Serving Franklin County, WA

State payroll tax to hit businesses this summer

House and Senate budget writers released their 2023-25 state operating budget proposals recently. It was a reminder that taxpayers have been very kind to the state’s coffers as revenue forecasts over the past few years have continued to increase. As a result of taxpayer largess and the majority party’s proclivity to spend every dime available, state spending has more than doubled over the past 10 years.

Has our population doubled? No. According to the Washington State Office of Financial Management, the state’s population in 2012 was about 6.8 million. The population in 2022 was about 7.86 million.

I wonder, how many of you – the hardworking citizens of Washington state – have seen your take-home incomes double over the past 10 years?

Why bring this up now? As our families and individuals continue to pay more for everyday expenses like gas and groceries, our paychecks are about to take another hit in the form of the Democrat- and governor-sponsored payroll tax for mandatory long-term care insurance.

In 2019, with no House Republican votes, the Legislature passed House Bill 1087 which created the Long-Term Care Services and Supports Program. The plan was to provide individuals who have paid into the program for a specified period of time with a limited lifetime benefit, up to $36,500, to assist with future long-term care costs.

To pay for the new program, the legislation also created a new, mandatory payroll tax that could amount to $0.58 for every $100 earned. What does this look like in practical terms? If you make:

· $50,000 per year, it will cost you $290 annually or $24.27 monthly.

· $75,000 per year, it will cost you $435 annually or $36.25 monthly.

· $100,000 per year, it will cost you $580 annually or $48.33 monthly.

· $125,000 per year, it will cost you $725 annually or $60.42 monthly.

When the long-term care insurance plan and payroll tax were placed on the ballot in 2021, 37 out of 39 counties, 44 out of 49 legislative districts, and nearly 63% of all voters in our state said no thanks.

This was done through Advisory Vote No. 20 and can be verified by the Secretary of State’s election page. Is it any wonder why the majority party in Olympia has also sponsored legislation to do away with advisory votes? They are consistently on the wrong side of what the public wants. Advisory votes are the mirror held up to the Democrats in Olympia. Better to break the mirror than face the facts, eh?

A new payroll tax, especially at a time when daily expenses are skyrocketing, is an unfair financial burden for those living paycheck-to-paycheck. There are still questions about the solvency of the program as well.

Will mandatory contributions increase as the state realizes the program is woefully underfunded? Remember, the most expensive way to run a program or a startup is to have our state government involved.

I know there are some in my community who think this proposal is a good idea. I just hope people are planning appropriately. The $36,500 benefit will not go far if someone is only relying upon the state plan for their long-term care needs.

It could end up giving a false sense of security. What if you move to another state? You could pay into the program for your entire career and see no benefit at all. Better to go out on the open market and find a long-term care insurance plan specifically tailored to your needs.

In the 2022 legislative session, the governor and legislative Democrats knew they had a problem with the unpopular payroll tax and passed legislation to delay the collection of the tax until July 1, 2023. I believe this was an “out of sight, out of mind” tactic to get the public to calm down by kicking the can down the road.

The can is coming, folks. July is right around the corner and with it comes another dent in your take-home pay.

We’ve introduced legislation to repeal this mandatory payroll tax and long-term care plan the last two sessions. Our bills have not been given a public hearing.

Despite being unpopular, unfair, unnecessary, and potentially underfunded, the majority party and the governor are proceeding with this mandatory payroll tax. It’s important for you to know the history of this tax and where it comes from. Not for the sake of posterity, but so you know where to aim your angst as all our wallets get a little thinner this summer.

Rep. Joe Schmick, R-Colfax, is the ranking Republican on the House Health Care and Wellness Committee and serves on the House Appropriations Committee. He represents the 9th Legislative District.

 

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