By Aaron Allen, The Seattle Medium
A new payroll tax proposal is fueling fierce debate in Olympia as lawmakers consider House Bill 2100, which would impose a 5 percent tax on high-wage jobs at large companies operating in Washington state. Framed as a way to fund critical public programs such as housing, education and health care, the bill has sparked strong pushback from business leaders who warn it could cost jobs, drive companies out of state and deepen economic uncertainty.
The legislation, sponsored by Representative Shaun Scott and currently under consideration by the House Committee on Finance, would apply to large operating companies with more than 20 employees, more than $5 million in gross receipts or sales, and a U.S. address. The tax targets total annual employee wages that exceed the Social Security wage limit and is levied on employers only. Companies with total wages of $7 million or less for the prior calendar year are exempt, and employers may not deduct any portion of the tax from employee wages.
Under the proposal, large employers would face the payroll expense tax, administered by the Employment Security Department, beginning July 1, 2026.
The legislation would also create the Well Washington Fund Account to receive a significant share of the revenue. Beginning July 1, 2027, 51 percent of the tax revenue would be deposited into that account. Funds could only be spent after appropriation and used exclusively on higher education, health care, cash assistance, housing and energy programs. The remaining revenue would be deposited into the state general fund.
In addition, the bill establishes the Well Washington Fund Oversight and Accountability Board, which would consist of 25 members. Ten members would come from the House of Representatives, selected from both major caucuses and key committees. Another 10 would be selected from the Senate in the same manner. The final five would be appointed by the governor and confirmed by the Senate, chosen for their expertise in federal and state funding related to higher education, health care, cash assistance, housing and the environment. The board would be led by two co-chairs, one appointed by the governor and one selected from among legislative members.
Business leaders and economic advocates have strongly criticized the bill, arguing that it places new burdens on employers at a precarious time.
“This bill is a tax on good paying jobs the kind of jobs that allow people to take care of their families, contribute to their communities, and pay the taxes that fund government services,” said Rachel Smith, president of the Washington Roundtable. “It is a tax on jobs at a time when employers are already absorbing nine billion dollars in new taxes from last legislative session. It is a tax proposal heavy on rhetoric, calling employer concerns ‘exploitation, propaganda, and hostage taking,’ but light on specifics and with no plan beyond a catchy title.”
Business groups argue that the proposed tax would push employers out of Washington and shrink the state’s economic base.
“The data is clear small businesses in Seattle and surrounding communities are fighting to survive. This bill would push more of them closer to the edge,” said Joe Nguyen, president and CEO of the Seattle Metropolitan Chamber of Commerce. “We oppose this bill on behalf of the voters and stakeholders who keep Washington’s economy moving, and the workers, families and employers struggling to keep up with rising costs.”
Nguyen warned that the payroll tax could become a barrier to competitiveness and job creation.
“Simply put, HB 2100 is another barrier that threatens our ability to keep businesses open, competitive and jobs rooted in Seattle and Washington state. We urge you to oppose this bill because the cost of your inaction is more jobs lost, businesses shuttered and residents forced to leave the region they call home,” said Nguyen.
Supporters of the bill say the tax would provide critical investments in public programs. Advocates claim the new revenue could improve funding for schools, raise teacher pay, expand early childhood education access and increase community participation in school decision making.
However, concerns remain about the economic impact on regional job markets. Joe Fain, president and CEO of the Bellevue Chamber of Commerce, compared the bill to Seattle’s existing payroll tax, pointing to job losses in the city since its adoption.
“Since Seattle adopted their ‘Jump Start’ payroll tax, jobs in Bellevue have grown by over 4,000 positions while Seattle has lost over 5,000,” said Fain. “Replicating this experiment statewide will only benefit the economies of Idaho and Arizona. The provision that exempts Seattle essentially forces taxpayers in Bellingham and Vancouver to subsidize Seattle’s city budget. The state’s own economist warns that private sector job growth was negative in 2025 and is optimistically projected to be flat in the years ahead. Adding a new payroll tax to the state’s jobs situation would be an unmitigated disaster.”
If passed by the Legislature, the bill would take effect 90 days after adjournment of the session in which it is approved.
