The fight over your wallet: Capping property tax increases, rent control, wealth tax, and the Jumpstart payroll tax

This legislative session that began this week has already seen four proposals that could hit Washingtonians right where it hurts: their wallets. With a $6.7 billion budget shortfall looming,  state legislative leaders are eyeing measures like raising the property tax cap, rent control, a wealth tax, and a statewide version of Seattle’s Jumpstart Payroll Tax. Each plan carries significant risks for taxpayers, businesses, and families—and it’s crucial to take action now to tell lawmakers: there’s a better way.

Raising the Property Tax Cap

Washington lawmakers are revisiting efforts to raise the cap on annual property tax increases, a move that failed last year. Current law limits property tax revenue growth to 1% annually without a public vote, providing stability for homeowners and small businesses, but Democrat lawmakers, concerned about increasing the state budget, want to raise it.

Lawmakers tried last year, proposing a 3% cap, but with tremendous public opposition, decided not to move forward with the legislation. This session, they are already at it again, filing HB 1334 today. The bill raises the cap to 3%, triple the rate allowed under current law.

If passed, this legislation will disproportionately harm low and middle-income residents, exacerbate housing affordability issues, and potentially raise costs for renters as landlords pass on the expense. As this new proposal gains traction, residents must speak up to ensure lawmakers don’t solve a budget shortfall by increasing costs for already struggling families and small businesses.

Rent Control

Despite an effort that failed last year, rent control proponents are back, repackaging their agenda as “rent stabilization.” HB 2117 would cap rent hikes at 7% annually for existing tenants. While that might sound like relief for renters, the economic evidence tells a different story.

Washington Policy Center scholar Scott Fallon highlighted the dangers of rent control in his policy brief: “It ignores supply/demand dynamics and exacerbates the housing crisis.” Research consistently shows rent control discourages investment in new housing, shrinks available rental units, and pushes property developers to other states. In San Francisco, rent control reduced the housing supply by 15%, thereby increasing costs on consumers.

Rather than leaning into policies that will further hurt Washingtonians, lawmakers should focus on lifting restrictive zoning laws, streamlining construction permits, and expediting eviction processes for dangerous or illegal activity. These actions, not arbitrary price controls, will address the root causes of housing affordability and availability.

Wealth Tax

To address the budget shortfall, lawmakers have floated the idea of a wealth tax, proposing a 1% tax on taxpayers’ wealth exceeding $100 million. Supporters claimed it would impact only the ultra-rich, but the reality is starkly different. Tax experts warn that wealth taxes often miss their targets, pushing high earners—and their tax dollars—out of state.

Even Nick Hanauer, the billionaire progressive entrepreneur and one of the largest Democratic supporters, called taxes like this “boneheaded.” He said, “Every wealthy person I’ve spoken to in the last few days has said they will leave the state.” Now imagine what our home will become if this same tax is applied to the rest of the state.

Jumpstart Payroll Tax

And then there’s Seattle’s Jumpstart Payroll Tax, which lawmakers are considering for the rest of the state. The tax is based on employee compensation over a certain amount but paid by the employer. It had serious opposition amongst Seattle business owners, fearful that the tax would make Seattle less competitive, driving jobs and opportunities elsewhere.

While framed as a tax on corporations, Milton Friedman’s timeless insight underscores its real impact:

“‘Business’ does not and cannot pay taxes. Only people can pay taxes. Corporate officials may sign the check, but the money…comes from the corporation’s employees, customers or stockholders”

In other words, businesses facing these additional costs often pass them along to employees through reduced wages, customers through higher prices, or stockholders through lower returns. Worse yet, such policies on top of the state’s new capital gains income tax risk pushing businesses out of Washington entirely, shrinking the tax base and leaving fewer opportunities for residents. Statewide adoption of this tax would amplify these harms, destabilizing the economy and further burdening families.

It’s Time to Speak Up

Washington families are struggling, and these policies threaten to make things worse. Rent control and market interference consistently backfire, driving up costs and worsening housing shortages. More taxes will only push businesses and jobs out of the state, and a shrinking tax base will be left with the tab. Every day folks are waking up to this. Recent polling showed that 62% of residents reject tax hikes as the solution to the budget deficit. So will our lawmakers respect that?

This session, our leaders have a choice: adopt common-sense, growth-focused policies that ease the burden on families and businesses…or pursue failed strategies that only deepen the challenges ahead.

The time to act is now. Use Future 42’s Take Action Tool to send a message to your lawmakers and demand smarter solutions for Washington’s future.