Tax Incidence in Washington

Map: State-Local Tax Burdens and Ranks by State, 2009 The Tax Foundation

State and Local Tax Burdens as a percentage of personal Income by state in 2009 Source: The Tax Foundation

(9/25/2014 Fixed link to DC study and updated it to the 2012 version.)

There were a number of questions asked in today’s K-12 Finance Task Force meeting about how taxpayers in different income strata experience Washington’s tax system. I’m providing some links to interesting data while we wait for more up-to-date information from the Office of Financial Management, which their representative Julie Murray promised in Sept-Oct.

The study Ben Rarick (executive director of the State Board of Education) mentioned is from the Institute on Taxation and Economic Policy, and is available here.  A short summary:

Recently released data from the Census Bureau confirms that overall Washington could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Washington as a low tax state — instead, they pay more than their fair share of state and local taxes.

Another interesting study is sponsored by the city of Washington DC and the Federation of Tax Administrators. It looks at the largest city in every state and compares the total state and local tax burdens of families in different economic strata across the nation. The interesting tables start on page 7. For a family of three earning $25,000 Seattle is the 18th most heavily taxed, but for the same family making $150,000 Seattle is 43rd, again showing the effects of the regressive tax system we have in Washington. The ranking for a family earning $75,000, near the median family income, is 39th, so the effect is pretty extreme for lower income families, but attenuates as income rises.

The Tax Foundation (the people who bring you “Tax Freedom Day”) also do interesting comparisons. Their methodology is different than some other folks, so the numbers aren’t consistent, but you can learn a lot by looking at their data. The map at the beginning of this post comes from them, showing relative tax burdens by state in 2009. Here’s an example – their report showing state and local tax burden by state. You can see the rankings by state changing from year to year. We’re 29th using this methodology in 2009.

About Ross

I'm proud to represent Bellevue, Redmond, Kirkland, Medina, Clyde Hill, Hunts Point, and Yarrow Point in the Washington State House of Representatives. I am chairman of the Appropriations Committee, responsible for crafting biennial budgets. I also chair the Washington State Economic and Revenue Forecast Council.
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