It’s Tax Day! Let’s Talk About Washington State’s Tax System

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It’s Tax Day! Let’s Talk About Washington State’s Tax System

By - April 15, 2015

Amid all the buzz today about federal taxes, we’d like to draw your attention to something closer to home: Washington state’s (broken) tax system. As you know, we’ve written about it extensively for years. 

Tax Day April 15Now, as a special Tax Day treat, here’s a roundup of some of the most compelling data that supports why Washington needs to reform its tax system. We would call it the greatest hits, but well, unfortunately it’s a list of biggest misses. 

We’ve also compiled a collection of recent editorials and op-eds that support the message of tax reform and increasing revenue. This support is picking up steam! For good reason

For more explanation on why our tax system is broken — and for the ever-important suggested solutions for how to fix it — visit our Progress Index or this recent blog post. And for analysis of how the current legislative budgets are (and aren’t) taking steps toward reform, read this post.  

Otherwise, read on…

Top 10 Reasons to Reform Washington State’s Tax System

 
  1. Washington has the most upside-down state tax system in the nation. The lowest-income fifth of Washingtonians pay 16.8 percent of their incomes in taxes – seven times more than the richest 1 percent, whose tax rates average 2.4 percent. (Source: ITEP)
  2. Our poorest families also face a higher effective state and local tax rate than those living in any other state. (source: ITEP)
  3. There are more than 655 special interest tax breaks on the books in Washington state – 223 more than in 2000. (Source: Progress Index)
  4. Between 2000 and 2014, tax revenues as a share of the state economy declined by 20 percent. The decline is largely because our system relies too heavily on sales tax, which is applied to a shrinking share of economic activity each year. (Source: Progress Index)
  5. The combined state tax rate for small businesses (1.7 percent) is nearly twice that of big businesses (0.95 percent). (Source: OFM)
  6. The combined state tax rate for hairdressers, accountants, janitors, and other service-based businesses (2.03 percent) is seven times larger than that of manufacturers (0.28 percent). (Source: OFM)
  7. Our tax revenues remain more than $500 million below pre-recession levels, after adjustment for inflation. (Source: schmudget blog)
  8. As of 2013, Washington ranked 37th in the nation in terms of its tax revenue recovery following the Great Recession. (Source: Revenue Trends 2013 policy brief)
  9. Washington is one of only nine states that that doesn’t tax capital gains, or profits from the sale of high-end corporate stocks and other financial assets. (Source: “A Capital Reform” policy brief)
  10. Only four other states – Florida, Nevada, South Dakota, and Wyoming — tax the richest 1 percent less than Washington state. (Source: ITEP

 

Recent Editorials & Op-Eds Supporting Tax Reform (Woo Hoo!)

 


And these are just some highlights of recent editorial articles. To see additional editorials as well as straight-up news coverage about tax reform, check out the website of Washington United for Fair Revenue.

About Melinda Young-Flynn, Director of Communications

Melinda works to ensure the Budget & Policy Center’s strategic communications advance the organization’s policy priorities and mission – and she serves on the organization’s leadership team.

Read more about Melinda