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We're Number One at Taxing the Poor

Study Finds Washington State Maintains Nation's Most Regressive Tax System

We're Number One at Taxing the Poor

Washington State may be progressive when it comes to gay marriage, pot, and electing Democratic governors, but when it comes to our tax system, not so much. According to a new report from a DC-based think tank, Washington continues to boast the most regressive state and local tax system in the nation—by far.

According to the latest data from the Institute on Taxation and Economic Policy (ITEP), the poorest 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, while the top 1 percent (those earning more than $430,000 a year) pay only 2.8 percent. That compares to a national average of 11.1 percent and 5.6 percent respectively.

Hooray for the job creators! Fuck the poors!

The culprit? We don't have an income tax and rely heavily on sales taxes.

"No income tax states like Washington, Texas, and Florida do, in fact, have average to low taxes overall," the report concludes. But "these states' disproportionate reliance on sales and excise taxes make their taxes among the highest in the entire nation on low-income families."

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

Washington relies on sales and excise taxes for more than 61 percent of its state and local revenue, compared to a national average of just 34 percent. And the lower your income, the more of it you spend on taxable goods and services (thereby creating a higher effective rate). The result is a tax system in which Washington's poorest families pay six times (and our middle class, four times) the effective rate of that paid by our state's wealthiest families. So the answer to the constant debate over whether our taxes are too high is: It depends on who you are. If you earn more than $400,000 a year, you live in one of the lowest taxed states in the nation, but if you earn less than $20,000 a year, you live in the highest.

To put it another way, suppose a politician were to propose a state income tax in which the poorest 20 percent of households paid a 16.9 percent rate, the middle 60 percent a 10.5 percent rate, and the wealthiest 1 percent a tiny 2.8 percent rate. You'd think they were fucking crazy, right?

Well, that's pretty much the effect of the tax system we have right now. recommended

 

Comments (30) RSS

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Jeremy Janson 1
You're surprised? You have a sales tax and one of the highest gas taxes in the country! And now, in addition to having an absurdly high gas tax, you think you need tolls.

In fact, really, this is only official taxes. If you factor in the unofficial tax of "Growth Management" and environmental regulation, the top 1% have a NEGATIVE tax rate because you're massively increasing the price of their real estate and the lowest 20% have full-time jobs and still can't find a place to live. You know, I was looking at real estate in L'Anise, Michigan, a small village on the Upper Peninsula - did you know you can buy a house for $15,000 there? It has modern utilities, a kitchen, 2 beds and a bath, and its only a 10 minute walk from Lake Superior. Did I mention that there's EVEN MORE open land and parks and recreaton than you have in Seattle? Now I'm not saying this place is ever going to be that, but it makes you think, don't it?
Posted by Jeremy Janson http://hailingfromgeorgia.blogspot.com on February 6, 2013 at 11:36 PM · Report this
2
Good goin', Goldy! Behold progressive Pugetopolis.

This rotting cod belongs in its entirety to the Washington State Democratic Party and all the crocodile tears it sheds for fairness and human progress. Somewhere locked safely away deep underground in Olympia or Seattle in an unmarked file folder written in Sanskrit is a copy of Ron Sims' 2004 Income Tax plan from the gubernatorial primary. Helluva plan. It is a monument to Ron's courage as much as it is to his party's cowardice.
Posted by Paddy Mac on February 7, 2013 at 8:51 AM · Report this
3
We are saved from plastic bags, however.
Posted by Paddy Mac on February 7, 2013 at 8:52 AM · Report this
Jeremy Janson 4
#2, read my post more carefully next time. I agree with you pretty much fully. I however would complain less about the Income Taxes they didn't enact and more about the GMA and wasteful Mass Transit bullcrap they did.
Posted by Jeremy Janson http://hailingfromgeorgia.blogspot.com on February 7, 2013 at 2:10 PM · Report this
5
I like how the percentages are the regressive portions, not the actual amounts.
The bracket breakdown is
16.9% tax = $3,380
2.8% tax = $12,040 a bit over 3x as much $$.

As a percentage, 17% is obviously more than 3%, but your argument has a bit of a disconnect when broken down into dollars.
Given that the higher earners likely own proportionally more expensive property, and the lower earners still pay these taxes via rents, the upper income brackets probably pay more $ in Real Estate taxes as well.

What is your point again?

Oh, yes, percent of FAMILY income paid as tax.
IF we are talking about families, why are you not including the benefits families recieve vs. individuals or couples sans children?

Just asking.
Posted by Nuclear Marc on February 7, 2013 at 2:45 PM · Report this
6
On the other hand, compare WA with OR, the Appalachia of the west coast. Don't like WA? Move to Portland where the job training program is accomplished by preventing motorists from pumping their own gas.
Posted by billwald on February 8, 2013 at 5:57 PM · Report this
TheMisanthrope 7
@5 Seriously?

You think solid amounts should be the basis of equality? You think that somebody who is only making $20,000 should pay $3,000 while somebody making over 20 TIMES that amount should only pay 3x as much?

First of all, the person making $400k can afford to pay a bit more than the person who is only making $20k. Base cost of living being what it is. Secondly, tax should, at minimum, be flat...and we should strive to be progressive in our taxation.

Stating flat amounts is the biggest deception in terms of taxation. All taxation is based on percentages. We shouldn't be nearly as regressive as we are.

If everybody paid their fair share, fair being defined as a percentage of their income, then our government wouldn't be hurting. But, our government is fully intent on increasing our regressive tax structure, and none of our politicians have stated a plan to change that which would have any significant change.
Posted by TheMisanthrope on February 8, 2013 at 7:46 PM · Report this
Chelydra_serpentina 8
@5 - Or you could look at it this way:

In your example, the 16.9% payer pays $3,380 in state taxes, leaving $16,620 to pay for everything else for the year. (Everything else = other taxes, food, medical, mortgage/rent, gasoline, insurance, clothing, emergencies, and all other other necessities and luxuries.) $16,620 isn't a hell of a lot of money to live on, though from where I am, I'd be swimming in riches if I made that.

The 2.8% payer pays $12,040 in state taxes, leaving $417,960 to pay for everything else for the year. $417,960 buys a hell of a lot of food, medicine, clothing, and mortgage/rent. Even at a 16.9% tax rate, the same household would pay $72,670 in taxes. Pretty damn steep, but that still leaves $357,330 left to pay for everything else.

The less you earn, the more a regressive tax system cuts into your basic survival expenses. Lower income earners don't suffer under a regressive tax system because they can't buy a new car every year or send their kids to private schools. They suffer because they struggle to meet basic needs. How does society benefit from that kind of system?

And low income earners aren't just the uneducated lazy asses in society. They're people who can't find anything else. They're people who can't find day care or are too sick to work. They're the kind of people who cook your food, clean your office at night, or clean up when great-granny in the nursing home soils herself. You know, that stuff no one wants to do, but somehow merits shit pay anyway.
Posted by Chelydra_serpentina on February 8, 2013 at 7:48 PM · Report this
Chelydra_serpentina 9
Aaaaand The Misanthrope beat me to it. Goddammit.
Posted by Chelydra_serpentina on February 8, 2013 at 7:50 PM · Report this
10
Let's put poor people on stationary bicycles and have them generate electricity so we can recharge our iPods and spend more time reading the Stranger, anc complain about how unfair it is.

p.s.: Make sure to take their guns away.
Posted by Unbrainwashed on February 8, 2013 at 10:42 PM · Report this
11
And low income earners aren't just the uneducated lazy asses in society. They're people who can't find anything else. They're people who can't find day care or are too sick to work. They're the kind of people who cook your food, clean your office at night, or clean up when great-granny in the nursing home soils herself. You know, that stuff no one wants to do, but somehow merits shit pay anyway.

Spoken like a true whiner. Hey, come to think of it, I think I will have fries with that Diet Coke. And could you put a rush on it? I have to meet in five minutes with Mike McGinn about my new arena. You know, the one that the Stranger supported. I tipped McGinn well, and tipped the Stranger well. And there's a buck in it for you.

Thanks!

- Chris Hansen
Posted by Unbrainwashed on February 8, 2013 at 10:51 PM · Report this
Chelydra_serpentina 12
@11: So what does a non-whining low income worker sound like? "Bang!" from when I put a gun in my mouth because I'm worthless and might as well end it now? Then you'd probably bitch because you'd think I expect the gummint to pay for my funeral.

Seriously, your world would fall apart without low income workers. You'd never eat, you couldn't buy a thing in any store, you wouldn't be able to use a cell phone because there wouldn't be any functioning towers, and you would have to use your own hands to lift great granny out of bed, set her on the toilet, wipe her ass when she's done, and wipe the seat and the floor where she missed.

By the way, I don't sling burgers. I work for the public library. But I'm sure that's not contributing to society as far as you're concerned.
Posted by Chelydra_serpentina on February 9, 2013 at 12:23 PM · Report this
13
Washington's very regressive state-wide system of taxation has been on the books for three generations;hardly new for this schizo state,nor is it unpopular:it is helping to do what many racially "White" residents of the Evergreen State want it to do:keep out what they hypocritical asses consider to be "riff raff":Non-"Whites",members of the Lower Class;Leftists.Kinda like California's Proposition 13 . . . . ----- http://www.inequality.org
Posted by 5th Columnist on February 9, 2013 at 12:51 PM · Report this
14
If the Klanazis of both the Dems and the Goppers don't want to implement an income tax (and the cities and counties can't without Our State's gubmint amending Our State CONsTITution),then file a petition to get a ballot measure that would implement a state WEALTH tax.
Posted by 5th Columnist on February 9, 2013 at 12:53 PM · Report this
15
#12, why on earth would you think I care? Your mayor and city council gave me $200 million for my arena. Money comes to money. You can go die in the gutter for all I care.

Cheers,

Chris Hansen

p.s.: Mike McGinn and the publisher of the Stranger told me to tell you they couldn't give a shit either.
Posted by Unbrainwashed on February 9, 2013 at 3:58 PM · Report this
16
And just wait until I get into the marijuana business. Think you're screwed now? You ain't seen nothin' yet!

- Chris
Posted by Unbrainwashed on February 9, 2013 at 4:31 PM · Report this
17
How do state income taxes work with federal income taxes? Do you do your state taxes first and then deduct that amount from federal or do both state and federal each take a percentage of your total income?
Posted by cliche on February 11, 2013 at 1:01 PM · Report this
18
#17, you deduct last year's income tax payment from this year's federal taxes. If you got any refunds -- that or federal -- and took the money rather than applied it to the following year's taxes, then those refunds count as income.
Posted by Unbrainwashed on February 11, 2013 at 7:20 PM · Report this
19
To clarify: Last year's state income tax payment is an itemized deduction on last year's federal tax form, which you will file this spring.

Example: This year, you'll be filing 2012's taxes. If WA had a state income tax (which it never will, by the way, but just as a hypothetical), your W-2 would list your state income tax withholding. That would be your state income tax deduction on your 2012 federal return. If your itemized deductions (including state taxes, local property taxes, charitable donations, etc.) exceeded your standard personal exemption, then you'd get an extra federal deduction.

If you got a refund from the state in 2012 when you filed your 2011 state income taxes, you'd have to include the amount of that refund as part of your taxable income on the 2012 state and federal forms -- unless you had earmarked your 2011 state return to apply to your 2012 state tax liability. There are line items for all this on the federal 1040 form, and there are similar line items on state income tax forms.

But, this is all theoretical. WA State doesn't have an income tax, and the last time it went to the voters it lost in every single county in the state. Goldy and his liberal friends can (and will) huff and puff about that, but it is not going to change -- ever.
Posted by Unbrainwashed on February 11, 2013 at 7:32 PM · Report this
20
Oh geez, another glitch.

"If your itemized deductions (including state taxes, local property taxes, charitable donations, etc.) exceeded your standard personal deduction ..."

If this is unclear, ask H & R Block. They can undoubtedly explain it better than I just tried to.
Posted by Unbrainwashed on February 11, 2013 at 7:35 PM · Report this
21 Comment Pulled (Spam) Comment Policy
22
Something doesn't add up. Besides sales tax, what taxes affect the poorest 20%?

In seattle, the sales tax is about 10%. So, in order to pay $3000, you would have to purchase $30K of taxable goods. Or there would have to be another really high tax that bumps the average up to 16.9%. That would take an enormous amount of tabacco and alcohol!

Considering that rent, food, and most services are not taxed, it seems that the overall tax rate would be, in fact, much lower than 10%. Maybe closer to 5%.

This study needs some roots to be credible!
Posted by pragmatition on February 12, 2013 at 10:36 AM · Report this
23
I voted against the income tax last time. And I'll do the same if a similar proposal comes to a vote.

But I am not opposed to an income tax. In fact, I think an income tax would be far preferable to the system we have now.

In order to get my vote however, there needs to a be a constitutional amendment eliminating the sales tax and property tax.

Aside from being regressive, the sales tax is incredibly expensive to administer and collect. A small army of accountants is put to work every month in Washington calculating tax payments and filling out forms. I don't wish for a bunch of unemployed accountants, but the current system is very inefficient. It would be far easier to deduct and collect a state income tax. And eliminating the sales tax would improve our State's competitiveness in online retail.

With regards to the property tax - if you are already taxing someone's wealth (income tax) there is no need to do it a second time with a property tax. Just set the income tax rate accordingly. And for those of you just joining the real world - everybody pays property tax, even renters, even the poor.

Tax everybody equally (the same rate with no deductions) and require a public vote to raise the tax rate. Then you got yourself a damn near perfect tax system.
Posted by David in Shoreline on February 12, 2013 at 6:43 PM · Report this
24
If you want to see how a state income tax works, go to the Colorado site:

http://www.colorado.gov/cms/forms/dor-ta…

This is the download for Form 104, the Colorado equivalent of the IRS 1040.

It'll give you a pretty good idea how it's done.

I've lived in Colorado for many years and keep thinking of moving to Washington. I am quite certain that my taxes would be higher in Washington due to the fact that gasoline tax, property tax and sales taxes are all higher than in Colorado. Our income tax is a flat 4.63% - less than the sum of the WA taxes.

.
Posted by Daves8 on February 12, 2013 at 9:56 PM · Report this
25
If you want to see how a state income tax works, go to the Colorado site:

http://www.colorado.gov/cms/forms/dor-ta…

This is the download for Form 104, the Colorado equivalent of the IRS 1040.

It'll give you a pretty good idea how it's done.

I've lived in Colorado for many years and keep thinking of moving to Washington. I am quite certain that my taxes would be higher in Washington due to the fact that gasoline tax, property tax and sales taxes are all higher than in Colorado. Our income tax is a flat 4.63% - less than the sum of the WA taxes.

.
Posted by Daves8 on February 12, 2013 at 9:59 PM · Report this
26
Your gas tax is 14.5 cents a gallon lower, but your combined sales and income tax rate is 12% to 13% in most jurisdictions vs. Seattle's 9.5% sales tax.

And because you can deduct either, but not both state income and sales taxes from your federal taxes, the difference is larger than it looks. Beyond that, because your flat 4.63% income tax rate reduces your income regardless of what you spend it on, whereas Seattle's 9.5% sales tax isn't charged on most food at the grocery store or medicine, the difference is yet wider.

As for property taxes, that one's tough because there are the rates and then there are the assessments. Having lived in a bunch of places, I'd say that Seattle's property taxes used to be quite reasonable but have been rising pretty rapidly in recent years because of the various liberal levies approved by voters.

Business taxes are fairly high here, though. You really see it at restaurants. The same meal in Seattle is about 20% to 25% cheaper in Portland, partly but not entirely due to Oregon's 0% sales tax.

All in all, I'd be willing to bet that Washington State's taxes are roughly equal to Colorado's at the lower levels, i.e., under $50K a year, but quite a bit lower at the upper levels. Since most of the Seattle liberals are in the upper-level income brackets, they are happy to keep it that way.
Posted by Unbrainwashed on February 13, 2013 at 12:43 AM · Report this
27
Don't forget fares,fees,fines,taxes,and tolls, on the STATE,county,AND municipal levels in Nazington as well.
Posted by 5th Columnist on February 17, 2013 at 12:43 PM · Report this
28
The really absurd thing about this is that the poor people who subsist solely on government benefits (TANF, SSI, Social Security, food stamps) are forced to return a hefty percentage of that money to the state of Washington through its sky-high sales and gas taxes.

Since the vast majority of these people are probably on food stamps, it seems that our ridiculously regressive tax system could be made a bit more equitable by having DSHS issue them a scan-able card with their photo that would exempt them from sales taxes at the check-out counter. The difference could be made up by levying a wealth tax on the filthy rich who funded the campaign against the income tax initiative a few years ago.

Posted by J Wright on February 17, 2013 at 3:49 PM · Report this
29
The nice thing about the regressivity of a sales tax without an income tax is that even low income people have an interest in limiting government spending, leaving more for all of us to use as we, not the bureaucracy, see fit.
Posted by Homple on February 18, 2013 at 4:24 PM · Report this
Steve Zemke 30
Even with our regressive tax nature, Washington State as a whole ranks 28th lowest in terms of comparing state and local taxes with overall income. This is according to the conservative Tax Foundation based in Washington DC
http://taxfoundation.org/article/annual-….
It's the lowest income folks that pay the highest % of their income in taxes which makes us the most regressive. In terms of income per capita compared to other states we rank 13th highest as of 2010 - the latest figures available. So those with money could afford to pay more based on their income and we'd have a fairer tax system.
Posted by Steve Zemke http://www.majorityrules.org on March 2, 2013 at 1:49 PM · Report this

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