Washington state is multiplying taxes for mega corporations in a move to cover its widening budget deficit. The state is expected to face a $12 to $16 billion shortfall over the next four years, according to the Office of Financial Management. The deficit should come as no surprise as state spending has ballooned by 40% in the past four years alone.
Under HB 2081, the state’s Business and Occupation (B&O) tax will be revised to raise the “Advanced Computing Surcharge.” Corporations earning over $25 billion globally will see their tax rate spike from 1.22% to 7.5%, with the maximum payment expanding from $9 million to $75 million. More specifically, the state is looking to shake down big tech companies like Microsoft and Amazon to compensate for its excessive spending.
Companies earning over $5 million annually will face a tax hike from 1.75% to 2.1%. The state has also implemented a temporary 0.5% B&O surcharge from January 1, 20216 to December 31, 2030, for companies earning over $250 million in Washington taxable income.
The state requires more revenue, and targeting corporations is merely the beginning. Senate Bill 5814 will raise the state sales tax from 6.5% to 10.6%. Digital automated services were previously exempt from this tax, but beginning in October, tech companies will be required to pay. The state hopes to collect $2.9 billion from this measure alone.
Yet, the state still requires more revenue. Senate Bill 5813 will restructure the capital gains tax to create a new top tier for gains over $1 million. In addition to the 7% base tax, the state has implemented an additional 2.9% surtax. The state expects to generate $321.6 million from this additional fee.
Per usual, fees will be passed on to the consumers.
Naturally, the decision-makers are failing to address the problem—excessive spending. Tax revenue has already increased by 34% or $18 billion since 2019. Politicians passed a number of social programs without proper funding. The child care subsidy expansion passed in 2021, but it took four years to amass the $300 million required. State-funded pre-K expansion also passed in 2021, but the $214 million has not been fully paid. Washington’s tort liability payout account has been operating at a deficit for multiple years, requiring $1 billion to simply move out of the red. What about the Rainy-Day Fund? Democrats used the $2.3 billion revenue to pay for more social programs.
Washington implemented a freeze on non-essential spending in December. Some believe that the state needs to implement a wealth tax, as Democrat lawmakers seek every option to fix the deficit that does not include spending cuts.
Washington managed to spiral into a massive debt in a short amount of time. Governor Inslee approved of incorporating an additional $2 billion into the $69.8 billion operating budget back in March. Eight months later, the Office of Financial Management declared that there was a serious problem and the state could face a deficit of $10 to $12 billion, revising that figure to $16 billion a month later.
The state was operating at a $14 billion surplus three years ago before politicians ramped up their spending by 40%. State taxes have increased by 99% in the past decade, while state spending has risen by 114% in the same time period. It is always the responsibility of the people to pay for government’s fiscal mismanagement.
