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Republican leaders call draft income tax ‘devastating’ to small businesses, press affordability agenda
Summary
Senate and House Republican leaders used a joint press availability to argue that a circulating draft state income tax would target pass‑through small businesses and worsen affordability, and to promote alternative savings and budget priorities.
Senate Republican leader John Braun and House Republican leader Drew Stokesberry opened a joint media availability in Olympia to make affordability the caucuses’ chief demand and to attack a draft state income‑tax proposal they said would fall hardest on pass‑through small businesses.
Braun said the top issue for Washingtonians this session is ‘‘affordability, affordability, affordability,’’ and warned that a proposed income tax targeting LLCs and S‑corporations would ‘‘put small business out of business across our state or move them into other states.’’ He said he planned to press the governor on the proposal during a scheduled meeting and to press budget items he characterized as harmful to affordability.
Stokesberry repeated the warning, saying the draft tax would ‘‘devastate small businesses’’ and that technical rules such as disallowing loss carry‑forwards would particularly penalize capital‑intensive sectors such as housing development. ‘‘Any sort of capital intensive business that has losses in one year and profits in later years would never get credit for the losses they incur,’’ he said, arguing that would dry up investment in projects that produce housing.
The leaders said they would advance alternative measures to control costs and cited an example of a proposed savings: Stokesberry described a bill to consolidate the University of Washington endowment investment function under the State Investment Board, which he estimated could save about $10,000,000 per biennium.
Why it matters: The exchange frames the opening of the 2026 session as a fight over tax and budget direction. Republicans characterized the draft tax as a threat to small business and housing investment; Democrats’ stated intent behind any tax proposal is to address revenue needs. Neither side in this press availability presented enacted policy outcomes; Republican leaders said they plan to press the governor and legislative committees as bills move through the session.
Reported remarks and context are drawn from the leaders’ opening statements and Q&A. The caucus asked reporters to examine bills they consider affordability solutions and to question why certain bills have not received hearings.
Next steps: Leaders said they will meet with the governor to discuss the budget and tax proposals and will continue public messaging on affordability as the session proceeds.
