Democrats back off long-term care tax
Schoesler, Schmick win temporary reprieve for voters
December 23, 2021
RITZVILLE — Sen. Mark Schoesler’s efforts to halt implementation of the new long-term care tax on workers in Washington State may be paying off.
For months, Schoesler, R-Ritzville, was trying to upend the tax on workers income to pay for a delayed long-term health care benefit. He even pre-filed Senate Bill 5503 earlier this month calling on the Legislature to step back from the tax and look at alternatives.
“Many workers won’t be able to afford it – people earning an average wage will lose hundreds from their paychecks each year,” Schoesler said. “Too many people would pay the tax, yet never receive benefits.”
On Dec. 17, Gov. Jay Inslee, Senate Majority Leader Andy Billing, D-Spokane, and Speaker of the House Rep. Laurie Jinkins, D-Federal Way, agreed to a delay of Washington Cares Fund taxes on income.
Inslee said his sudden move toward delaying the new tax follows “ongoing discussions with legislators.”
According to Inslee, the tax would provide “much-needed care and coverage” for workers facing long-term health care issues, but the bill need “refinements.”
“Therefore, I am taking measures within my authority and ordering the state Employment Security Department not to collect the premiums from this program from employers before they come due in April,” he said. “My actions mean that the state will not collect those funds until the Legislature sorts through these issues.”
Rep. Joe Schmick, R-Colfax, has been fighting for the repeal of the tax on income too. He cosponsored House Bill 1594 to repeal the controversial tax.
“I’m glad that we can take another look at this very controversial proposal,” Schmick said. “It has not much garnered public support at all. We now have a chance to go back to the drawing board.”
The delay means employers will not be penalized or fined for declining to withhold the new tax from workers’ paychecks.
The long-term care tax was signed into law in 2019 and would have collected a 0.58% payroll tax on people working in private and public jobs. It amounts to a tax of $290 per year on someone earning a $50,000 annual salary.
The tax money would have been used to establish a fund to provide up to $36,500 in long-term health care benefits beginning Jan. 1, 2025. People paying into the system and relocating out of state would lose the benefit.
“It’s time for the Legislature to create a joint committee to examine private-market alternatives to this program and look for a better way to provide long-term care in Washington,” Schoesler said.
Under Schoesler’s proposal, a committee would be appointed to study option and review affordability, bundling with a life insurance policy, other insurance options and more and report its findings to the House by July 1, 2023.
“The opposition to this tax is not new,” Schoesler said. “When Washington voters in 2019 had a chance to give their opinion through Advisory Vote 20, nearly 63% statewide said the tax should be rejected.”
In the 9th Legislative District — the district representing Adams, Asotin, Franklin, Garfield, Whitman and southern Spokane counties – 77.3% of voters opposed the tax, he said. Schoesler, Schmick, and Rep. Mary Dye, R-Pomeroy, represent the district.
Schmick would rather repeal the entire law than study it.
“If that’s not politically feasible, at least we should redraft the policy and start from scratch to make it more equitable, efficient, and economically solvent so that taxpayers down the road don’t end up paying more for broken promises,” he said.
The state offered an opt-out window for residents who could show they had private long-term care insurance.
As of Dec. 1, only about 430,000 people requested an exemption of the tax.
“Who trusts state government – especially the state Employment Security Department – to manage a program like this effectively,” Schoesler asked rhetorically, in reference to the agency’s loss of more than $600 million due to fraud while under the direction of Suzy LeVine.
LeVine has since left the agency to join the Biden Administration in Washington, D.C.