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Senate Democrats in Washington state have introduced a 2025-27 revenue proposal to increase funding for public schools, healthcare, and public safety by taxing the wealthiest individuals and large corporations. The proposal includes five key tax reforms, projected to generate billions in revenue while also cutting the state’s regressive sales tax
Key Tax Changes in the Proposal:
✅ Financial Intangibles Tax – A 1% tax on financial assets (stocks, bonds, mutual funds) for individuals with over $50M in holdings, expected to raise $4B annually starting in 2027.
✅ Employer Payroll Tax Cap Removal – A 5% payroll tax on wages exceeding the $176,100 Social Security threshold, applying only to businesses with $7M+ in payroll expenses. This would generate $2.3B per year for public programs.
✅ Property Tax Growth Adjustment – Raising the property tax growth cap from 1% to match inflation + population growth, with exemptions for seniors and people with disabilities.
✅ Repeal of Obsolete Tax Exemptions – Ending 20 outdated tax breaks, raising $1B over four years for schools and healthcare.
✅ Sales Tax Reduction – Cutting the state sales tax from 6.5% to 6%, reducing revenue by $1.3B annually to ease burdens on low- and middle-income families.
Impact & Legislative Debate:
Supporters, including Senate Majority Leader Jamie Pedersen (D-Seattle), argue the reforms will fix a tax system that favors the ultra-wealthy while ensuring stable funding for essential public services. Critics warn of potential legal challenges and business impacts.
The final operating budget will be negotiated before the April 27 deadline. If passed, these tax changes could significantly reshape Washington’s revenue system.
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