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 Many are outdated and no longer serve their original purpose; others are simply giveaways to powerful interests that manipulated them into the tax code to serve their own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:

1990s state tax cuts have limited Washington State's ability to fund public priorities

December 21, 2006 - The strong economy and resulting revenue growth of the middle and late 1990s led 44 states to cut taxes. Read the full update

New Revenue Forecast Numbers

November 16, 2006 - Today, the Washington State Economic and Revenue Forecast Council released preliminary results from their quarterly forecast of the economy, including updated projections of how much revenue the state will collect in coming years. Read the full update

Fiscal FAQ's: The Estate Tax

October 18, 2006 - “Fiscal FAQs” (Frequently Asked Questions) are a new series of publications by the Washington State Budget and Policy Center that are designed to demystify complex fiscal issues in Washington State.

Updated state economic and revenue projection

September 20, 2006 - Today, the Washington State Economic and Revenue Forecast Council released preliminary results from their quarterly forecast of the economy, including updated projections of how much revenue the state will collect in coming years.

Structural deficit looms despite short-term good news: Budget structure hurts low and moderate-income Washingtonians

June 15, 2006 - Today, the state Economic and Revenue Forecasting Council (ERFC) released their quarterly revenue projection. Our report finds that despite the recent good news that revenue collections have exceeded original projections, Washington's future fiscal balance remains precarious.
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