Senate Democrats unveil tax proposals

Proposals are aimed at generating billions in new revenue to fund public services while lightening some of the tax load carried by working families

OLYMPIA, WA (March 21, 2025) — Democrats in the State Senate unveiled a slate of revenue bills on Thursday, centered around requiring corporations and the rich to pay a fairer share of taxes to fund public education and other essential services, with some policies designed to ease the tax burden on working families.

The five bills introduced Thursday aim to raise revenue to close a budget shortfall, rejecting an “all-cuts” approach. Those bills would create a financial intangibles tax, remove the cap on employer payroll taxes, allow property tax to grow by population and inflation, repeal ineffective & obsolete tax preferences, and cut the state sales tax.

Combined, those policies would generate an estimated $6 billion in revenue for just the 2025-2027 biennium, according to Senate Majority Leader Jamie Pedersen (D-Seattle), speaking at a press conference Thursday. That’s a modest estimate, as the figure assumes some degree of tax dodging by corporations and the mega-rich.

According to reporting in the Washington State Standard, these proposals would raise $17 billion in new revenue over the next two budget cycles, per Senate Democrats’ calculations.

The financial intangibles tax (SB 5797) would be a tax of $10 per $1,000 of assessed value of stocks, bonds, exchange-traded funds, and mutual funds held by individuals with more than $50 million of these assets. The Senate Democratic Caucus estimates it would be paid by about 4,300 wealthy individuals and generate approximately $4 billion per year starting in the 2027 fiscal year. 

SB 5796, removing the cap on employer payroll taxes, would generate about $2.3 billion annually once fully implemented, by allowing the state to levy a 5% tax on large employers’ payroll expenses above the Social Security threshold, which is currently $176,100 per year. It would only be paid by companies with $7 million or more in payroll expenses — about 5,289 companies total — and includes a full credit for businesses already paying Seattle’s JumpStart payroll tax, a similar municipal-level policy. 

Revenue from both of these proposals would fund education, healthcare, and social services.

Senate Democrats are also proposing to repeal 20 tax exemptions where the public policy objective was not met, it is unclear whether the policy objective was met, or the exemption is legally obsolete (SB 5794). These exemptions were identified as obsolete or ineffective by the nonpartisan auditors at the Joint Legislative Audit & Review Committee, which was created to take a critical look at tax preferences for businesses in Washington. Senate Democrats estimate these repeals would generate another billion dollars for education and healthcare over a full, four-year budget cycle. 

The proposal to allow property tax rates be based on inflation and population growth (SB 5798) would bring in an additional $779 million for public education, and give localities the option to use this new calculation to raise revenue for public safety investments. The proposal also aims to provide some tax relief to the most vulnerable Washingtonians by exempting participants in the Property Tax Exemption for Senior Citizens and People with Disabilities program from paying the state property tax at all. 

Senate Democrats are also proposing a .5% reduction in state sales tax from 6.5% to 6%, easing the tax burden for working families (SB 5795).

“Our nearly century-old tax code relies mostly on flat taxes that fail to distinguish between small businesses and large corporations, homeowners and skyscraper owners, working people and billionaires,” said Sen. Noel Frame (D-Seattle), vice chair of the Senate Ways & Means Committee for Finance, in a statement. “It’s antiquated, unfit for a modern economy, and deeply unfair. This year, we’re proposing major reforms to ensure the biggest corporations in the world and extraordinarily wealthy individuals pay what they owe in taxes, so we can fund world-class schools, health care, infrastructure, and the services Washingtonians rely on.”

With some revenue and budget cut proposals already on the table, the Senate and House Democrats plan to release their budgets next week, offering the first comprehensive look at the scale of cuts and new revenue the Legislature is pursuing to close the projected budget shortfall.