Inslee, leaders opt to pause long-term payroll tax

OLYMPIA — A new payroll tax on employees in Washington state is being delayed.

The Seattle Times reports Gov. Jay Inslee and state Democratic legislative leaders announced Friday an agreement to push back the new WA Cares payroll levy as they address issues with the new long-term care program.

“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,” Inslee said in the statement.

“My actions mean that the state will not collect those funds until the Legislature sorts through these issues.”

During the pause, employers won’t incur penalties and interest for not withholding those taxes from worker wages, he added.

Approved by the Democratic lawmakers and Inslee in 2019, WA Cares was intended to be a first of its kind in the nation social-insurance program to help people pay for care for themselves in old age or sickness.

To pay for that, the WA Cares Fund created a 0.58 percent payroll deduction on workers that was set to begin Jan. 1.

Starting in 2025, eligible beneficiaries could then begin to claim up to $36,500 to help pay for things like meal delivery, assisted living or nursing care, transportation or respite for family members providing care.

But there have been concerns, including people learning that they will pay into the program but never receive any benefits.

That includes about 150,000 people working in Washington but living in another state, such as Oregon or Idaho. Others who might never receive benefits are older adults who might not get vested to receive a benefit before they retire in the next few years; people who ultimately leave to retire in another state; and military families rotating through Washington.

Rep. Joe Schmick, R-Colfax, said in an emailed statement Friday that he’s glad another look will be taken at the program.

“My continued preference would be for a complete repeal,” his statement said. “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.”

Democratic lawmakers have acknowledged the concerns and say they are working on proposals to address them when the Legislature gathers in January for its 60-day session.

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