

An 1,800 square-foot home in Spokane Valley, Washington with a property size of roughly one-third of an acre has a valuation of about $350,000. The property taxes on that home in 2024 are just over $2,700. Let that sink in. A state like Tennessee meanwhile has a property tax of about $600 a year.

Under the new proposed bill, combined with a 1% population growth for Spokane County; the tax increase for 2025 would push that amount to near, if not more than $3,000 a year.

A train of thought has led some to believe that this only impacts homeowners and property owners in the state. Thus the hundreds of thousands of renters in Washington would be safe from these increases. But that line of thinking misses the fact that landlords and management companies already forced to increase rent costs in recent years, will need to increase them at even greater rates to offset their costs.

This bill is a lose-lose for all who call Washington home.

Senate Bill 5786

Attacking the wallets of Washingtonians in the business sector rather than on the home front, SB5786 squeezed through the senate by the slimmest of margins (25-24).

The bill would increase fees for liquor licenses, licenses to serve alcohol, and all similar licenses by 50% above their current rate. The bill effectively would price some locations out of business, especially the mom and pop shops and small distilleries in the state.

This bill must now make it through the house of representatives, which if even possible, has a greater bent toward taxes than the senate.

More taxes

These two specific bills moving through the legislature in Washington represent only a fraction of the revenue that is expected to be generated via new taxes. The halls of congress have also moved forward bills to tax Tesla cars for simply existing, widening the net on sales taxable items, and increasing taxes on inheritance.

It is a move that Washington’s liberal Governor Ferguson is trying to caution Washington democrats against, calling the move “too risky.” The people, meanwhile, regardless of party lines, are panning the bills on the state’s legislature website to the tune of 90% - 95% against.

With the session likely drawing to a close soon, the coming weeks should determine if anyone in congress is listening.