How Washington’s tax code can help advance racial justice

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How Washington’s tax code can help advance racial justice

Reforming our inequitable tax code would help undo the damage of generations of racist policies, new brief shows

By - October 3, 2019

Like most U.S. institutions, Washington’s state and local tax code is embedded in a deep history of racism and oppression that continues to harm residents of color across the state. Despite this problematic history, Washington’s tax code can be a potent tool for helping to eliminate some of the barriers to opportunity that persist for communities of color.

Our new policy brief, “Washington’s Tax Code is an Untapped Resource to Advance Racial Justice,” describes how these barriers to economic opportunity are the result of racist policies, in and outside of our tax code, enacted and perpetuated over many generations. From discriminatory taxes on Chinese laborers in the 19th century to attempts to impede on Native American fishing rights to the employment discrimination that persists today, Washington has a lengthy history of implementing policies that benefit white residents at the expense of communities of color.

The brief – the latest in the Budget & Policy Center’s Progress in Washington series – shows that, due to systemic racism, many Washingtonians of color are far more likely than white households to be among those with the lowest incomes (see graph below). And people of color – especially those who are Black, Hispanic, and Native American – are substantially less likely to have high incomes compared to whites.

Click on graphic to enlarge.Graph showing household income by race/ethnicity in Washington state. Shows white households have an equal chance (20%) at being in either the poorest fifth or richest fifth of the population. Black, Native American, and Hispanic households are much more likely to be in the poorest fifth (30% or more) of the population than the richest fifth (10% or less).

Washington state has the most upside-down, or regressive, tax code in nation, in which the poorest fifth of households – a disproportionate share of whom are people of color – pay nearly six times more of their incomes in state and local taxes than the wealthiest 1%. It’s a tax code that makes matters worse for many residents of color who are already struggling to provide for their families.

Lawmakers can and must reform Washington’s tax code so it is no longer another barrier to economic opportunity for families of color. Lawmakers should work to implement the following reforms:

  • Invest in thriving communities by ensuring the wealthy pay their fair share. New taxes on sources of wealth that are heavily concentrated among Washington’s richest, and mostly white, residents – like capital gains, mansions and other high-value real estate, and excessive wages and salaries – would generate new resources for schools, health care, and other investments that would help communities prosper.
  • Reduce taxes for those struggling to make ends meet. Enacting the Working Families Tax Credit, Washington’s state version of the highly successful federal Earned Income Tax Credit, would put cash back into the pockets of hundreds of thousands of Washington households who are working hard for low pay. In addition, amending the state Constitution to allow for “safeguard” property tax credits for lower- and moderate-income homeowners and renters would help those living in areas of the state with rapidly growing property values to remain in their homes and communities.
  • Build and maintain equitable budget rules. Keeping racist “supermajority” laws off the books in Washington state would help ensure that the interests of communities of color are justly represented in the legislature. Such laws, which were recently struck down by the state Supreme Court, gave a small group of anti-tax lawmakers veto-power over all state tax policy decisions. Lawmakers should also repeal damaging revenue growth restrictions that sap resources from communities. And they should build a more robust rainy day fund to preserve community investments during the next recession or state emergency.
About Andy Nicholas, Senior Fellow

Andy specializes in state budget and tax policy. Since joining the Budget & Policy Center in 2009, he has served on a Legislative Task Force on Tax Preference Reform and has conducted numerous analyses of Washington state’s tax code.

Read more about Andy