Washington's New Tax Hike and Strike Fund Came With Limits Written in Pencil

Two fiscal bills from this session arrive with the same reassurance built in. Each carries a limit that makes it easy to accept: a high dollar threshold, a benefit cap, a sunset date. The question worth asking is not whether the limit exists. It is whether the limit holds. Washington's own record answers that, and the answer is on the page.

SB5813, the tax that already grew. This bill raises two taxes at once. It adds a 2.90 percent surcharge on the portion of a person's capital gains above one million dollars, on top of the existing 7 percent, and it steepens the estate tax so the top rate on the largest estates jumps from 20 percent to 35 percent. Be precise about the first one, because precision is the whole argument. Washington's capital gains tax is an excise tax on the sale of assets, and the state Supreme Court upheld it as an excise tax, not an income tax and not a wealth tax, in Quinn v. State in 2023. Name it correctly, because the point lands harder when you do. That narrow excise tax is already growing. It was sold in 2021 as a 7 percent tax reaching only the very wealthy. Four years later it has a second bracket. Credit where it is due: the bill also raises the estate exemption to three million dollars and expands the family-business and farm deductions, which genuinely shield smaller estates and family operations, and that deserves saying. But a 35 percent top estate rate is now among the highest death taxes in the country, and it took effect immediately under an emergency clause that closed the referendum window on a tax increase.

SB5041, the benefit imported at the far end of the curve. Washington now pays unemployment benefits to workers who walk off the job in a strike. After roughly a two-week wait, a striking worker draws up to six weeks of benefits, and the cost is charged to the employer being struck, which raises that employer's unemployment taxes the next year. Two other states already do this, and their history is the part to study. New York paid strikers after a seven-week wait until 2020, when it cut the wait to 14 days. New Jersey enacted the benefit in 2018, then shortened its wait from 30 days to 14 in 2023. Washington did not start where those states started. It started at the two-week mark both of them reached only after years of shortening. And the bill hands you its own tell: it orders a trust-fund impact report every year for a decade, which is what a legislature does when it does not know the cost, and it sets the whole thing to sunset in 2035, the kind of sunset on a labor benefit that tends to get extended before it ever lapses.

Watch where the design points next, because it tells you. The capital gains surcharge starts at a million dollars, a threshold a future session can lower the way the original tax's threshold has already been tested. The estate brackets can be steepened again, because this bill just proved they can be moved in a single step. The six-week benefit cap can be lengthened and the 2035 sunset can be extended, and the annual report exists precisely to build the case for doing both. None of that is speculation about motive. It is reading the guardrails and noticing what they are made of.

A limit only protects you if the people who wrote it cannot erase it. Washington wrote this session's limits in the same pencil it used the last time, and the eraser is already in its hand.

This is our read of the bill. We encourage you to read it yourself and reach your own conclusions. The sources are public and cited below.