Washington’s tax system hits working poor hardest

A new report shows Washington is number one – but probably not in a way most residents appreciate. Among all 50 states, Washington’s poor and middle-class residents pay the highest share of their income in state and local taxes, compared to their wealthier counterparts. It’s a troubling reminder for state lawmakers, who made deep budget cuts to public structures designed to help those same workers and families weather the recession.

Policymakers may need to take a hard look at how to increase revenue next year in order to maintain essential services during our economic crisis. Following the worst economic downturn since the Great Depression, general fund revenues have fallen by over $6 billion since June 2008. Possibilities include ending special tax exemptions, increasing sin taxes, taxing pollution, and a general sales or business tax increase.

But even the most optimistic budget numbers make it clear that such fixes amount to a band-aid approach at best. More dramatic action is needed to ensure the state’s long-term economic health, according to local and national experts on Washington’s budget and economy.

“Our focus needs to be on getting through this recession while preventing cuts to essential public structures,” said Remy Trupin, executive director of the Washington State Policy and Budget Center. “But clearly more work needs to be done in the future.” Trupin noted that the Working Families Tax Rebate proposed by his organization would offset the costs of tax increases for lower income families.

Posted in An Inclusive Economy, Progressive Tax Reform