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Dear Friends and Neighbors,
Last year, my colleagues and I stood on the House floor and warned that the state budget had reached a “terminal state.” We sounded the alarm that a government growing twice as fast as the economy is not just unsustainable; it is dangerous. It is a plague on personal and economic prosperity.
Those warnings were dismissed as misinformation, but the consequences are now arriving. We are seeing a government that refuses to address its spending addiction and is instead inventing new ways to tax the people of Washington every year.
As the 2026 legislative session continues, the defining question before us is simple: Will we fix the spending problem, or will we force families to bail out a government that refuses to live within its means?
The strategy: The “Washington One-Two Punch”
To understand why new taxes are being proposed despite record revenue growth, you have to understand the strategy being used in Olympia. I call it the “Washington One-Two Punch”.
The setup begins when the ruling party proposes a budget that cuts essential lifelines, slashing nursing home subsidies and reducing support for people with developmental disabilities, to create panic among our most vulnerable citizens. Once that pressure builds, the Legislature steps in, pointing to these manufactured crises to declare, “We have no choice! We must pass an income tax to save services!”
It is a manipulative cycle that presents lawmakers as rescuers from a disaster they themselves created. I detailed this scheme in my recent op-ed, and I encourage you to read it to understand the tactics being used to justify taking more of your money.
I go into more detail in my recent op-ed, “Rep. Joshua Penner: Washington Dems will push a bad gamble: a state income tax.”
The cost of a “terminal” budget: A menu of new taxes
Because the majority party refuses to curb spending, they are turning to a menu of new taxes to fill the gap created by this strategy. Despite passing the largest tax increase in state history last year, here are the specific proposals dominating the conversation in Olympia right now.
- A “millionaires” income tax: Backed by the Governor, there is a push for a 9.9% state income tax on earnings over $1 million. This isn’t just a tax on the wealthy; it is a gambler’s bet to break our state’s constitutional tradition of no income tax.
- Tripling property tax growth: Proposals are resurfacing to lift the 1% cap on property tax growth, potentially allowing it to jump to 3% annually—growing your tax bill faster than your paycheck.
- A 1% wealth tax: Lawmakers are looking to reintroduce a tax on financial assets (stocks, bonds) over $100 million.
- Expanding business taxes: We are seeing efforts to increase B&O taxes and corporate surcharges, costs that are inevitably passed down to consumers.
- A new tax on family-wage jobs (House Bill 2100): A 5% payroll tax on compensation above $125,000.
Spotlight on House Bill 2100: A tax on good wages
One proposal deserves specific attention for its direct attack on family-wage jobs: House Bill 2100.
This bill creates a new 5% payroll tax on compensation above $125,000. Crucially, this applies to total compensation, not just base salary. That means the value of your healthcare benefits, retirement contributions, and bonuses is all counted toward the tax.
This policy penalizes employers for offering good benefits and competitive pay. At a time when the state projects zero job growth in 2026, this bill makes it more expensive to hire and threatens to push jobs out of state.
During a recent House Finance Committee hearing on HB 2100, I raised a concern about how the proposed payroll tax would impact different parts of our state.
I asked the bill’s sponsor about the equity of the proposal, noting that while Seattle can utilize offsets to keep tax revenue local, smaller communities and counties currently lack the mechanism to do the same. I expressed concern that this structure means businesses in the rest of the state would effectively be subsidizing the State General Fund, while Seattle retains its funds locally.
I’m seeing this far too often—new tax schemes aimed at filling the state’s budget deficit without regard for the impact on local economies. This proposal creates a distinct double standard: it allows the state’s largest cities to shield their local revenue, while requiring communities like ours to foot the bill. I will continue fighting hard against these bad taxing schemes.
The solution: Affordability First
We do not have to accept the premise that the only way to fund services is to tax you more. We don’t need a new tax scheme; we need an intervention.
House Republicans have introduced an Affordability First budget framework. This plan demonstrates that it is possible to fund essential services, meet our obligations to the vulnerable, and keep our communities safe without new taxes.
This framework focuses on fiscal discipline and prioritizing core services. Instead of expanding government and asking families to shoulder the cost, this approach emphasizes living within our means—just like every Washington family does every day. It is a budget that values people more than the system that claims to serve them.
You can learn more about the Affordability First framework by clicking here.
Stay informed
If you have questions, concerns, or ideas related to the state budget or any of the issues discussed in this update, please do not hesitate to contact my office. My contact information is included at the bottom of this email.
You can also stay informed using these resources:
- Stop Bad Bills: Track the status of HB 2100 and other tax proposals.
- Tax Tracker: A full list of the new taxes and fees passed in recent years.
Thank you for staying engaged and for allowing me to serve you in the Washington State House of Representatives.
Sincerely,
Joshua Penner
