- Five years ago, The Stranger ran this chart showing that Washington State had the most regressive tax system in the nation. Guess what? We're still the most regressive when it comes to taxes.
A new national study from the Institute on Taxation and Economic Policy confirms that Washington State's "morally bankrupt" tax system remains the worst in the nation when it comes to unfairly taxing the poor.
"Washington state has, by far, the US’s most regressive state tax system, taxing the poorest residents at 16.8 percent while taxing the top 1 percent at only 2.4 percent," the study says.
Back in 2010, when we were yelling about this same problem in the context of a failed push for a statewide high-earners income tax, the numbers were slightly different. (Then, as you can see in the above chart, Washington's poor were paying 17.3 percent of their income in taxes and the rich were paying only 2.6 percent.) But today our ranking remains the same as it was five years ago, as does the company we keep.
Florida, Texas, South Dakota, Tennessee, Kansas, Indiana—those backwardly-taxed states are our peers, according to the new study, though of course we lead the pack when it comes to backward tax systems. (Meanwhile, some states near to Washington have among the least regressive tax structures in the nation: Oregon, California, and Montana.)
How can we fix this?
Well, the capital gains tax Governor Inslee lobbied for in his State of the State speech would be a start.
"We’re asking the wealthiest Washingtonians to do a little more," Inslee said. "I am proposing a new capital gains tax on the sale of stocks, bonds and other assets. It is estimated that less than one percent of the state’s taxpayers would be affected. This exempts any capital gains on retirement accounts, homes, farms and forestry. As I mentioned, this is new to us, but certainly not a new concept nationally. Forty-one states have this system already."
But, the problem is that Republicans control the state senate, and on Monday, as their first order of business, they passed a—possibly unconstitutional—new rule requiring a nearly impossible 2/3 senate majority for any new taxes. Which means a capital gains tax is one of the five things Washington State needs that our Republican-controlled senate isn't eager to give us.