Report: For WA Economic Recovery, Rethink State Tax Structure

Lily Bohlke
Washington News Service

OLYMPIA, Wash. – As Washington state lawmakers consider how to recover from the economic effects of COVID-19, a new report from the Economic Opportunity Institute recommends changing the state tax structure to make it more progressive, instead of reducing public services.

During the last recession, lawmakers opted to make cuts to healthcare – including mental health services, as well as childcare and federal assistance programs. They also increased K-12 class sizes and hiked college tuition.

John Burbank – EOI’s executive director – said even before the pandemic, Washington hadn’t yet returned to its pre-2008 levels of funding and services.

“Even though we’ve had tremendous increase of wealth and income in our state, particularly at the very top,” said Burbank, “the state has failed to keep up with that in terms of the provision of services.”

The report says low- and moderate-income households in Washington pay much more in state and local taxes than in other states, and wealthy households pay less. And the pandemic job losses have had an outsized impact on low- and moderate-wage workers – in fields like food service, healthcare and local government – as well as people of color.

Washington gets almost half of its general revenue from sales taxes, and Burbank said that’s part of the reason it recovered from the Great Recession more slowly than other states. Many other places rely on a mix of sales, income and capital gains taxes.

Burbank said he hopes the Evergreen State will learn from its neighbors, like Idaho and Oregon, where he said tax responsibilities are more evenly distributed across income groups.

“The answer is not to cut,” said Burbank. “The answer is to find new progressive revenues. Right now, we have sort of a ‘reverse Robin Hood’ system of taxation, and we need to reverse that.”

He said these kinds of progressive taxes are practical and doable – if the Legislature finds the political will to make the changes.