When Joe Nguyen was sent to Olympia in 2019, representing West Seattle, White Center, and Vashon Island, the 35-year-old was celebrated by The Stranger as “an AOC of the Washington Senate” — an outspoken progressive in the mold of U.S. Rep. Alexandria Ocasio-Cortez. Nguyen had been a Democratic delegate for Rep. Bernie Sanders, who supported social benefits. In Olympia, to the delight of the Seattle Weekly, he was known for “yelling NO really loudly at Republicans.”
Nguyen, now 42, is still a progressive. But in his new post as president and CEO of the Seattle Metropolitan Chamber of Commerce, he’s joined the chorus of business groups yelling “No” at a statewide tax proposed by Democratic progressives. On the side of No he is joined by another former state senator, Joe Fain, the former floor leader for the Republicans. Fain is president of the Bellevue Chamber of Commerce.
Different political tribes, similar interests: both men head chambers of commerce that object to additional taxes on the employment of highly paid workers at a time of economic risk.
The proposed tax, embodied in House Bill 2100, is aimed at companies with highly paid employees. Faced with a new tax on the employment of the people most valuable to the business, some companies will let go of some of them. Some will stop recruiting new ones. Some will move part of their business, or all of it, to a friendlier place. Some will just pay — but they will be left with less money to do other things.
The proposed tax would take from employers an amount equal to 5 percent of what they pay employees above $200,000 for a single worker, $250,000 for married filing jointly, and $125,000 for married filing singly. The tax is on the employer, but indirectly it affects the employee. It makes the employee more costly to hire, without putting money in his pocket. Instead, the money goes into the government’s pocket.
State legislators are following Seattle’s “Jump Start” tax, imposed in 2021. That one charges most companies 0.746 percent, and a few billion-dollar companies 2.557 percent, of what they pay to employees above $192,450 a year. Seattle has thousands of people who earn more than that. In 2024 the Jump Start tax raised $440 million, and city officials were glad to have it.
Seattle’s tax hits only those companies with more than $9 million in payroll. Seattle Chamber President Joe Nguyen says about 500 companies have to pay, and that fewer than 10 companies pay most of it. At the top of the list is Amazon, the city’s, and the state’s, largest private employer. (Boeing was, but not anymore.)
Amazon has responded to the new payroll tax by moving several thousand employees from Seattle to Bellevue. It has more than 14,000 employees there, and has been aiming for 25,000 (though it just announced a large layoff). Amazon recently restarted work on its high-rise project in downtown Bellevue.
In the five years of Seattle’s Jump Start tax, Bellevue has added nearly 3.9 million square feet of office space. That’s 50 percent more than downtown Seattle did. Business is slowing in both cities now, and much of Bellevue’s office space is vacant — 23.5 percent, in the Cushman & Wakefield report for last year’s third quarter. That’s not a healthy figure, but it’s less pallid than the rate of office vacancy in downtown Seattle: 35.6 percent, which about the highest vacancy rate of any large city in the United States.
Jobs are also affected. When the Jump Start tax was imposed the growth in the number of jobs fell from 3 percent a year to one-tenth of 1 percent. Last year it was minus six-tenths of a percent. The Jump Start tax is not the only reason for that, but it’s one of them.
“Bellevue’s unofficial economic development strategy is basically, ‘We’re not Seattle,’ ” says Nguyen.
At the Bellevue Chamber, CEO Joe Fain allows that Seattle’s Jump Start tax “has given a short-term boost to Bellevue’s economy.” He knows it’s not a sustainable plan. “Bellevue needs Seattle’s success,” Fain says.
And now comes HB 2100, which proposes to take the tax rate Seattle imposes on billion-dollar companies, double it to 5 percent, and impose it on companies with a payroll of just $7 million. That’s the legislators’ idea of a “large employer.” Nguyen, who was the director of the state Department of Commerce last year, chuckles at this. “Those are not big companies,” he says.
Seattle’s tax exempts several types of employers — companies that sell insurance, groceries, liquor and motor fuel; also non-profits that do medical research. Non-profit hospitals and clinics that mostly do Medicaid work get an exemption for salaries below $400,000. The proposed state tax has no similar list of exceptions, though that could change.
The state bill would allow Seattle to keep collecting its Jump Start tax. Seattle companies could subtract their payments to the city from what they owe the state. No other city would be allowed to do this — only Seattle.
It is perhaps more than a coincidence that of the bill’s 19 co-sponsors — all Democrats — nine are from Seattle and five more represent Seattle suburbs. (Of the rest, two are from Olympia and one each from South Tacoma, Everett, and Spokane.)
The carve-out is a nice deal for the state’s biggest city. “I live in Seattle,” says Joe Nguyen of the Seattle Chamber. “I don’t want double taxation. But I don’t know how the rest of the state is going to feel subsidizing Seattle.”
They won’t like it.
The more important issue, Fain and Nguyen both say, is the effect of the proposed tax on the health of the state. “Washington’s economy is in a really tough place,” says Fain. Growth has slowed. In the past five years, the strong migration to Washington from other states has reversed. “The entrepreneurial class is leaving,” Fain says. Apart from health services, private-sector job growth has been flat — and now comes a wave of layoffs in the tech companies. There is talk of a recession. Maybe we are in one.
“At a time when we’re struggling, don’t make it worse,” Nguyen says.
The state is struggling, too. State tax collections on home sales, retail sales, and capital gains have been coming in slower than expected. Spending has continued to rise, opening a gap of $2.3 billion through mid-2027 in a budget of $79 billion. That’s a real problem, but not exactly a disaster. Nguyen, who was a budget guy in the State Senate, says the deficit is small enough to be closed partly by cuts.
If the Trump administration pulls away tens of billions in Medicaid and other funds, as the sponsors of HB 2100 fear, that’s a whole other matter. Washington’s generous social programs, which Nguyen supports, rely heavily on the 20-to-25 percent of the state’s budget that comes from the federal government. If that money really were to be cut off — and Nguyen is not predicting that — the budget gap would be many times larger than $2.3 billion.
What then? Ngyuen has no answer better than to wait for Trump to be gone. “There is no math that can help us overcome a gap that big,” he says.
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