State Revenue

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Great schools, access to health care, safe communities, and other priorities that serve us all are key to a strong economy and quality of life in our state. By investing in these priorities, lawmakers secure a brighter future for our state and its people. In order to support these foundations of thriving communities, our state needs dependable resources. And in order to provide those resources, everybody has to pitch in. That means rebalancing our upside-down tax code – one in which people with low incomes pay significantly more in state and local taxes as a share of income than the top 1 percent – with revenue reforms that make our tax code more equitable, sustainable, and adequate. 

Washington state’s tax code is:

  • Upside-down. Washington state has the most upside-down tax code in the nation. People with low and middle incomes pay up to seven times more as a share of their household incomes in state and local taxes than the wealthiest 1 percent. 
  • Not transparent. Most businesses compensate for the costs associated with the business and occupation tax simply by increasing the prices of the goods and services they sell to consumers. As a result, most lower- and middle-income Washingtonians wind up shouldering significantly larger tax bills at the cash register than they realize, since, unlike retail sales taxes, the higher costs associated with these taxes don’t appear on sales receipts.
  • Cluttered with tax breaks. Our state’s tax code is has nearly 700 tax breaks that divert money out of communities and into the hands of special interests. Many are outdated and no longer serve their original purpose; others are simply giveaways to powerful interests that manipulated them into the tax code to serve their own purposes. 
  • Behind the times. Our state tax code hasn’t substantially changed since the 1930s. Back then, Washington state’s economy was based on agriculture, manufacturing, and purchases of tangible goods, like cars and appliances. Today our state produces advanced software and other high-tech goods and services that weren’t even imagined in the 1930s. Our tax code should reflect our modern, innovative economy if we expect our state budget to support modern, thriving communities. 

Washington lawmakers should focus on bold, equitable revenue reforms that will fix our upside-down tax code, clean up wasteful tax breaks, and invest in the programs that allow our communities to thrive.

 
Research Highlights:


Related Research:

New revenue forecast emphasizes need for action on budget

November 19, 2008 - The Economic and Revenue Forecast Council today announced that the state's expected revenue will be over $400 million short of the amount needed to pay for current state commitments (2007-09). Including the 2009-11 bienium brings the total deficit to over $5 billion. Read the Update

Addressing Budget Deficit Requires Revenue

September 23, 2008 - Due to the economic downturn and a long-term structural problem with Washington State’s budget, we are facing a $3 billion deficit. This calls for comprehensive and deliberative efforts to address the problem. Read the Policy Brief

Revenue forecast analysis

September 17, 2008 - Today's revenue forecast underlines the need to begin a deliberative discussion about the state budget. Read the Update

Forecast further underlines need for revenue

June 20, 2008 - As a state, we have rightfully made significant long-term investments in public education, health care, and early learning.. Read the update

ON POINT: Better Choices for Economic Security

February 12, 2008 - In light of the pending revenue forecast, state leaders have the opportunity to make the right investments now to minimize the effects of the economic downturn on families, communities, and the regional economy.

A Tax Cut for Working Families

January, 2008 - The Washington State Budget & Policy Center has released a simple and effective proposal to provide a much-needed tax break for working families. Our proposal has resulted in state legislation.

New revenue projection is $132 million lower

November 15, 2007 - The Economic and Revenue Forecast Council (ERFC) today released its revised estimate of revenue for the current biennium. Compared to the estimate released in September, revenue is projected to be $132.4 million less. Read the update

Rethinking Property Tax Reform: A series of policy briefs with information and recommendations for Washington State's property tax

November, 2007 - An opportunity exists for Washington State to take a thoughtful and balanced approach to property tax reform.

New revenue forecast brings more welcome news

September 14, 2007 - The Economic and Revenue Forecast Council released more good news today for Washington State. The latest forecast projects an additional $213 million for the 2007-09 biennium. Read the update

New revenue forecast brings welcome news

June 14, 2007 - The State's Economic and Revenue Forecast Council released good news today for Washington State--revenue projections for the 2005-07 and 2007-09 biennia have been increased by a combined $484 million. Today's news provides support for government investment in education, health care, and savings for a rainy day.

Washington State Ranks 36th in Levels of State and Local Taxation

May 22, 2007 - A Center policy brief analyzing a newly released United States Census Bureau data set of state and local taxation levels finds that in 2005 Washington State ranked in the bottom third of states in overall levels of state and local taxation, when measured as a percentage of personal income.

Balancing Adequacy and Equity with a Property Tax Circuit Breaker

March 28, 2007 - State legislators in Olympia are currently considering various proposals for property tax reform. One idea that has not yet been proposed here is a property tax circuit breaker, which would offer tax credits to lower and moderate income homeowners who are paying more than a certain threshold of income in property taxes. Read the policy brief

Updated revenue forecast brings mixed news

March 15, 2007 - The Economic and Revenue Forecast Council (ERFC) released an updated revenue forecast today with both good news and bad news for the state budget. Read the update

Balancing Adequacy and Equity in Washington State’s Property Tax

February 27, 2007 - The property tax in Washington State funds essential local priorities such as education, fire protection, and hospitals. New research by the Center explores the opportunity for the state to ensure adequate funding for these essential public programs while addressing the existing inequities in the system.

Tax Expenditure Reports A Tool for Transparent, Timely Budgeting

February 13, 2007 - A proposal to require reporting on the full impacts and costs of the hundreds of tax exemptions and special tax breaks is once again under consideration by the legislature.
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