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No to Unfair Sales Tax Sales Tax is an Unfair Tax
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Washington State also has the Most Unfair Tax Structure in America!

As a consequence of very high State Sales Tax, the State of Washington also has the most unfair tax structure in the nation

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Raising the sales tax would unfairly target the poor and middle class.


In 2002, the Washington State Tax Structure Study Committee found that the fundamental weakness of our state and local tax structure was its extraordinary reliance on sales taxes.

In Fiscal Year 2008, Washington received 63 percent of its tax revenue from general sales taxes, compared with a rate of 34 percent for states nationally. As a consequence, the tax structure in our State is both unfair and unstable.

With regard to fairness, the committee estimated that "the lowest income households pay 15.7 percent of income for total excise [sales] and property taxes, while the highest income households pay 4.4 percent of income for the same taxes."

The Institute of Taxation and Economic Policy has concluded that, lacking an income tax, "Washington State has the most unfair tax system in the nation."

The instability of the tax structure is evident in the recent behavior of taxable retail sales, our largest tax base. Between 2007 and 2009, Washington personal income rose 3 percent, while taxable retail sales, which include new construction, fell 15 percent.

The Governor claims that the increase in the sales tax would only be temporary. However, there has never been a “Temporary” Sales Tax Increase in the history of our State!




 

Washington’s Unfair Tax Structure:

 

Our middle class pay too much because our super rich are not paying their fair share

 

Institute on Taxation and Economic Policy (ITEP), Who Pays… A Distributional Analysis of the Tax System in all 50 States, Third Edition, November 2009

 

The reason school funding is so low in our State is we have the most regressive and unfair tax structure in America. Washington State taxes on middle class families are 20% above the national average – over $1,000 per family above the national average. By contrast, State taxes on the richest one percent in Washington State are 70% below the national average.

 

Why Does the Sales Tax Harm the Poor More than the Rich?

The reason the sales tax is unfair is because the poor spend a much higher percent of their total income on items subject to the sales tax than the rich do.

 

 

The very poor are the most adversely affected by the sales tax. Meanwhile, those making more than one million dollars per year spend less than 20% of their income on taxable items. The bulk of their income is spent on homes, stocks and bonds – none of which are subject to our State’s sales tax.


Rep. Hans Dunshee, D-Snohomish said he would never vote for an increase in the sales tax because "It whacks all the people who can least afford it."

 

We Should Lower the sales tax – NOT raise it!

 Our current revenue structure is upside down. It asks little of the wealthiest Washingtonians but consumes a large share of lower-and moderate-income families’ resources. If we cut the sales tax in half, it would put an extra thousand dollars per year in the hands of our State’s poorest families.  

Increasing regressive sales tax harms economy and would increase unemployment

Five states, including Oregon, have no sales tax at all. Of those States which have a sales tax, they range from 3% in Colorado to 7.25% in California. What makes Washington State unique is that we do not also have a State income tax. We are also one of only three States without a corporate income tax. We therefore rely more on Sales Taxes and less on corporate taxes than any other State in the nation.

 

Washington’s taxes are not fair.

Washington has the most   regressive taxes of any state. Washington is the highest taxed state for the non-elderly poor taking 17.6 percent of the poorest 20 percent’s total income for state and local taxes but only 3.3 percent of the top 1 percent’s income. Neighboring Oregon takes only 9.4 percent from the poorest. Florida is the next most regressive state but takes only 14.4 percent from the poorest. Only eight states take more than 10 percent.

 

 

 

 

Increasing the Sales tax would only increase the unfairness of our State tax structure

 

 


 

The $5 billion dollars in cuts in State programs (including increases in user fees) have fallen almost entirely on the backs of the poor and middle class, including teachers and state workers losing jobs, wages and health insurance. It is unfair that these same groups should be doubling harmed by also raising taxes on the poor and middle class. It is particularly unfair since we already have the most regressive and unfair tax structure in America. 

 

Finally, it is unfair in that the wealth of the richest one percent has doubled in the past 10 years while everyone else is facing bankruptcy. Requiring billionaires to pay their fair share of State taxes is more likely to pass the voters, more likely to help our economy and is fairer to all economic groups. As a consequence of these recent tax give aways, in just the past 10 years, the richest one percent have gone from owning 20% of our nation’s wealth to owning 40% of our wealth. The last time so few people controlled so much wealth was 1929. Clearly Trickle Down economics has not worked. It is time to try Bottom Up economics.