WASHINGTON: An income tax would make Washington State and local governments more efficient and fair. I’m about to put a check in the mail to King County to pay the first half of my current property-tax bill. The bill is higher than it was last year, but that doesn’t bother me as much as being reminded how much this state’s tax system stinks. How much we pay matters, but so does how fair the tax system is and how effectively the money is spent — does it generate the community benefits most of us want? Washington’s tax system would fail just about anyone’s fairness test because it relies mostly on property and sales taxes, which have inequality baked in. Sales taxes disproportionately affect lower-income households. Reliance on property taxes means that wealthier areas will be much more able than poorer ones to pay for the services and infrastructure needs of their residents. (The property taxes collected by the county are distributed to cities, counties, schools, the state and other government entities.) Every kind of tax has benefits and limitations, which is why most states have a mix that includes an income tax. With an income tax, sales and property taxes don’t have to be so high, so their negative effects are somewhat mitigated.
Poor people across the country pay a higher percentage of their income in state and local taxes than do wealthier people, but Washington is the worst offender in that regard. A report by the nonpartisan Institute on Taxation and Economic Policy found that in our state the 20 percent of households with the lowest income paid 16.8 percent of that income in state and local taxes in 2015. Across the country, low-income households pay 10.9 percent of their income in state and state and local taxes, but the percentage of income paid in taxes falls as income rises.
The top 1 percent in Washington paid 2.4 percent of their income, which is less than half of the national average, 5.4 percent. There have been efforts to introduce an income tax, but in recent times they’ve never gotten far. The idea of a Seattle city income tax on high-income households is going to be an issue in this year’s race for mayor. Current Mayor Ed Murray announced in the first mayoral debate last week that he will send a tax proposal to the City Council. Seattle has become a city heavy with wealthy people. It makes sense to go where the money is as the city scrambles to provide the services its rapid growth demands. And a tax on high-income people might be welcome in a time of vast and growing income inequality, especially since federal government spending is now at risk.
