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This is Part 1 in our “Progress in Focus” series of blog posts highlighting the individual sections of the Progress Index. This post is focused on the revenue section.
Washington state has an upside-down tax system – in which low- and middle-income families pay seven times more taxes as a proportion of their income than the wealthiest families. This gives us the unfortunate distinction of having the most regressive tax system out of all 50 states.
But this broken system is finally getting some attention in Olympia. And it’s about time.
Lawmakers are currently considering several proposals – including enacting a capital gains tax, closing wasteful tax breaks, and reinstating a Business & Occupation (B & O) surtax on large service-industry businesses – that would make the tax system fairer while generating $1.5 billion in new revenue to advance progress in Washington state.
Having enough revenue to invest in public services that we all rely on is critical to our collective well-being. It determines our ability to provide high-quality education, build a world-class health care system, protect our environment, and support a strong middle class. But as our Progress Index shows, our revenue system is causing us to fall behind on many key measures of progress.
Consider these examples of stalled and declining progress, which are just a small sample from the Index:
Without additional state investment, progress on these critical issues, and many others, is impossible. Reforming our state’s revenue system is one of the best things we can do to create an economy where everyone can prosper.
In addition to its regressivity, our tax system has some serious
structural defects. In order for it to become healthier and more able to
meet the needs of this state, these flaws must be fixed (see figure for a summary; and see the full Progress Index to review all the data we use to measure progress). Currently, our tax system:
The proposals currently under consideration by the legislative and executive branches are a step in the right direction to fix our broken revenue system. These proposals would seek to ensure that there are adequate resources to invest in shared prosperity for all Washingtonians.
But more needs to be done. We live in a state known for innovation, so it’s high time that our tax system gets out of the past and starts aligning with the needs of a modern economy. If this happens, we can move in a direction in which every Washingtonian has an opportunity for a bright, equitable future.
To read our additional recommendations for how to improve our state’s revenue system, visit the revenue section of our Progress Index. Stay tuned for “Progress in Focus” blog posts on the other sections of our Progress Index.