EKCC Briefing: HR1 Permanency, the Tariff Toll, and Washington's Spending-Driven Tax Cycle

Bellevue Chamber  |  April 23, 2026

On April 23rd, the East King Chambers Coalition convened for its monthly meeting. The focus was federal policy update — a presentation from the U.S. Chamber of Commerce on tax permanency, tariffs, and permitting reform followed by Washington Tax Policy Center on the widening gap between state spending and revenue growth. 

The 3 Percent Growth Imperative and HR1

The U.S. Chamber opened by framing its federal agenda around a single number: 3 percent annual economic growth, the pace the country averaged from 1950 to 2010 and had since seen slip below 2.2 percent. Central to that goal is HR1, the reconciliation bill passed in 2025, which made the 2017 individual rate cuts permanent along with the higher standard deduction, the 20 percent pass-through deduction mostly used by small businesses, and a new incentive for employers who help cover childcare. The Chamber is circulating guide documents so members can think through the provisions and then take the specifics to their accountants. 

"If we want to see the prosperity we have seen over the past 80 years moving forward, we need to get back to a point where the economy is growing around 3 percent a year." — Chris Eyler, U.S. Chamber of Commerce

Tariffs, Permitting, and the Surface Transportation Bill

Working against that growth, the U.S. Chamber said, are tariffs that have climbed from roughly 3 percent a year ago to 12 to 13 percent today. Businesses absorbed the cost at first but are increasingly passing it to consumers, and manufacturing has been in contraction for more than ten months. A Supreme Court ruling struck down the tariffs imposed under the International Emergency Economic Powers Act, opening refunds on the roughly $166 billion collected, though the administration has already moved to reimpose tariffs under other statutes. On the pro-growth side of the ledger, the Speed Act and the Permit Act both cleared the House and have a real chance in the Senate this year, and the Surface Transportation reauthorization is due before its September 30 expiration. The Chamber asked members for specific examples of how tariffs are changing their hiring and investment decisions, since concrete cases move policymakers more than the macroeconomic argument.

"These are nothing more than taxes... they constitute the largest tax increase in nearly 50 years." — Chris Eyler, U.S. Chamber of Commerce

Washington's Spending-Driven Tax Cycle

The Washington Tax Policy Center turned to the state's structural problem: spending now growing well above the combined rate of population and inflation, with the biennial budget up from $38.2 billion to $80.2 billion over a decade. Six new state taxes and four new Seattle taxes have not closed the gap, because each new revenue source is absorbed into a higher spending baseline before the next shortfall opens. The state's new tax on income above $1 million, a 9.9 percent rate under SB6346 aka "Millionaires' Tax" taking effect in January 2028, will not by itself cover a projected $7 billion shortfall, and the Center expects more tax proposals next session. The presentation drew a sharp contrast between Seattle's layered taxes and the East King County alternative, where a firm with $500 million in revenue can pay hundreds of millions less over a ten-year period compared to an equivalent firm operating in Seattle — a gap already showing up in office vacancies and relocations like Starbucks's second headquarters in Nashville.

"It's having the predictability that you can give to your CFO when they're underwriting a 10-year lease in the city, and they're not having to worry about a new tax coming in every single year." — Ryan Frost, Washington Tax Policy Center

In summary…

• East King County's competitive edge is its tax predictability — and that edge is only durable if the spending-driven tax cycle spreading in Seattle is kept from taking hold east of the lake
• The Chamber is circulating HR1 guidance documents; members are encouraged to review provisions with their accountants
• The U.S. Chamber is actively collecting member examples of how tariffs are affecting hiring and investment — concrete cases carry more weight with policymakers than macroeconomic data alone
• The income-tax rulemaking now underway at the Department of Revenue warrants close engagement from the East King business community
• Protecting the region's predictability means coordinated advocacy in Olympia and vigilance against any expansion of local taxing authority