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Republican leaders say proposed income tax would hurt affordability, small businesses and risk out-migration
Summary
Senate and House Republican leaders criticized the Democratic income-tax proposal as unfair to married couples and small businesses, warned it could expand beyond millionaires, and said the state can prioritize existing revenue to fund needs such as public defense without a new income tax.
Olympia — Senate Republican leader John Braun and House Republican leader Drew Stokesberry used a week-4 leadership media availability to sharply criticize a Democratic income-tax proposal, saying it would worsen affordability and unfairly target small and medium-sized businesses.
Braun, speaking as the caucus’ lead, said the proposal ‘‘starts with a certain group’’ but ‘‘prioritizes past due entities,’’ and argued it would primarily benefit large companies while imposing penalties on smaller firms. He told reporters the bill ‘‘is a nonstarter for us’’ and singled out a ‘‘marriage penalty’’ and the ‘‘failure to allow for carry forward’’ as especially damaging provisions.
Stokesberry echoed those concerns, saying the tax ‘‘is only a tax on millionaires this session’’ but warning ‘‘it will quickly become a tax on regular people like you and me.’’ He argued the bill also would capture pass-through income from S corporations, LLCs and partnerships — income that may exist ‘‘on paper’’ rather than as cash — and that treating that income as taxable would ‘‘decimate’’ sectors including housing development by drying up capital.
On funding for rising public defender costs, leaders rejected the income tax as the right mechanism. Braun said the state’s budget priorities have been ‘‘grossly out of whack’’ during recent growth and that reallocating or prioritizing existing funds could cover roughly $200 million a year needed by counties for public defense without levying a new $4 billion income tax.
Republican leaders also cited migration and business departures as evidence the state already loses residents and high-income earners. Stokesberry and other Republicans pointed to IRS migration data and local real-estate anecdotes, saying new taxes would accelerate domestic out-migration.
The leaders offered policy adjustments they say would be more sensible if a tax were to be considered: remove the marriage penalty, allow loss carryforwards, and avoid taxing ‘‘phantom income’’ on small-business owners so that taxes align with cash flows.
Braun said the caucus will ‘‘work to either stop the bill or make it better’’ and urged reporters to follow their upcoming listening sessions and other outreach.
