OPINION
Payroll tax meant for long-term care delayed
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A regressive payroll tax that was supposed to start being taken out of workers’ paychecks in January was delayed this morning. How? The same way Gov. Jay Inslee has been making rules and mandates without the Legislature since Feb. 29, 2020.
In a press release with statements from the governor and House and Senate Democratic leadership, Inslee says, “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 continues, “My actions mean that the state will not collect those funds until the Legislature sorts through these issues. While legislation is under consideration to pause the withholding of LTC fees, employers will not be subject to penalties and interest for not withholding fees from employees’ wages during this transition.”
Poor payroll clerks, long-term-care insurance (LTCI) carriers and W2 workers who sought to obtain private LTCI to comply with a law that now feels up in the air. It’s like they’re in a roller-coaster relationship with this tax, wondering if they’ll have a New Year’s Eve date.
The law created the WA Cares Fund, a government-run, long-term-care program that some Washingtonians won’t need, many Washingtonians won’t qualify for and that is woefully inadequate for some of those who might. It also eliminates choices and promises to take 58 cents of every $100 a worker earns, burdening family budgets in a time of record inflation.
A possible delay of the tax was suggested by the governor earlier this month. He said he was empathetic with concerns about glaringly unfair eligibility provisions. That empathy came against the backdrop of taxpayer dismay, a lawsuit, a cease-and-desist order, amendment and repeal discussions and a proposed initiative to make participation in the program optional.
While one-man rule might appear to be coming to the rescue, saving us from a payroll tax that the Democrats wanted to fund a program they bragged about, it’s only a temporary halt. While Inslee and Democratic leaders are acknowledging the law they passed was a mistake, be clear: They aren’t saying they won’t take your money for this fund, they are saying they won’t be taking it yet.
The pause is welcome, given inflation, a planned 50% payroll tax increase for the state’s controversial Paid Family and Medical Leave, and another tax hike on the way for workers’ compensation insurance. It keeps getting more expensive for individuals to work in Washington state.
We maintain that the WA Cares Fund needs to be repealed when the Legislature convenes, not simply tweaked and a political, cover-your-backside delay eventually lifted. The long-term-care law and payroll tax is flawed beyond repair.
House Bill 1594 and Senate Bill 5503 have been filed and would do just that. Repeal could truly move us forward.
For now, the Democratic majority’s mistake has prompted a conversation about long-term care and the need for individuals to plan for it. Lawmakers could have done that, of course, without passing a law so many of them would come to regret.
-Hovde directs Washington Policy Center’s Health Care and Worker Rights Centers. Washington Policy Center is an independent, nonprofit think tank that promotes sound public policy based on free-market principles.
