Washington State Tax Structure Alert
In November of 2001, the FCWPP legislative committee met to discuss how FCWPP could be more effective in
promoting economic justice in a time of continuing budget crisis, the consequences of which are the balancing of the budget on the backs of the most vulnerable in our society. The committee agreed that our efforts should be focused on the revenue side of the budget equation, specifically, the Washington State tax structure.
This is a critical time to let the governor, our legislator’s, and the public know you want real reform of our tax system. Washington just barely closed a $1.6 billion budget gap in the 2002 legislative session, and we are facing another $2.0billion plus gap for the next biennium. The foundation of our fiscal problems is a tax structure that is highly regressive and unstable.
Several “tax” events are on the horizon and FCWPP needs your help in calling for progressive tax reform before they reach the headlines. First, Citizens for Tax Justice, whose 1996 report ranked Washington the most regressively taxed state in the nation, will be releasing their 2002 report, probably shortly after the elections. It is anticipated that Washington will continue to be ranked at or near the top. In addition, on November 30, 2002, the Washington State Tax Structure study will be releasing its report. We see both of these events as an opportunity to reinforce our message about progressive tax reform to the public. Finally, legislators and the Governor are currently in the process of preparing their budget and revenue strategies for the 2003 session.
FCWPP believes that our priority at present is to educate the public regarding the nature of our tax structure and the connection between government services and taxes. Although we have been looking at the economic impacts of many revenue options, we do not want to give the well-organized and well-funded anti-tax proponents any premature fodder by promoting any specific revenue options.
What You Can Do
We encourage Friends to send a letter to the governor, their legislators, and the newspaper editor letting them know why tax reform is important. Ask legislative candidates in your district whether they are willing to consider progressive tax reform. Some messages you might want to include:
Equity & Fairness: We want a system that taxes people more fairly, according to their ability to pay.
Washington’s tax system is one of the most unfair systems in the country—placing a much higher burden on low-and moderate-income people. According to a study by Citizens for Tax Justice, a national nonprofit organization, the poorest 20% of Washington’s residents pay 17% of their income in taxes, while the wealthiest 1% pay only 3.6% of their incomes in taxes. Our state’s reliance on “the sales tax, and associated fees, fines, and even the state lottery, place most of their burden on low-and moderate income people.” This contributes to increasing anti-tax sentiments and instability.
Stability: We want a system that does not rely so heavily on one tax source. Washington’s tax system is one of the most regressive because it is overly dependent on sales and use taxes, which hit lower-income people harder. General and specific sales taxes make up 59% of Washington’s state and local taxes, compared to a national average of 35.5%. Our dependence on the sales tax is so high because Washington does not have a personal income tax, and we have been limiting our property taxes. This over reliance on one tax source also makes our system unstable—when consumption drops so do our tax revenues. In turn, tax systems that have lower rates on a number of different tax sources are more stable.
· Adequacy: We want a system that provides adequate revenue to meet the needs of all Washington’s residents. Washington’s fiscal crisis is not simply a product of the current economic recession. The economy is a factor, but it is not the sole cause of our budget problems. The foundation of our fiscal problems is a tax structure that is highly regressive and unstable. The regressive nature of our tax system, combined with recent initiatives that have capped government spending and restricted tax revenues while increasing spending for specific purposes, are severely squeezing our fiscal capacity. This is making it extremely difficult to fund desired services.
We believe Washington has plentiful resources. We want to bring in adequate revenues to meet the needs of all our residents, and to ensure that the provision of desired programs and services is not dependent on cuts in others.
· Accountability: We want a system that better meets the needs of our residents. All decision-making processes should be open to the public, so the public can determine whether policies are adequately serving their needs. This also requires a regular review process to evaluate existing tax laws and determine if they are fair and effective. In addition to measuring tax effectiveness in meeting revenue needs and encouraging economic development, review processes should also evaluate how fairly the tax burden is shared across income categories.
You also will find additional useful messages in an opinion piece published on September 25 in the Tacoma News Tribune by John Burbank, the Executive Director of the Economic Opportunity Institute. Website:
FCWPP is also available to schedule a presentation at your meeting or community group to discuss progressive tax structure reform. For further information, please contact your FCWPP Steering Committee representative or Deric Young at email@example.com.