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The board of directors of the Association of Washington Business – the state’s oldest and largest business association – has endorsed two of three initiatives on this November’s ballot.
AWB’s board has voted to endorse Initiative 2109, repealing the state’s capital gains tax, and Initiative 2124, allowing employees and self-employed individuals to opt out of coverage under WA Cares, the state’s mandatory long-term care insurance program.
The board voted to remain neutral on Initiative 2117, repealing the state’s Climate Commitment Act that limits greenhouse gas emissions via a cap-and-trade program.
“Washington is a high-cost state for employers, but the lack of an income tax has historically been a competitive advantage,” AWB President Kris Johnson said in a news release. “When lawmakers chose to implement a capital gains tax, we lost one of our key advantages and moved a step closer to an income tax, which Washingtonians have repeatedly rejected. We hope voters will say yes to I-2109 and support tax policies that make it easier, not harder, to start and grow in business in Washington.”
In 2021, the Legislature passed and Gov. Jay Inslee signed into law a capital gains income tax aimed at the state’s wealthiest residents. The measure assesses a 7% tax on capital gains above $250,000 a year, such as profits from stocks or business sales.
A lawsuit challenged the tax's constitutionality, but in March 2023, the state Supreme Court held that it was constitutional.
Johnson also had harsh words for WA Cares, a first-of-its-kind universal long-term care insurance program funded by worker contributions that became law in 2019.
“Lawmakers made some critical changes to the original long-term care insurance program in 2021 that made it problematic, including removing the option for people to opt out of the state program when they acquire private insurance,” Johnson said. “Employers have tried to work with legislators to fix the program but have been unsuccessful. We think people should have the choice to opt out of a program they may never use.”
The WA Cares payroll tax – 58 cents on every $100 earned – was supposed to kick in Jan. 1, 2022, but that plan was derailed by, among other things, lawmakers concerned about people paying into the program who would not be eligible to receive benefits.
In late January of that year, Inslee signed House Bill 1732, delaying both the start of the long-term care payroll tax until July 1, 2023, and the start date for benefits payments until July 1, 2026.
The board was more circumspect with regard to the CCA and its emissions trading program to put a limit on pollution by requiring emitters to obtain “emissions allowances” equal to their covered greenhouse gas emissions that can be obtained via auctions hosted by the state Department of Ecology.
“Our members overwhelmingly agree the Climate Commitment Act has challenges and needs reform, but there is a range of opinion about whether it would be better to repeal the program or continue to address the issues with the existing program,” Johnson explained. “After much discussion, our board decided to remain neutral on this initiative.”
The three initiatives on the November ballot were part of a package of six initiatives submitted to the Legislature this session by the voter advocacy group Let’s Go Washington. The three initiatives not on the ballot – lifting restrictions on police vehicle pursuits, prohibiting income taxes, and establishing a “bill of rights” for parents of K-12 students – were passed by the Legislature and go into effect next month.
In the meantime, supporters and opponents of the three initiatives on the fall ballot are making their case to voters in the five months remaining before the Nov. 5 general election.