Oops! Missent email reveals WA Senate Dems’ tax plans

SEATTLE – SEATTLE – An email intended to remain private reveals nine new or higher taxes state Senate Democrats are considering before the 2025 legislative session – plus a couple of possible tax cuts.

The tax-hike menu, aimed chiefly at Washington’s wealthiest corporations and residents, slipped out due to a mishap by Sen. Noel Frame, D-Seattle.

On Friday afternoon, Frame emailed a presentation of “2025 Revenue Options” to fellow Senate Democrats, saying it was “for internal purposes only and is not intended to be shared publicly.”

But she accidentally sent the email to Senate Republicans, too. It was quickly shared with journalists and posted online by some lawmakers.

According to the documents, Democrats are weighing a wealth tax similar to one proposed last week by Gov. Jay Inslee, and may raise the state’s capital gains tax rate paid by the wealthiest residents on stock profits.

Proposals include a trio of higher taxes aimed at big corporations, including a statewide version of Seattle’s JumpStart tax on high salaries. Also on the table is lifting a longstanding limit on state and local property tax collections, and levying a new tax on homes sold for more than $3 million.

They’re also looking at taxing storage unit rentals and imposing a new 11% tax on guns and ammunition.

As for possible tax cuts, the Senate Democrats are considering an expansion of the Working Families Tax Credit, which sends annual rebates to lower-income Washingtonians. They’re also looking at a property-tax exemption for homeowners and a tax credit for renters.

The internal documents offer a rare preview not only of the majority Democrats’ potential tax plans, but also the talking points they’ll use to sell them.

“Be specific about the ‘villain’ – talk about the ‘wealthy few’ and those who wrote our flaw tax code 100 years ago,” advises a slide titled “best ways to talk taxes.”

Senate Democrats are also coached to avoid phrases like “tax the rich.” Instead, they’re supposed to say people should “pay what they owe.” Don’t focus on the state’s “budget hole,” the presentation added. Instead, Democrats should talk about “proposed solutions” that “will make people’s lives better.”

Democratic legislative leaders have previously said they’re looking to raise taxes to fend off cuts to state government and services, including funding for schools and expanded child care. The tax proposals outlined by Frame’s email include many that have been floated by Democrats in recent legislative sessions.

“The actual news item is I inadvertently started conversation the week of Christmas,” Frame said on Monday. “I’d much rather be making a gingerbread house with my 4-year-old.”

She said the documents are not setin stone but more of an informational buffet of options for her colleagues as they prepare for the session.

“To be clear, there are a lot of conversations happening out there,” Frame said, including an examination of what cuts the Legislature could make to planned spending.

In her email, Frame asked for legislators to consider sponsoring some of the proposals. “Let’s spread the tax policy love around!” she wrote, followed by a smiling and blushing emoji.

Republicans ripped the tax plans and the Democrats’ talking points.

State Sen. Lynda Wilson, R-Vancouver, who posted the leaked documents on social media, said she wasn’t surprised to see what Democrats are considering.

“They have an insatiable appetite for more revenue, which is more taxes on more people,” Wilson said in an interview.

Wilson said the Democrats’ plan for selling the taxes to the public is revealing. “Their mindset is that anyone making more money than them is a villain,” she said.

Frame defended the talking points as a normal political and public-relations strategy. “It’s basic storytelling structure. It’s human,” she said of the discussion of “villains” in the tax debate.

Those proposals outlined by the Senate Democrats would potentially pull in billions of dollars a year, helping lawmakers as they try to fill a big gap between expected tax revenue and spending over the next four years. The shortfall has been estimated at between $10 billion and $16 billion.

Even apart from the current shortfall, Frame and other Democrats have long criticized Washington’s tax code as regressive because it relies on taxes that hit the poor and middle class harder than the wealthy, such as the sales tax.

They’ll roll out their actual tax proposals when the 2025 Legislature convenes in January for a 105-day session whose main purpose is to craft a balanced two-year budget. That debate will also be guided by incoming governor Bob Ferguson, who has said he’s looking for cuts first and has not so far embraced tax increases.

The wealth tax will certainly be on the table, given Inslee’s proposal. It is similar to one Frame has proposed the previous two years. The Senate Democrats’ proposal, as outlined in Frame’s email, would apply a 1% tax to financial assets like stocks of more than $50 million, compared with Inslee’s suggested $100 million threshold. That would apply to 7,500 people and raise about $4.5 billion per year.

An “alternate version” would apply only to those with assets of more than $250 million, affecting roughly 1,100 people and raise about $2.4 billion a year.

Senate Democrats are also looking at boosting the state’s capital gains tax. The 7% tax, enacted in 2021, applies mainly to profits from the sales of stocks and bonds above $270,000. That could be raised to 9.9% for profits exceeding $1 million.

The business taxes considered by Senate Democrats include a payroll tax similar to Seattle’s “JumpStart” tax on big businesses. The proposal would impose a 6.2% tax on compensation above $168,600 – similar to what companies pay for Social Security and family medical leave taxes on wages below that threshold. It would apply only to companies with Washington payrolls of more than $8 million.

That could bring in roughly $3.7 billion per year from about 4,000 businesses. An alternate plan would scrap the $8 million payroll limit, applying the tax to all companies paying high wages.

In addition to the wealth tax and payroll tax, the ideas include:

• A 1% business and occupation tax surcharge on companies with taxable income of more than $500 million, similar to a tax previously imposed on big banks.
• Removal of a cap which limits the amount big companies such as Amazon and Microsoft pay to fund affordable college tuition to $9 million a year. Democrats are eyeing removing the cap or raising it to $15 million.
• Raising the capital gains tax on stock and other investment profits of more than $1 million from 7% to 9.9%.
• Allowing the state and local governments to raise total property tax collections by 3% annually, instead of the current 1% limit.
• Imposing a new tax of 1% on the home sales of more than $3,025,000, with the money going to housing programs.
• Making rental storage units a taxable retail sale, requiring them to pay taxes from which they’re exempt.
• Applying an 11% tax on guns, ammunition and gun parts, in addition to other state, federal and local taxes. The tax would not apply to sales to law enforcement or the military.