Challenge Seattle, the CEO group led by former Gov. Chris Gregoire, released a regional jobs plan this month documenting how expensive, slow and unpredictable Washington has become for employers. The report identifies taxes including Seattle’s JumpStart payroll tax, higher B&O taxes and the Advanced Computing Surcharge as part of the problem—but stops short of identifying the lawmakers, city council members, bills or ordinances responsible for creating them.
The diagnosis itself is devastating. Central Puget Sound lost nearly 7,000 jobs in 2025 while the rest of the country kept hiring, the first time since at least 2005, outside the Great Recession and the pandemic, that regional employment growth trailed the national average. Washington’s cost-of-doing-business ranking fell from 32nd to 47th. Its standing in an annual survey of chief executives slid from 32nd in 2015 to 47th today. The state now has the worst five-year business survival rate in the country, with roughly four in ten new Washington businesses making it to year five compared with more than five in ten in California, Massachusetts and Texas.
That is the assessment of a group of businesses – not activists, though they are mostly left-wing leaders. But, more importantly, they are the employers Washington Democrats spent the last decade taxing.
The report says the quiet part about taxes
Page 14 spells out what mid-sized and large employers are actually paying for.
“Employers here face a growing combination of local and state costs, including Seattle’s JumpStart payroll tax, increases in the state business and occupation (B&O) tax, including the Advanced Computing Surcharge, and higher unemployment-insurance costs,” the report states.
The section on tax structure goes further and even assigns cause.
“Newly introduced statewide taxes, such as capital gains and personal income, and higher taxes on business account for much of the change,” it says, before adding that local taxes stacked on top through rising municipal gross-receipts, sales, payroll and property levies. Washington’s ranking on a cross-state tax competitiveness index fell from 11th in 2015 to 45th today.
Per-employee business taxes went from $7,600 in 2015 to $8,400 in 2020 to $11,900 in 2026, according to the report’s chart. The rate of business taxation at the state and local level tripled between 2020 and 2026. State agencies adopted roughly 71 percent more regulations last year than in 2015, leaving Washington the eighth most regulated state with more than 200,000 regulations on the books. Permitting timelines doubled from about 400 days to 900.
The consequences
The consequences show up where regular people live and do business.
Washington restaurants report an average net margin near 1.5 percent, half of surveyed Seattle restaurants lost money in 2024, and opening a restaurant in Seattle can require more than 63 steps, 16 forms and $7,500 in fees before a single customer is served. Seattle is now the second most expensive major city in the nation for dining out.
Downtown employment fell from roughly 330,600 jobs in 2024 to about 317,600 in 2025, erasing the post-pandemic recovery, while more than 32 percent of central business district office space sits vacant. Seattle Red has previously reported on the Downtown Seattle Association’s findings tying the JumpStart payroll tax to downtown job losses and collapsing office values.
Twenty recommendations, none of them repeal
Having named the taxes, the plan declines to touch them.
Recommendation five calls for developing a tax strategy. Recommendation six calls for economic impact analyses of major policies before they pass. Recommendation seven calls for a regular review process for policies already on the books. The remaining recommendations cover business concierge positions in every city and county, a local government playbook, permitting standards, workforce convenings and industry clusters in space, fusion and sustainable aviation fuel.
“Given current budget pressures, the recommendations concentrate primarily on improving policies, processes, partnerships, and institutions rather than requiring significant new spending,” it states.
It also concedes how unusual Washington’s position is.
“Washington is now in the bottom half of states across every tax category at once, a position almost no competitive state occupies,” the report notes, contrasting Washington with Oregon, which has no sales tax, and California, which has no estate tax. The prescribed remedy for that is a study.
The guest list is… odd
The acknowledgments section is where the politics become unavoidable.
Among those thanked for contributing insights are Speaker of the House Laurie Jinkins, Senate Majority Leader Jamie Pedersen and House Majority Leader Joe Fitzgibbon, the legislative leaders who delivered the largest tax increase in state history in 2025. Seattle officials, King County’s executive and staff from the Governor’s Office appear as well. What an odd guest list.
Challenge Seattle added a disclaimer. “The individuals and organizations listed below contributed their insights to this report; however, their participation does not imply endorsement of the report or its recommendations,” the section reads.
Gregoire came closest to an indictment in her opening letter. “Employers and residents alike tell us it has become too difficult to build, too expensive to operate, too unpredictable to plan, and too unaffordable for workers and families,” she wrote. She did not say who should stop.
The writing on the wall
A quarterly Association of Washington Business survey found taxes cited as a key challenge by 71 percent of employers, with a third planning their next expansion outside Washington. Seattle Red also reported last month that small business hiring and job openings softened as the new state taxes took hold.
The report gets the disease right, but then prescribes a committee to do more busy work to come to the conclusion we already know. Naming the capital gains tax, the income tax and JumpStart on paper while asking politely for better customer service is not a jobs agenda. This is the least aggressive way to make an impact, which is precisely why it won’t survive a news cycle or two.
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