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Wednesday, January 30, 2013

We're Number One! Washington Retains "Most Regressive Tax Structure" Honors!

Posted by on Wed, Jan 30, 2013 at 2:03 PM

  • Institute on Taxation and Economic Policy

The Institute on Taxation and Economic Policy, a progressive DC-based think tank, just released its latest edition of “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” and congratulations: Washington state still leads with the most regressive tax structure in the nation! And by far.

According to the latest data, the bottom 20 percent of Washington households—those earning less than $20,000 a year—pay a crippling 16.9 percent of their income in state and local taxes, whereas the top 1 percent—those earning more than $430,000—pay only only 2.8 percent. Hooray for the job creators! Fuck the poors!

The culprit: Washington state's absurd over-reliance on the sales tax. Our sales and excises taxes generate over 61 percent of state and local tax revenue, compared to a national average of only 34 percent. And since the lower your income the more of it you spend on taxable goods and services, the higher your effective tax rate.

No income-tax states like Washington, Texas and Florida do, in fact, have average to low taxes overall. Can they also be considered “low-tax” states for poor families? Far from it. In fact, these states’ disproportionate reliance on sales and excise taxes make their taxes among the highest in the entire nation on low-income families.

Yeah, anytime you find your state lumped in together with Texas and Florida in anything but grapefruit production, it generally isn't very good news.

We have a tax system in which Washington's poorest households pay six times the effective tax rate of our state's wealthiest—our middle class nearly four times the rate. Essentially, if you earn over $400,000 a year you live in one of the lowest taxed states in the union, but if you earn under $20,000 a year you live in the highest.

So where's the outrage? If our editorial boards had a shred of decency and fairness they would be screaming at lawmakers to fix this gross and embarrassing inequity. But they don't. And our citizens are no better, consistently rejecting out of ignorance and fear any ballot measure that might inch us towards tax fairness.

Washington state is a fucking disgrace, and if we don't do anything to eventually fix our regressive and structurally deficient tax structure, then we collectively deserve the economic stagnation it will inevitably bring. But, you know, we don't have an income tax, so yay for us!

  • Institute on Taxation and Economic Policy


Comments (41) RSS

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Christ on a bicycle, we can legalize gay marriage AND pot, but we can't fix this?! Goldy, tell us all what we should be doing to make it happen!
Posted by Bethany Jean Clement on January 30, 2013 at 2:18 PM · Report this
Urgutha Forka 4
So, according to the republican mantra, those states with the most regressive taxes should have the lowest unemployment (the whole "don't tax the 'job creators'" baloney).

Anyone have any data on that?
Posted by Urgutha Forka on January 30, 2013 at 2:25 PM · Report this
Goldy 5
Bethany @1, Well, obviously, we need to tax income and/or intangible wealth. Politically, I think the most likely foot in the door would be some sort of high earners or capital gains tax dedicated toward a popular program like K-12 or early learning. But it's take a lot of work to educate voters.
Posted by Goldy on January 30, 2013 at 2:35 PM · Report this
Will in Seattle 7
It's not just the sales tax, it's the large exemptions for corporate taxes and the lack of capital gains or asset taxes, as well as the property tax exclusions for "non-profit" (which is what rich people's hobbies are).
Posted by Will in Seattle on January 30, 2013 at 2:37 PM · Report this
Goldy 8
@4 There is no correlation. SD has one of the lowest unemployment rates in the nation, NV one of the highest. The rest of the no-income tax states are mostly middling.
Posted by Goldy on January 30, 2013 at 2:39 PM · Report this
Max Solomon 10

What Will Eyman Allow?
Posted by Max Solomon on January 30, 2013 at 2:50 PM · Report this

First of all you can't put Texas and Washington in the same category because the property taxes in Texas are twice or higher what they are in Washington.

Property taxes are proper way to fund all the infrastructure, education and transit...and Texas does that successfully.

However, the biggest deadbeats around are the property owners who are paying a pittance compared to other states...and that's true even on a county by county basis...King County paying some of the smallest taxes, yet at the same time its residences yelping for premium governmental services!

Seattle if you want to find a culprit for the missing revenue, look in the mirror, homeowners. You're the cheats!

Posted by Supreme Ruler Of The Universe http://_ on January 30, 2013 at 2:55 PM · Report this
Rotten666 12
Scrap the sales tax and replace it with an income tax. I don't see what the problem is.
Posted by Rotten666 on January 30, 2013 at 2:57 PM · Report this
This gives the poor incentive to work, cmon guys
Posted by Seattle14 on January 30, 2013 at 3:11 PM · Report this
@ 3 We will but this time not in a GOP heavy year
Posted by Seattle14 on January 30, 2013 at 3:13 PM · Report this
TheMisanthrope 17
Could somebody correct @11, please. It's a well known fact that we get less than we put in.
Posted by TheMisanthrope on January 30, 2013 at 3:15 PM · Report this
@ 15 Why don't you move to Oklahoma you right wing nut
Posted by Seattle14 on January 30, 2013 at 3:15 PM · Report this
Will in Seattle 19
@11 however, sales taxes on primary homes, with no limit on stakeholder exemptions, are non-existent in TX and FL. WA has a 1 percent tax.

This makes rich people more exempt, since there is a base exemption in WA state.
Posted by Will in Seattle on January 30, 2013 at 3:28 PM · Report this
TheMisanthrope 21
@18 You just have to get along with anon troll. He's awesome, especially when he goes into conniptions like this.

And, good on you Goldy for being brave enough to post this in Slog. Maybe we can make this post into an actual article, since Slog has been claimed to not have any journalistic integrity, by The Stranger staffers, but the articles carry some semblance of authority.

So where's the outrage? If our editorial boards had a shred of decency and fairness they would be screaming at lawmakers to fix this gross and embarrassing inequity.

Including The Stranger's editorial board! This is the second time they've acknowledged this on Slog in a whole 4 months. Once after nagging the shit out of Goldy in September, and now this time. How come you haven't been rallying against the regressive tax structure? How come you haven't made inquiries into how Olympia wants to fix it if they succeed in their lawsuit against 1185 and its ilk?

Why didn't The Stranger rally against the regressive tax increases in 2010? Why is The Stranger more concerned with increasing taxes, and the regressive tax structure, than with fixing our own tax structure? How can they claim to be progressive?

These are actually vital questions...
Posted by TheMisanthrope on January 30, 2013 at 3:30 PM · Report this
TheMisanthrope 24
@23 Irony isn't your strong suit, is it...
Posted by TheMisanthrope on January 30, 2013 at 3:42 PM · Report this
Goldy 25
@21 Nobody in Washington has written more extensively on tax regressivity than I have. From my very first post at HA, a manifesto of sorts:

I intend to help educate the public and the media about an astonishingly regressive tax system that gives billions of dollars of tax breaks to wealthy special interests while placing an almost unbearable burden on the backs of middle- and low-income families. I intend to work for real, progressive, tax reforms that provide meaningful relief to those who need it most, assure adequate funding for essential public services, and create the kind of positive, rational business environment that all citizens want.

No doubt when it comes to tax structure, I have failed to achieve my goals. Yet. But I don't accept as valid the criticism that, in the meanwhile, it is somehow hypocritical of me to support regressive taxes to fund necessary services, when those are the only taxes available. For example, given a choice between a regressive tax and dismantling our public transit system (as is happening in Pierce County), I'll choose the regressive tax, because that is the lesser of two evils.

I'm doing my best to work within the system that exists, while at the same time doing my best to change it. And I deeply regret that on that latter point, my best has not been good enough. But that's what I have to work with.
Posted by Goldy on January 30, 2013 at 4:16 PM · Report this
Obviously the numbers pointed out by Goldy show that we need a balance FARE approach when it comes to taxes in this state I know lots of people who fear out of control spending! Most of us are social liberals, but we still want some incentive that income taxes will need a super majority to EVER be raised! We need to sell an income tax like we sold legal Weed "New Approach Washington I-502" by Education on our broke tax system and incentives to the people that income taxes won't be misused!
Posted by jamesnseattle1 on January 30, 2013 at 4:18 PM · Report this
According to the latest data, the bottom 20 percent of Washington households—those earning less than $20,000 a year—pay a crippling 16.9 percent of their income in state and local taxes.

I agree that this figure is crippling, but a large chunk (more than the general sales tax) is from "Sales & Excise on Business." Are they talking about small business owners making less than 20,000 per year? That figure seems really high, so maybe I'm missing something.

Hopefully the legislature gets together and comes up with some honest income tax legislation. I abstained from voting for the previous one because their claims of "it'll only apply to people earning over 250,000 per year!" were horseshit; the state had every intention of lowering that cap the first chance they got. I'm not opposed to a state income tax, but I am opposed enough to politicians lying to my face that I wasn't willing to vote in favor of the measure. Put the actual plan on the ballot and I'll fill in the "yes" bubble.
Posted by doceb on January 30, 2013 at 4:35 PM · Report this
TheMisanthrope 30
@25 No, you haven't been trying your best to change it. You don't get off that easy by saying you have a manifesto to make a change about it. You mention it twice a year, at most. I think before September, the last time The Stranger made a statement about it may have been 2011? 2010?

You, and The Stranger, have been peddling the regressive tax structure for years. You, and The Stranger, have not made one iota of effort to actually inquire at, report on, or officially remark on change. You, and The Stranger, have been content to put the blame on Eyman and 1185 (and its preceding issues). The Stranger, in 2010, was completely content to go with the regressive tax structure during the lapse between Eyman Initiative #1 and Eyman Initiative #2.

If you're so intent on changing the system, FUCKING DO IT. Put this in the main paper. Make it a FEATURE. Give it pages by filling in with interviews from representatives, state senators, the proponents of the lawsuit against Eyman's initiatives.

But, if you're just going to shill for every regressive tax, without even noting its regressive nature, then you should STFU. You're not helping. You're just supporting and endorsing the tax system we have in place, giving you the special label of tax-and-spend liberal; it doesn't give you the label of progressive you probably want to be. At this point, it make take a complete breakdown of the system in order to fix it. I don't know what the answer is, but I know what the answer isn't.

And, your manifesto on HA isn't proof that you support that change. If anything, it is proof that you have failed to live up to your ideals.
Posted by TheMisanthrope on January 30, 2013 at 4:39 PM · Report this
TheMisanthrope 31
@28 I do believe they are talking about S&E taxes that apply to businesses, who passes on the charges to us, the consumer.
Posted by TheMisanthrope on January 30, 2013 at 4:47 PM · Report this
@29: the breakdown for the lowest 20% is as such:

Sales & Excise Taxes 13.0%
split into:
General Sales—Individuals 4.1%
Other Sales & Excise—Ind. 4.1%
Sales & Excise on Business 4.8%
Property Taxes 3.9%
split into:
Property Taxes on Families 3.9%
Other Property Taxes 0.1%

Total: 16.9%.

I think their general sales taxes figures are about right.
Posted by doceb on January 30, 2013 at 4:51 PM · Report this
Goldy 36
@30 Google "Goldy regressive tax" and "Goldy regressive tax" -- I'd wager you'll find dozens of posts by me on the topic.

So no, I don't buy your premise. At all.
Posted by Goldy on January 30, 2013 at 5:31 PM · Report this
emma's bee 38
@30: I think you're full of shit on this one, speaking as a non-Washingtonian who's been reading Slog lo these many years and has seen Goldy inveigh against your regressive tax structure on many occasions.

But, damn, WA, that is some depressing company to be leading.
Posted by emma's bee on January 30, 2013 at 5:58 PM · Report this
TheMisanthrope 39
@36 in print, you have not mentioned it in all of 2012. Not in your features, nor your news. And never once in all of your features.

So far, on google, after 50 pages, I found literally 4 slog posts mentioning regressive tax structure in the post itself. One of which was acknowledging we have one and saying we aren't paying enough taxes anyways.

Should I go further? I'm finding "dozens" hard to believe.

P.S. you can check your features yourself quite easily. Just click on Goldy, and there's a menu for it. No need to Google.
Posted by TheMisanthrope on January 30, 2013 at 6:11 PM · Report this
TheMisanthrope 40
In fact, the last time our regressive tax system got any sizable print in an article penned or co-penned by you were a handful of paragraphs buried in an Occupy article in October 2011 with a short interview with Hanauer.
Posted by TheMisanthrope on January 30, 2013 at 6:19 PM · Report this
skjaere 41
If you think this is appalling and should change, do be sure to contact your representatives. Complaining on the internet changes very little.
Posted by skjaere on January 30, 2013 at 6:24 PM · Report this
TheMisanthrope 43
@41 I have. Mine think that a Capital Gains tax will solve everything. Feckless nitwits they are.

Goldy, and Emma's Bee, here's a link for ease of clickitude.
Posted by TheMisanthrope on January 30, 2013 at 6:29 PM · Report this
Westlake, son! 45
Property tax is where it's at.

Don't nobody own property. You didn't build that, that land/property was here for millions of year before you. Want to put something on it, like a house or a building or parking lot or dirt farm? Pay up, you owe society for the right to claim that land.
Posted by Westlake, son! on January 30, 2013 at 6:45 PM · Report this
Better think twice about kicking all the rich people out of the state, a high percentage of a dollar is a lot less than a small percentage of thousands.......or is the Stranger just bad at math.
Posted by dmanjam on January 30, 2013 at 10:20 PM · Report this
GeneStoner 49
When I saw that chart I thought "A fool and his money are easily parted."

The key takeaway is: don't be stupid and let the government take a bunch of your money.

However, because the poor use more government services than the rich, its only fair they pay more...
Posted by GeneStoner on January 31, 2013 at 1:03 AM · Report this
TheMisanthrope 51
@48 yes and no. Poor people spend all their money, so S&E taxes are the highest percentage of their income. Soon after you get out of the lowest tax bracket, you have untaxable wealth like 401(k) savings and other things. As you get even higher, last I remembered, there were even tax breaks on luxury items like fur coats, luxury cars, and planes and other such items, with the logic being that rich people could go elsewhere to buy shit without being taxed for it, but if we keep them in state they won't leave. Also, it's supposed to entice other big spenders to come buy luxury items and spend money at other auxiliary places like hotels, rental cars, and restaurants.

I need citation for that last two bits because I'm not sure what was getting tax breaker or if it got repealed (or if it existed in the first place, but I'm sure I read about it in Seattle Times or P-I).

@49 That logic is "I've got mine, fuck you." It's terrible and it should be stated as terrible. We're all in this together...or we should be except the rich people and people like you keep saying fuck you to the people they're above.
Posted by TheMisanthrope on January 31, 2013 at 7:08 AM · Report this
TheMisanthrope 53
@52 You're right. The article I found mentioned that we had sales tax exemptions on things like cosmetic surgeries and exemptions for all personal property taxes to all non-residents.

It then mentioned that people came from out of state to buy things like fur coats and luxury items without paying the sales tax. But, it was a fucking poorly written article, which put the two things together like there was a sales tax exemption specifically on fur coats.

Stupid crappy articles.
Posted by TheMisanthrope on January 31, 2013 at 9:48 AM · Report this
Dominic Holden 54

TheMisanthrope @ nearly every other comment: You're completely wrong to claim we haven't adamantly supported progressive taxation--I've made it a priority of our coverage since I became news editor. From before the 2010 campaign, in our endorsement, through the election cycle, and even after the vote, we supported a high-earners income tax as a way of ending the regressive tax structure. We even kept up the drumbeat for progressive taxation the year after that initiative failed. There's tons more over the years: op-eds, polling analysis, frequent posts about regressive taxation, etc. I'm not going to waste any more time on your fake argument except to say that the SECB even based many of its endorsements last year primarily on those candidates who we believed were capable of advancing an income tax, both in our primary election and in our general election endorsements. Your line of attack, as usual, is easily disproven bullshit.

Posted by Dominic Holden on January 31, 2013 at 11:32 AM · Report this
Theodore Gorath 55
@54: But that's just like, your opinion, man.
Posted by Theodore Gorath on January 31, 2013 at 11:42 AM · Report this
Soupytwist 56
@54 - The Stranger has been the ONLY organization for progressive taxation in Washington. And that's part of the problem. There isn't any voice for it statewide. Bill Gates, Sr. for all the good work that he's done, somehow managed to not convince his son to be an advocate for it. And tax reform would take that kind of money and high profile in the face of people like Eyman and his backers (who ironically spend far more on initiatives than they would in paying taxes).
Posted by Soupytwist on January 31, 2013 at 11:58 AM · Report this
TheMisanthrope 57
@54 I think its telling that of ALL the links you posted, the majority were in 2010. So, you mentioned it twice, in print, in ALL of 2012. And, exactly once in print in 2011.

Oh yeah, that's a strong drum beat. BTW, 10 links over the course of 3 years is 3.33 links per year (and that's INCLUDING slog). That's a HUGE drum beat man. Really fucking loud. /Sarcasm

Look, Dominic, if The Stranger spent as much ink bleating about the progressive tax structure as they do about bikes vs cars (two columns in the paper in two weeks), or pot (you alone have 3 pot-exclusive articles over the past year), or even as much digital ink and real ink as you guys spend bitching about Eyman's initiatives, I wouldn't be on here bitching about how you're not beating the regressive tax structure drum hard enough, or loud enough.

You're entitled to your opinion, but the drum you beat for regressive taxation is quiet and small.
Posted by TheMisanthrope on January 31, 2013 at 12:38 PM · Report this
Goldy 58
@57 You have this weird fetish about print. Print may be where the bulk of our ad revenues come from, but our online audience is much larger.

Also, I know some might disagree, but we're a NEWSpaper. That means that our primary obligation is to cover the news, not create it. On Slog I'm free to do all the advocacy I want, as long as I get my other chores done. But in the paper, we mostly write about current events. And currently, there's little opportunity to write about implementing an income tax.
Posted by Goldy on January 31, 2013 at 2:24 PM · Report this
TheMisanthrope 59
@58 There's a lot of opportunity to write about implementing an income tax. There's this new study. There's the current lawsuit going through regarding the Eyman initiatives. There's the tolls on both the tunnel and the bridges. There was the car tabs. FFS, you're the king of conflation. You conflated a whole post about a nightclub fire into a gun control post. If I could write as well as some people, I would be hammering this point home again and again in wherever I got hired to write.

Even in your post about the bridge tolls you posted 39 minutes before you put up this asinine comment, you failed to mention regressive taxes, when tolls and fees are some of the most severely regressive taxes in existence. Thank god for some of the commenters.
Posted by TheMisanthrope on January 31, 2013 at 4:05 PM · Report this
If you are truly an accountant and auditor remind me to be glad that I don't live in your area.

First: When doing this exercise you have to run the numbers for both renters and homeowners. If you don't do this you are deliberately skewing the numbers to the low end. Altho by not taking the portion of their rent that goes to the property owners taxes into account you are also being deliberately dishonest in running the numbers. Everyone with a dwelling that they pay for is paying that property tax. Rent may be non-taxable but that is only because the tax is built into the price. Anyone that doesn't understand that really needs a lesson in economics.

Next: When you note that low income earners can apply for a credit or discount on some taxes you are assuming that a) they know they can apply and b) that they actually will do so. Figure out how many qualify for those credits and discounts and how many actually take advantage of them when running your numbers.

Same section: You are quite correct in noting that taxes on the internet are low. By Federal law they are non-existent. You can be taxed on things you purchase over the internet (subject to current and future lawsuits by various companies on the internet) but internet access in and of itself has ZERO taxes on it. This is something you should know. If you want to know what happens when a fee of any sort (and yes the Federal Government considers fees and taxes to be identical in some situations) gets applied to internet access just ask the cell phone companies how many millions they paid out. But then again as an accountant and auditor you knew all that and were just sloppy in typing it out right? You can charge all you want for the phone and cable but you don't get to tax internet access. If state of WA is taxing internet access without Federal approval (and it would take an act of congress to get that approval) then I really pity your state budget when the feds tell the state to a) refund ALL of those taxes and b) pay the feds x amount in penalties for doing something they know they aren't allowed to do.
Posted by Romial on February 2, 2013 at 12:10 AM · Report this
sloegin 62
Previous income tax initiatives crash and burn because they're not tied to the outright removal of another tax. Poors and mids won't vote for it, because they're heavily overburdened already, and the rich won't, because they're a bunch of moochers.
Posted by sloegin on February 7, 2013 at 1:07 PM · Report this
Poor people get the advantage of the earned income tax credit.
Posted by jeffy on February 21, 2013 at 8:59 PM · Report this

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