Unpacking "dueling" tax packages from House and Senate Democrats

Plus gas initiative ruled unconstitutional, House hears bill on more tenant protections, and remembering the late House speaker

Editor’s Note: This version corrects some bad math in the wealth tax item below. We inadvertently increased the tax by an order of magnitude.

Before we get to the newsletter, please don’t show up tomorrow at the Heritage Room in downtown Olympia expecting to hang out with The Observer in person. We had to postpone the event to avoid a conflict with hearings on the budget in House Appropriations and Senate Ways & Means that are expected to run into the evening. Instead, we’re going to get together on Thursday, April 3, for tasty snacks, beverages adult and otherwise, and a spicy debate on the budget and revenue situation. There’s still some space left if you haven’t signed up.

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Back to Senate and House approaches to revenue

We put “dueling” in quotes because a whole lot of folks are going to view these two sets of ideas as either variations on long-overdue progressive tax reform or slightly different flavors of bitter, job-killing defeat. But let’s break down the differences anyway. (The spending side of this dropped this morning. We’ll break that down later in the week.)

Two different ways to tax big business

As we noted on Friday, the Senate essentially adopted Seattle’s JumpStart tax, a payroll tax on companies that employ workers who make more than $174,100 per year. Companies with less than $7M in payroll would be exempt. The proposal acts as a stand-in for a high-earners income tax that ducks the constitutional income tax problem by taxing the employer instead of the worker. It’s aimed at the tech sector giants, but would also sweep in other employers of the highly paid, including large medical practices, medical device and pharmaceutical companies, and law firms. Democrats figure nearly 5,300 companies would pay the tax.

The House, meanwhile, opts for a bump to the business & occupation tax for about 400 companies reporting taxable income over $250 million. There’s a substantial Venn diagram between the two groups that includes all the name-brand corporate citizens, but there are winners and losers in both scenarios. The Senate’s version essentially leaves out sectors that aren’t issuing paychecks at such a high level. The House, meanwhile, gives something of a pass to the aforementioned medical practices, law firms, and probably not a few early-stage tech companies that are still small enough to fly under the radar.

Photo by Benjamin Child on Unsplash