Concerns about new long-term care tax
August 19, 2021
Mr. Ed Schweitzer, who founded and leads Pullman-based Schweitzer Engineering Laboratories, recently pointed out how the new long-term care tax will have an extra-bitter taste for people who call Idaho home but work in our state, in border cities like Clarkston or Pullman.
Those include a significant number of SEL's employee-owners, he wrote in a letter to Gov. Inslee, who will be forced to pay the tax but can never benefit from it if they don't reside in Washington.
His letter also details other known, serious flaws with what's called the Washington Cares Fund.
They include the finding by our non-partisan state actuary that the program is on track – even before tax collections begin – to be underfunded by $15 billion. That makes further tax increases and larger cuts into employee wages "inevitable," Dr. Schweitzer writes.
SEL hopes others in the business community and chambers of commerce will also write and make their concerns known.
I also heard from a friend in Franklin County, who shared the perspective of someone who represents a well-known national insurance carrier.
Now that people are realizing they can opt out of the mandate and accompanying payroll tax by obtaining their own long-term care policies, he tells me the demand has shot up so much that his own company may not be able to issue all the requested long-term care policies before the November opt-out deadline, and a nationally known competitor has stopped offering policies in Washington.
He thinks the long-term care program tax is a "huge mess" and wondered what I think.
First, I thought this legislation was a bad idea when the majority Democrats passed it in 2019, as House Bill 1087. It's good for people to have long-term care plans, but government simply isn't good at managing things like this.
The employers who pay premiums to the state for industrial insurance (worker's compensation) and unemployment insurance know what I mean.
Second, as people have become more aware what this never-ending tax would mean for them, state government has contributed to the concern and confusion by failing to be transparent.
I should say "agency" instead of state government because the Washington Cares Fund is being managed by none other than the state Employment Security Department. You know, the same ESD that failed to protect about a billion taxpayer dollars from foreign scammers who filed false claims for unemployment benefits in 2020.
For months, our constituents have been in a sort of limbo. Employment Security isn't allowing anyone to apply for an exemption (the opt-out) until Oct. 1, and the agency also has provided very few answers to legislators.
There is one bit of recent progress: The agency has quietly opened a toll-free call center for questions about exemptions. The number is 833-717-2273. Questions may be emailed to [email protected] – just be aware that what agency calls the "most current" information available is not necessarily final.
I am drafting a bill to repeal the long-term care tax. If there's a special session later this year on transportation, or to deal with the confusing and controversial police "reform" laws that just took effect, the agenda needs to include rescinding this bad policy.