by Sumayyah Waheed
Washington State: We're known for our natural beauty, tech innovations, agriculture, and bold spirit. But we've fallen behind in one place: our upside-down, regressive tax code. In a state with so much spirit and potential, no one should be in last place. But our terrible tax code stands in the way of that.
Washington was once again ranked as having the worst tax system in the nation for working and middle-income households, by the sixth edition of the "Who Pays?" report released by the Institute on Taxation and Economic Policy (ITEP). We've been ranked dead last since ITEP published the first report in 1996.
Our tax code asks those with the least to pay the most. Working households pay nearly 18 percent of their income in state and local taxes, those in the middle pay around 10 percent, and those at the very top who make more than $500,000 a year pay just 3 percent. That's because Washington relies primarily on sales and other regressive taxes to raise revenue.
A few dollars tacked onto a receipt is a drop in the bucket for Washington's millionaires and billionaires. The same amount could make or break a low-income household's budget. Even worse, powerful special interests have rigged our tax code with hundreds of wasteful tax breaks and loopholes that drain resources out of our communities and into these interests' pockets. Washington frequently makes headlines for our economic success. What doesn't get mentioned is that the wealthy get an absurdly outsized share of the harvest — 42 percent of all income growth between 2009 and 2015 went to the richest 1 percent — and they're not paying their share.
Because the wealthiest don't pay their share, we barely have enough to take care of the basics. Despite our economic boom, state revenue is actually below Recession-era levels. Investing in key foundations benefits all of us. Excellent public schools, affordable housing, modern infrastructure and transportation, and accessible healthcare are critical ingredients of thriving communities. Without an adequate, sustainable source of revenue, we can't achieve this vision.
Our tax code isn't just insufficient, it's inequitable. Because of a continued legacy of racist policies that exclude people of color from opportunity, communities of color represent a disproportionate share of those with low incomes. Of Black, Indigenous, and Latinx residents, nearly 60 percent of each demographic are in the poorest two-fifths of all Washingtonians. Southeast Asian Washingtonians are more likely to have lower incomes than their East and South Asian counterparts. Being a recent immigrant or refugee can make it even harder to get ahead.
With each passing year, Washington is becoming more racially diverse. Already, 43 percent of kids in our state are kids of color. Low-income communities of color pay the highest rate in taxes to support the things that benefit all residents, but we don't see equitable investments in our communities. Our schools are left behind, our bus lines are cut, and our neighborhoods aren't prioritized for improvement projects. The pressing issues so many of us care about, like ending the school-to-prison pipeline, preventing homelessness, providing legal support to undocumented immigrants, making sure all people have access to healthy, affordable nutrition, and more, require a robust state budget to realize.
Last year, the Trump Administration passed the Tax Cuts and Jobs Act, now proven to "supercharge the racial wealth divide." While people across the nation resist this dangerous new policy, we must do everything we can at the state level to support low- and middle-income families. Our representatives should stand up for all of us by creating a state tax code that gives everyone access to opportunity. And it's time for us to join the movement. We call on legislators to end the tax break on capital gains, profits from the sale of luxury assets that only benefit the very wealthy. We've also endorsed fully funding and expanding the Working Families Tax Rebate, which would invest in working families and local economies, especially low-income communities of color. Our upside-down tax system has best served the wealthiest for more than a century. It's time to change that.
Talk to your friends, families, coworkers, neighbors and more. This matters to all of us. For Washington to thrive, we need to clean up our tax code, make the wealthy pay what they owe, and equitably invest resources in every community. We don't belong in last place. We belong at the frontlines, leading the way for our country as a state that invests in community, opportunity, and equity for all.
Sumayyah Waheed is the director of theAll In For Washingtoncampaign, a statewide effort to clean up the tax code so it works for all communities, not just the wealthy and powerful.
Featured Image Alex Garland