Washington State Senate Leader Cites Lack of Support for New Tax on Big Businesses

Senate Majority Leader Jamie Pedersen says a statewide payroll tax is a non-starter, despite pressure from progressive activists.

Feb. 3, 2026 at 2:47pm

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A year after sponsoring legislation to create a statewide version of Seattle's payroll tax on large employers, Washington State Senate Majority Leader Jamie Pedersen, D-Seattle, says the proposal lacks support in the Democrat-led legislature. Pedersen is instead focused on an income tax bill targeting individuals earning over $1 million per year, which he plans to unveil this week. Pro-tax activists are frustrated by the lack of interest in the payroll tax from Democratic leaders and the governor, suspecting a deal has been made with business interests.

Why it matters

Washington faces budget challenges due to a slowing economy and increased demand for services. Payroll tax proponents argue it can raise money quickly, while an income tax will take years to implement. However, Pedersen cites lack of support in his caucus and concerns from businesses that the payroll tax could drive companies out of the state.

The details

Last year, Pedersen sponsored a bill to create a statewide version of Seattle's payroll tax on large employers, but it failed to gain traction as the legislature settled on other means of raising $9 billion in business taxes. This year, Pedersen has signaled the payroll tax is a non-starter, even as Democratic Socialist Rep. Shaun Scott has become the driving force for it in the House. Pedersen's focus is on an income tax bill on individuals earning over $1 million annually.

  • A year ago, Pedersen signed onto legislation to create a statewide payroll tax.
  • This year, Pedersen has signaled the payroll tax is a non-starter.

The players

Jamie Pedersen

A Democratic state senator from Seattle and the Senate Majority Leader.

Shaun Scott

A Democratic Socialist state representative from Pedersen's district who is the driving force for the payroll tax in the House.

Bob Ferguson

The Democratic governor of Washington.

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What they’re saying

“We had a big discussion about it. The end result was that by the time we had to decide what our strategy was going to be for funding the budget last year, we probably didn't have 10 votes in our caucus for that bill.”

— Jamie Pedersen, Senate Majority Leader (dailyfly.com)

“There isn't any deal right now.”

— Jamie Pedersen, Senate Majority Leader (dailyfly.com)

What’s next

Pedersen plans to unveil his income tax bill on individuals earning over $1 million per year this Tuesday.

The takeaway

The lack of support for a statewide payroll tax from Democratic legislative leaders and the governor highlights the challenges of passing new business taxes in Washington, even as the state faces budget pressures. The focus has shifted to an income tax on high-earners, which may be seen as more politically palatable.