Progressive Taxation

Report: Washington State Taxes Are Still the Most Inequitable in the Country

Families who make less than $24,000 a year—the poorest 20 percent of the state—pay an estimated 17.8 percent of their income toward taxes.

By Hayat Norimine and Christina Ausley October 17, 2018

In Washington state, the less money you make, the larger your percentage of income goes toward taxes. 

A study from the Institute on Taxation and Economic Policy released on Wednesday concludes that Washington state still has the most regressive taxes in the U.S., meaning the poorest households pay a disproportionate amount of taxes compared to the richest households in the state.

The study takes into account new laws as of September and uses 2015 income data. Families who make less than $24,000 a year—the poorest 20 percent of the state—pay an estimated 17.8 percent of their income. Those making more than $545,900—the richest 1 percent—pay just 3 percent. 

"Lower-income people are having to work a lot harder to meet their tax obligations....People who are wealthy, their taxes here are negligible," said Matthew Caruchet, spokesperson for the Economic Opportunity Institute. "I don't think that fits with the way Seattle sees itself, as a city that cares about what is fair or what is just." 

According to the report, places with low taxes overall ultimately hurt low-income families—"low taxes" generally mean the taxes that do exist hit poor people hard.

Washington is one of seven states in the U.S. that doesn't have an income tax, a large part of the reason it ranks so poorly, according to the report. Six of the seven states without an income tax made it in the top 10 among most inequitable tax systems (Texas, Florida, Nevada, South Dakota, and Wyoming). 

Instead, Washington heavily relies on sales or "consumption" taxes, which make up more than 60 percent of the state's tax base, according to the report. The average among states is 35 percent.

Those taxes hit low-income people the hardest, assuming everyone buys essential goods and services; property taxes also affect low-income households disproportionately, since landlords often raise rents to make up for higher taxes. 

The Seattle City Council last year approved a city income tax that was struck down by the King County Superior Court—one that would apply 2.25 percent tax on income above $250,000. The city appealed the decision and hopes it will eventually be heard by the state Supreme Court. While city officials planned to start collecting revenue from the tax in 2019, that will depend on whether higher courts take up the issue in time. 

An income tax has been illegal in Washington since the state Supreme Court in the 1930s narrowly ruled it unconstitutional. Statewide voters have since struck down income tax measures eight times; and in 2010, the last time, 64 percent of voters opposed it. 

Show Comments