Washington state Democrats propose 18-month delay in WA Cares tax

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Washington state Democrats have proposed a bill to delay for 18 months the collection of a payroll tax that funds WA Cares, providing time to address legal and logistical issues plaguing the new long-term care program.

House Bill 1732 would postpone the 0.58% payroll tax deduction on Washington state workers until July 2023. The bill is sponsored by House Minority Leader Pat Sullivan, D-Covington, and former Speaker Rep. Frank Chopp, D-Seattle.

The legislation, pre-filed on Monday, is the latest development in a roller coaster ride related to the bedeviled long-term care tax, including a lawsuit by Washington workers who live out of state and have no plans to retire in Washington, what critics called a narrow one-time opt-out, and a website that was supposed to facilitate opt-outs crashing from overuse.

Because of the problems with the tax, 23 state senators wrote Inslee on Dec. 3 asking him to delay it.

On Dec. 17, Gov. Jay Inslee and Democratic state leaders announced a pause in the collection of the new payroll tax. As part of the announcement, state Senate Majority Leader Andy Billig, D-Spokane, and state House Speaker Jinkins, D-Tacoma, said they “support employers pausing premium collections from employees in Washington so lawmakers can take necessary action.”

The two added, “While we cannot direct employers not to collect, we strongly encourage them to pause on collecting premiums from employees, giving us time to pass legislation extending implementation dates until next year.”

On Dec. 23, Inslee released a statement saying he does not have the authority to put the breaks on the tax and that employers are still legally obligated to pay the full amount owed to the state.

“There seems to be some inaccurate reporting and misinformation about the Legislature’s long-term care bill, which under the law requires employers to withhold money from employee wages,” Inslee said in a press release.

“Only the Legislature has the authority to eliminate the requirement that employers pay a premium based on withholding from an employee’s wages at this time. The Legislature has committed to changing the law in January 2022, including delaying the premium collection timelines.”

The Jan. 1 deadline for heading off the new tax has come and gone, with the 60-day legislative session convening on Jan. 10.

Another bill pre-filed on the same day, House Bill 1733, would allow some people not likely to receive benefits to opt out the program and the payroll tax. According to the bill, people working in Washington but living in other states could opt out. Spouses or partners of active military and some disabled veterans could also opt out, as could temporary workers with nonimmigrant visas.

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