Washington State has the most regressive tax structure in the country. No other state asks more of its poorest taxpayers and simultaneously asks so little of its wealthiest taxpayers. The major reasons for its distorted tax structure are the state’s excessive reliance on sales taxes (along with property taxes) and the absence of any type of tax on income.
Later this month, legislators will be meeting in a special session to try to close the state’s $2 billion shortfall. Governor Gregoire has taken the uninspired and unimaginative approach of proposing only spending cuts to fill the gap. Her proposed plan will simultaneously harm working families and ensure that Washington State’s tax structure remains the nation’s most unfair.
Governor Gregoire and legislators need to think outside the box, and specifically consider the Washington State Budget and Policy Center’s (WBPC) proposal to tax capital gains income.
The Institute on Taxation and Economic Policy (ITEP) found that a modest tax on capital gains income could raise as much as a $1 billion annually, and a full 97 percent of Washingtonians wouldn’t be impacted. To read more about WBPC’s proposal and ITEP’s analysis read A Capital Reform.
Elected officials must move beyond the cuts-only rhetoric and look to budget solutions, like taxing capital gains, that help to create long term fiscal solvency and create a tax structure that works for everyone.
Photo of Governor Chris Gregoire via WS DOT Creative Commons Attribution License 2.0