Sen. Mark Mullet: Washington state doesn’t need to add another tax on workers

By Sen. Mark Mullet

Workers in Washington state are just starting to see a new payroll tax deducted from their paychecks this month, as our state implements a new long-term care insurance program.

The median income earner making $50,100 will see a $288 annual payroll deduction. This program has no income cap, so the more you make, the more you pay, even though the benefits are fixed.

While the goals of this program are admirable, the devil is in the details of the policy. This program has already received much-deserved criticism for its inability to use the long-term care savings from this program in any other state but Washington.

We know that half of Washington workers choose to retire in a state with a better climate, so half of our Washington residents could pay this tax their whole life and never receive a penny of benefits.

We must also acknowledge that the majority of Washington residents missed the opportunity to opt out of the tax in the summer of 2021 because there was no public messaging campaign to inform Washington residents about the ability to get their own private policy and avoid this tax. It is also unfair to workers who transfer into our state because the opt-out window has already closed, so they have no way to avoid the tax.

Given the workforce shortages in our state, the last thing we need is another barrier to make it harder to attract the nurses, police officers, and other critical professions we are trying to support.

The Legislature rightly delayed implementing this policy in 2021 to address some of these issues. Rather than adjusting the program to better meet the needs of Washington workers, it will be implemented with the same flaws that caused its initial delay.

As our state becomes more unaffordable because of housing and our rising cost of living, our state government shouldn’t add insult to injury with another mandatory tax. For someone living paycheck to paycheck, this could be the cost that leads to a financial crisis.

We don’t have to look far for another solution to provide long-term care savings for families in Washington. Just to the south of us, Oregon has started the groundbreaking “Oregon Saves” program to help working people who are not receiving retirement benefits from their employers get ready for retirement. While Oregon focused on retirement, we could adjust their model to help families in Washington state save for their long-term care needs.

Washington can set up a savings program through our Washington state employers that allows workers to save up to 5% of their pay each month in a Roth IRA. Workers can customize the amount they save and add any beneficiaries to add to the program. Workers would be able to opt out or opt back in at any time. The funds from this account would be portable if the worker retires to another state.

This type of program would provide the much needed flexibility for workers to build their long-term care savings over time at a pace and level that makes sense for them and their families. It would include workers who live in other states but are employed in Washington. It would allow workers to use their savings whether they live in Washington state or not. This program, by its very nature, would always stay solvent and not run into concerning situations where expenditures outweigh collections.

We should help workers in our state with options for saving as retirees get older and long-term care costs get more expensive. We should provide a program that gives workers flexibility, options and choice so they can save at their pace and move their savings wherever they retire. The Oregon model makes sound fiscal and financial sense and gives workers a solution to their long-term care savings needs.

We have to stop believing that every answer to a problem in our state is a new tax. I believe we can hold true to our values but run our state’s budget with more transparency and accountability. We do not need to make life harder for workers and their families.

Our state should rethink this program so that the people of Washington state have more choices and flexibility when making their retirement and long-term care plans.

Mark Mullet, D-Issaquah, is a candidate for Washington state governor and the vice chair of the Senate Ways and Means Committee. He represents the 5th Legislative District.