(Yet) one more reason to reform Washington’s taxes

June 18, 2008 | Aaron Keating

Whether it’s by bad design or bad luck, Washington has its share of tax problems, and then some.

The latest problem is a so-called “tax extender” that allows Washington residents to deduct state and local sales taxes on their federal returns.

The extender has to be renewed every year by Congress, and it isn’t easy. Just ask Rep. Brian Baird, D-Vancouver, who has spent 11 years in Congress trying to make it permanent.

Just seven states rely strictly on state sales taxes – Washington, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming. The income taxes in other states have been deductible on federal returns all along.

Washington’s particular combination of sales, property and business taxes is a unique witch’s brew.

It hits both low- and middle-income workers and small/start-up businesses especially hard; generates wide swings in public revenue in the short-term; and doesn’t keep up with population growth and demand for services in the long-term.

The end result is underfunding of public investments in schools, transportation and health, paired with unrealistically high taxes on those least able to afford it.

There are a whole lot of ways we could do better.

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Posted in State Economy, Tax and Budget

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