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!