Washington’s Payroll Tax Clash: Tech Giants vs. Social Safety Nets

In the marbled halls of the Washington State Capitol in Olympia, a fierce debate erupted this week over House Bill 2100, a proposal to impose a 5% excise tax on payroll expenses exceeding $125,000 per employee at qualifying companies. Sponsored by Rep. Shaun Scott, a Democratic Socialist from Seattle, the measure targets medium and large employers—those with more than 20 employees (potentially rising to 250 in a substitute version) and over $5 million in gross receipts or sales, excluding those with prior-year payrolls under $7 million. Modeled after Seattle’s JumpStart tax, it aims to create the Well Washington Fund to safeguard education, Medicaid, housing, and other programs amid fears of federal funding shortfalls.

The bill’s first public hearing before the House Finance Committee on January 22 drew over 15,000 virtual sign-ins, with more than 12,000 opposing it—an 83% rejection rate that underscored deep divisions. Supporters hailed it as a progressive tool to raise billions, with fiscal notes projecting $11.8 billion for the 2027-29 biennium and $9.3 billion for 2029-31, though initial estimates from Scott pegged it at $2 billion annually or over $5 billion per biennium. Revenue would flow to the general fund starting July 1, 2026, shifting to 51% for the dedicated fund from July 2027. Fox 13 Seattle reported witnesses like Scott arguing the tax mirrors Seattle’s success, where revenues, high-earning jobs, and major employers have grown yearly since implementation.

Fiscal Pressures Ignite the Proposal

Rep. Scott framed HB 2100 as essential insurance against federal cuts, potentially up to $51 billion in Medicaid funding over a decade under the Trump administration. “The Well Washington Fund is about investing in critical silos of public sector spending at the same time that the Trump administration is defunding them,” Scott told KOMO News. Proponents, including Manousos Jacobsen of the Democratic Socialists of America, emphasized protection for working families: “HB 2100 raises revenue by taxing only the biggest companies and uses those funds to protect the programs working families rely on.” Fatema Boxwala of Tech 4 Taxes added, “The Well Washington Fund creates a source of revenue that our social programs desperately need by taxing the corporations in our state that can afford it the most.”

Superintendent of Public Instruction Chris Reykdal supported the levy, stating, “This is on businesses. I think they can handle the gap.” The proposal exempts Seattle JumpStart payers like Amazon and includes proposed carve-outs for hospitals, health care providers, school districts, and major universities, with Scott noting, “I heard from many employers that had similar concerns, so we are talking about exempting hospitals, health care providers, as well as school districts and major universities—the employee threshold in the bill was also increased tenfold from its original version.” Dailyfly News covered these adjustments in the substitute bill.

Business Backlash Builds Momentum

Opposition was swift and vocal, led by business groups warning of job flight and higher costs. Joe Nguyen, president of the Seattle Metropolitan Chamber of Commerce, cautioned, “This bill in the summary does say it’s a tax on large companies… You are going to be able to capture grocery stores, which would make cost for food a lot higher, you are going to touch upon healthcare providers, which will make healthcare costs higher as well.” Amy Harris of the Washington Technology Industry Association predicted, “While the state may see short-term revenue, the long-term risk is losing jobs, investments and competitiveness.”

Kris Johnson, president of the Association of Washington Business, declared, “The fact that we are even debating a tax on good jobs sends the wrong message here and out of state.” A joint statement from the Washington Roundtable, AWB, Bellevue Chamber of Commerce, Seattle Metropolitan Chamber, and Greater Spokane Inc. lamented, “Washingtonians across the state are facing an affordability crisis… Employers of all sizes are facing the same pressures, compounded by a growing tax burden that makes it harder to hire, expand, or even keep jobs in Washington.” Joe Fain of the Bellevue Chamber cited Seattle’s post-JumpStart losses: 5,500 jobs departed Seattle while Bellevue gained 4,000. The Center Square highlighted these concerns.

Echoes of Seattle’s Tax Experiment

Critics pointed to Seattle’s JumpStart, which fell $47 million short of projections in 2024 and coincided with high commercial vacancy rates and business relocations to Bellevue. Rep. Scott countered at the hearing, citing year-over-year revenue growth under Seattle’s tax. Microsoft, a prime target, has opposed similar levies, with House Republican deputy leader Chris Corry warning, “We’re going to end up removing our tax base, like the people that are actually contributing to our economy are going to be leaving.” Washington Policy Center critiqued the bill as punishing employers for high wages amid state overspending.

On X, sentiment mirrored the hearing: WA Senate Republicans posted, “Boom! People DO NOT like the jobs tax bill from WA Democrats/Socialists (HB 2100). More than 83% of over 15,000 people Signed-in CON against HB 2100.” Todd Myers of WA Policy Center noted impacts on public school staff, listing hundreds earning over $125,000 in districts like Seattle (1,721) and Bellevue (661).

Federal Shadows and State Budget Realities

The push comes amid Washington’s budget strains post a $12 billion tax package in 2025 and doubled spending since 2015. Proponents link it to potential Trump-era reforms, while a companion Senate Bill 6093 advances similar ideas. Post-hearing, no executive session vote has occurred, leaving HB 2100’s fate uncertain as the 60-day session progresses. Michele Willms of the Associated General Contractors warned, “Even with the 250-person threshold, that is really not a large business in the construction industry… The payroll tax will lead to higher bids, resulting in taxpayers paying more for fewer projects.”

Washington State Standard traced the proposal’s roots to November 2025, backed by unions like SEIU. As lawmakers weigh billions in potential revenue against exodus risks, the showdown pits equity advocates against economic guardians in a state reliant on tech titans.