Sine Die 2009

On Taxes

Washington’s tax structure — with over 50 percent of revenues coming from the sales tax — is the worst in the country.

In Washington, individuals in the lowest 20 percent of the tax bracket pay 17 percent of their annual income in state taxes, and individuals in the top 20 percent of the tax bracket pay less than 3 percent.

Our tax structure hammers lower and middle class families, who pay far more than their fair share for the essential public services from which everyone in our society benefits, like K-12 and higher education.

And now they stand to pay more for less. Because of the global economic meltdown, state revenue has taken a nosedive. The total downward adjustment of state revenues since the last legislative session is $4.9 billion – $2.3 billion since February alone.

This has forced the Legislature to make dramatic cuts in essential public services, which will disproportionately affect – you guessed it – lower and middle class families.

Lower and middle class families are hard-hit when times are good, and then take a double-hit when times are bad. It doesn’t take an economist to point out how unfair this is.

Given that we have a tax system that’s so unfair to the middle class, and — as the current recession has demonstrated — incapable of dependably funding fundamental public services, having a conversation about restructuring our tax system so that working class families are treated more fairly and public services are supported more stably is not a conversation we should be afraid of having.

During the presidential campaign, President Obama said it’s time for higher-income earners in our country to pay their fair share in taxes. Obama defines those with the highest incomes as families who earn $250,000 per year.

If we were to follow Obama’s lead and ask higherincome earners in Washington to pay their fair share in taxes, 19 out of 20 people would NOT have to pay more. If the threshold is set higher, even fewer people would pay more. But we would introduce a new and fair way to fund, say, education and higher education in our state, and help ensure that these critical areas of state government have a stable and reliable funding source for years to come.

This would be an equitable investment in our state’s long-term economic stability. But making changes to our tax system to make it fairer and more stable won’t be simple, and it won’t happen quickly.

Opponents to a modest income tax on the most affluent in our state have been vocal and vociferous. Because they can’t argue about the merits of the proposal, they focus on the specter of what it might become.

In the past, this “camel’s-nose-under-the-tent” argument has been a prescription for preserving the status quo, and maintaining a tax system that is more unstable and less fair than the people of Washington deserve.

This year, the Senate began a dialogue with the public about the need for change, given the magnitude of our budget crisis. Many individuals rose to voice their support for a high-earners income tax.

Others supported raising the sales tax by a third of a penny to fund long-term care, adult family care, mental health and basic health care services, and mitigate the effects of the cuts to public health care. In the Senate, many believed that increase in the sales tax was a move in the wrong direction, and pushed to include a full working families tax credit to the sale tax increase proposal in order to offset the unfair impact on those who are hardest hit by our tax structure.

In the end, however, the Legislature as a whole believed that the public would perceive an increase in revenue as making things worse for regular families in our state, and so no tax measure was passed.

But this is only the beginning of the discussion. It is still possible that – by continuing an open dialogue about the modest costs to those who can afford them, and the tremendous benefits to everyone else — common sense and the common good will prevail.

A promising sign of this is that a recent national poll shows that 74 percent of the public thinks those making over $250,000 per year should pay more in taxes.

 

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