Opinion: The taxation bait and switch

Nancy Churchill critiques proposed tax hikes by Washington Democrats, citing potential impacts on property owners and consumers.

Washington Democrats are gearing up to push these tax increases in the upcoming legislative session

Nancy Churchill
Dangerous Rhetoric

Recent reports reveal that Washington state Democrats are considering a range of tax hikes to address a projected $12 billion budget shortfall over the next four years. A leaked email from State Senator Noel Frame (D-Seattle), a member of the Senate Ways and Means Committee, outlined several potential revenue options. The Washington State Standard report includes Frame’s slides and graphics, showcasing the marketing pitch lawmakers will use to justify taking more of your hard-earned money.

Here are some of the key proposals currently under consideration:

Taxes on businesses

An employer payroll tax has been proposed to implement a tax on total compensation, including wages, salaries, and stock options. This tax increase could potentially affect ALL businesses, not just large corporations. Also proposed is an additional 1% B&O surcharge on the “largest” corporations. Of course, it would be easy during this session or another year to broaden the scope of this surcharge to include many more than the “largest” corporations.

Taxes on the wealthy

A wealth tax of 1% on financial intangible assets exceeding $50 million. Some examples of “intangible assets” would include stocks and bonds, mutual funds, cryptocurrency, certificates of deposit or money market funds. You may not hold these financial instruments, but your company’s pension fund probably does, so this isn’t just a “wealth tax.”

Also under consideration, raising the existing capital gains tax to 9.9%. Capital gains usually apply to sales of stock or real estate. For example, this tax increase would likely reduce the income you might receive from the sale of your home, because nearly 10% of any profit will go straight to the government. Again, this isn’t just a “wealth tax.”

Taxes on the working class

The worst tax idea of the session is a Property Tax Levy Cap Increase. The proposal would raise the cap on annual property tax increases from 1% to 3%. There’s also a proposed firearms and ammunition tax, which would impose an 11% tax on firearms, ammunition, and related parts.

Sales tax on storage units

Reclassifying storage unit rentals as retail transactions, subjecting them to sales tax.

These proposals aim to generate additional revenue to address the state’s budget deficit and fund public services. However, they have sparked heated debate among lawmakers and constituents. Republicans argue the state has a spending problem, not a revenue problem, and warn of the economic fallout these taxes could bring.

Villainizing “The Wealthy Few”

Senator Frame has advised fellow Democrats to cast “The Wealthy Few” as the villains in this push for higher taxes. But the reality is that higher taxes on wealthier earners often incentivize them to leave the state entirely. Case in point: Jeff Bezos reportedly saved $1 billion in taxes by moving to Florida.

When wealthy individuals leave, they take their tax dollars with them, leaving the rest of us to foot the bill for Olympia’s reckless spending. Meanwhile, taxes on businesses may sound appealing, but they’re a classic bait-and-switch.

Business taxes are just hidden taxes on consumers. To stay afloat, businesses must pass tax costs onto customers through higher prices. If they don’t, they risk bankruptcy. Don’t let Democrats demonize business owners — large or small — as the villains. At the end of the day, you pay these taxes when prices go up.

The push for higher property taxes

Why would junior taxing districts want higher property taxes? Junior taxing districts — such as hospitals, fire departments, schools and libraries — rely heavily on property taxes for funding. With record-high inflation, employees in these sectors understandably expect wage increases to keep up with rising costs. Many public employers already include cost-of-living adjustments (COLAs) of 3% or more. However, with property tax revenues capped at 1% annual growth, districts are struggling to meet payroll demands. That’s why they’re lobbying the Legislature to raise the levy cap from 1% to 3%.

Property taxes have already increased

Despite the levy cap, property taxes have already risen for two reasons: higher home values and Inflation. Home values are higher because a tight housing market has driven up home prices, leading to higher assessed values and, consequently, higher taxes. The next reason is inflation in construction costs. Skyrocketing costs for building materials, appliances, labor and other inputs have made new homes more expensive, which also raises property values (and taxes) across the board.

In short, taxing districts are already collecting more revenue as property values climb. For example, in Pierce County, residential property values have increased 6%, which will impact the assessed taxes. A levy cap increase isn’t about fairness — it’s about squeezing even more from property owners.

The case against property taxes

Not only should the property tax levy cap remain at 1%, but I would argue property taxes should be abolished altogether. These districts should be funded in entirely different ways — not on the backs of property owners. Here are some key constitutional arguments against property taxes.

Violation of property rights

Property taxes undermine private property rights. If taxes must be paid indefinitely, property is never fully owned by the individual.

“Taking” without compensation

Property taxes can be seen as a form of government “taking” under the Fifth Amendment, which prohibits taking private property for public use without just compensation.

Unequal application

Property taxes disproportionately burden property owners compared to renters or those without property, potentially violating the Equal Protection Clause of the Fourteenth Amendment.

Don’t fall for the taxation bait and switch

Washington Democrats are gearing up to push these tax increases in the upcoming legislative session. Don’t be fooled by their arguments that these taxes will only affect “the wealthy” or “big corporations.” The truth is, these costs trickle down to all of us — everyday consumers and property owners who already face the burden of rising prices and inflation.

The problem in Olympia isn’t a lack of revenue; it’s a spending problem. Fortunately, you can “vote” against new tax proposals to raise taxes by submitting comments on new legislation and also by giving testimony in public hearings. Let’s hold our leaders accountable and demand responsible budgeting — not endless tax increases.

Nancy Churchill is the state committeewoman for the Ferry County Republican Party. She may be reached at DangerousRhetoric@pm.me. The opinions expressed in Dangerous Rhetoric are her own. She may be reached at DangerousRhetoric@pm.me. The opinions expressed in Dangerous Rhetoric are her own. Dangerous Rhetoric is available on thinkspot, Rumble and Substack.

Washington Democrats are gearing up to push these tax increases in the upcoming legislative session

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