Over the 74 years since it was first implemented, Washington’s state retail sales tax has been raised eight times, from 2% in 1935 to 6.5% in 1983. On average, the sales tax rate was raised once every 6 years during its first 48 years of existence, culminating in a 2-cent jump between 1981 and 1983.
Yet it has remained unchanged over the past 26 years.
The steady rise in rates over the first two-thirds of the sales tax’s history stemmed partially from the fact that growth in demand for public services generally tracked growth in personal income, while retail sales steadily shrunk as a portion of the overall economy (from 32% of total consumer spending in 1959 to only 26% by 2000), primarily due to our ongoing shift from a manufacturing to a service and information based economy. State government simply couldn’t meet the demands of our growing economy without periodically raising the sales tax rate, and at times, expanding its base.
But since 1983 the rate has been frozen at 6.5%, and with inevitable results. Over the past decade and a half Washington state’s personal income has grown by 225%, while state sales tax revenues have increased by only 198%. And for a state that relies on the sales tax for over half its general fund revenues, that is a recipe for a structural budget deficit.
Contrary to the Eymanesque meme of out-of-control government spending, state taxes and expenditures are steadily declining both per capita, and more importantly, as a percentage of the total economy. Sure, our severe recession has exacerbated and accelerated the problem, but it was always there lurking beneath the ups and downs of the economic cycle. Already even with Mississippi in terms of state and local tax burden, and contemplating drastic cuts in our social safety net, Washingtonians can no longer put off the tough questions: are we willing to raise our taxes to help maintain the level of services and quality of life we’ve come to expect, and if so, how?
The easiest and quickest solution would be to raise the sales tax, which would immediately generate additional revenue with little administrative overhead. But a 1 cent increase only raises an additional 2 billion dollars over the next biennium, enough to fill but a portion of the remaining budget gap, and recent polls show an increase even a fraction of that size is extremely unpopular amongst voters. And with WA already laying claim to the most regressive tax structure in the nation, and combined state and local rates now topping out at 10 percent, it’s not hard to understand why.
The other solution—the one I’ve been relentlessly plugging for weeks—is a high-earners income tax, that depending on the plan, would only tax the top .1% to 4% of households. The very households, it turns out, who have benefited most from our state’s economic growth over the past couple decades.
Over the past decade the average income of the wealthiest fifth of Washington families has increased $14,136, from $119,954 to $134,090, while real incomes of the poorest fifth and middle fifth have remained flat, or even declined. And the disparity only grows when looking back a further decade.
Again, lower and middle incomes have remained relatively flat, while the top fifth of households have seen their income grow 41%, from $94,930 to $134,090.
Add to this growing income inequality our profoundly regressive tax structure, where the bottom fifth of households pay 17.6% of income in state and local taxes while our top 1 percent pay only 3.1%, and the argument for an income tax appears clearly grounded in both fairness and mathematics. It is the wealthy who have benefited the most from our state’s extraordinary economic expansion over the past few decades, and the public investment that helped make it possible, and it is the wealthy who clearly have ability to pay. Meanwhile our lowest income households are already struggling to pay what amounts to the highest state and local taxes in the nation, all the while seeing their real incomes stagnate or decline.
Coming up soon: why taxing the rich has less of an anti-stimulus effect than cutting government spending.
Oh yeah, enact an income tax so that it only affects those making $500,000 or more per year. In a couple of years, that’ll be down to those making $10,000 or more per year.
WHATEVER WE DO IN THIS STATE, PLEASE, PLEASE DO NOT ENACT AN INCOME TAX!
If we do, it won’t be long before we all will be regretting it terribly.
You know, I’ve got no problem if the income tax goes all the way down to those who only earned $1.
I’d rather pay 1 or 2% in income tax than to see the sales tax go up by a similar amount.
Oh and lets apply the sales tax to services.
The B&O tax needs to be replaced with a corporate income tax as well.
Incorrect @1,
That is a straw man argument. No tax can be increased without the approval of voters. If our legislators ever got past their lack of will and I-960’s prohibitions, any such income tax expansion would be challenged by initiative or referendum. So either way, the scenario you suggest would have to be approved by voters. And it wouldn’t be.
Goldy–
You can spin & spin & spin…but it ain’t goin’ anywhere if it ain’t tax NEUTRAL.
Also, a huge % of folks do not trust State Government…can’t imagine having both a sales tax and income tax on the book. Just a matter of time before rates are raised or threshholds lowered.
Folks are going to realize they simply cannot afford to “trust” Leftist KLOWNS like you.
Comprende?
Blah blah blah – shorter Goldy – fuck the rich!
No.
But, I’m perfectly willing for us to cut services that are bloated and unnecessary. Still haven’t really heard the Legislature and Governor do that yet…..
The issue comes down to trust Goldy. I don’t trust you or Democrats to responsibly add a new tax stream however noble you make it sound. Bracket it to the wealthy now, but I know it will just get the camel’s nose in the tent and raise the overall taxes over time.
CUT, CUT, CUT!
Take it out of the hides of the money hoarders.
Matty @6,
Well, all I’m asking is that we put it up to a vote. If more voters agree with you than with me, then so be it. But I’m not prepared let WA’s social safety net and public infrastructure gradually erode away by default, at least, not without a fight.
I agree with Goldy, we should have an across the board state spending cut, obviously the state is spending beyond its’ means.
Oh wait, that would be doing the impossible. Better that we have more taxes, so the government can grow, grow, grow and take more, more, more.
So, yeah, I agree and disagree with Goldy. One of us wants to keep feeding the tapeworm. I want to excise it.
But since 1983 the rate has been frozen at 6.5%, and with inevitable results. Over the past decade and a half Washington state’s personal income has grown by 225%, while state sales tax revenues have increased by only 198%. And for a state that relies on the sales tax for over half it’s general fund revenues, that is a recipe for a structural budget deficit.
———
Goldy, that link to 225% pulls a blank, at least for me.
@8
Then hire Eyman and put an initiative on the ballot! ;)
Meanwhile, even you haven’t proclaimed we’ve cut the fat yet. We’re a long ways from needing any vote on the matter.
I’ll start. Department of Ecology – 50%, then the Department of Labor – 50%, then cut Legislators – 50% back to half time or less.
Goldy,
Keep pounding this drum. You are right on the money.
“Coming up soon: why taxing the rich has less of an anti-stimulus effect than cutting government spending.”
Something to do with the marginal propensity to consume no doubt….a concept beyond the grasp of most wingnuts.
@6: Our gov. and legislature are already cutting billions, dummy.
@11: Two thirds of L&I’s budget is worker’s comp. which is paid by employers. Do tell us what to cut here. Or maybe you believe injured workers should just beg in the streets?
Poll results: 74% of Americans want to raise taxes those making over $250,000/year.
http://www.cbsnews.com/blogs/2.....3732.shtml
Incidentally, Goldy, this claim:
“But since 1983 the rate has been frozen at 6.5%”
does not tell the whole story, as you’re certainly aware. In fact, the sales tax people actually pay has gone up considerably over time as local levies have been increased. In King County the sales tax is 9.5%, having JUST gone up AGAIN. Here’s just the two year history:
April 1, 2009: RTA tax, increased five-tenths of one percent (.005). Local rate: .030 . . . Total: .095.
April 1, 2008: Mental health tax, increased one-tenth of one percent (.001). Local rate: .025 . . . Total: .090.
April 1, 2007: Transportation tax, increased one-tenth of one percent (.001). Local rate: .024 . . . Total: .089.
In other words, since May 31, 2007, the sales tax in King County has gone from .088 to .095, an increase of 8% in just two years.
In addition, our property taxes have increased 11% since 2006 in King County.
So, let’s be clear, the state’s portion of the sales tax may have been locked in place for years, but the taxes people have been paying have nonetheless gone up considerably in a relatively short period of time.
And you want to add to this burden?
An income tax aimed on the wealthy would only make our method of taxation less regressive. This would still be a great state to live in as a millionare. For those running larger companies the deal would be even bettter since the vast majority of consumers would not be effected and access to education would be preserved.
Bring it on!
Speaking of poll results, I was wondering why Mr. Klynical wasn’t posting his Rasmussen Polls showing that Presidential Approval Index of +4 that made him howl with glee. Well, here’s today’s results:
“The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 37% of the nation’s voters now Strongly Approve of the way that Barack Obama is performing his role as President. Twenty-nine percent (29%) Strongly Disapprove giving Obama a Presidential Approval Index rating of +8.”
Oops, now I see why he didn’t post it. It doubled in the President’s favor. My, that’s gotta really suck for our Mr. Klynical.
@11 I mean staff, not budget.
You want to tell me we’ve cut everywhere we’ve can?
Kill the pork, kill the government bloat, live within our means!
I might be inclined to think seriously about this, but last year you flabby twats were yowling for a big sales tax increase for a short train line that less than 1% of the population would use with any regularity.
“The new tax de jour? Oh, income tax – why yes, now we want that too!” Face it, you just love taxing.
I say FUCK the public employee unions to hell. Send them all straight to hell and we can cut government budget 25%. Make all their pensions NULL and VOID and FIRE their fucking asses!
And who do you think GIVES a fuck what you say?
@1 What a lameass argument from a lameheaded apologist for gross tax unfairness.
@2 Why shouldn’t the first 10K or 20K of income be exempt? Do you feel those who work for cheap labor conservatives who refuse to pay their employees a living wage don’t have a right to basic necessities of life?
@4 “Folks are going to realize they simply cannot afford to “trust” Leftist KLOWNS like you.”
We had an election on this precise issue and your ilk lost. Then we had another election on this precise issue 4 years later and your ilk lost again.
@5 So you think the rich are getting fucked if they have to pay more than one-sixth of the taxes the poor have to pay? See #21, do Cynical a favor by sucking his dick.
@6 “I don’t trust you or Democrats”
Who cares? People of your persuasion are a disrespected and distrusted minority in this state, so no one gives a diddly what yu think! The fact Washingtonians haven’t elected a Republican governor since 1980 speaks for itself.
@19 I’ll go along with that provided your employer cuts your pay 25%, too, and every retail business in Washington cuts their prices by 25%. Deal?
You see what shit we put up with from Republicans? Do you wonder why I don’t work? Why should I work under the kind of system they want, i.e., workers don’t get paid and the rich don’t pay any taxes. Fuck that! I’d rather be a 3-percenter like them. I want the same deal they have.
@18: 60% of the voters don’t see things your way. You can have your Bushian wars of opportunity and hand up our sons’ blood for oil, but we are embarking on a new green agenda. The agency is well on its way to constructing a fine, modern transit line. I know you hate that, but don’t hate ST – look within yourself.
From the PDF above:
So some quick math shows the defined groups pay annually in WA state and local taxes:
* Wealthiest: $51,200
* Middle-income: $3,410-5,280
* The poorest 5th: up to $2992
@29–
So by Goldy’s Marxist calculator, the wealthy are screwing the poor folks.
Interesting logic, ain’t it.
I’m grateful to the wealthy people who pay more than I do. They pay enough.
But let’s get the focus back on where it should be,
THE ROLE AND COST OF GOVERNMENT!!
Government is too intrusive, too big and needs to be reined in.
And the only way to do that is to take away the money.
Golldy’s ilk jumps right to the revenue and closes their eyes to the extent and cost of gov’t.
That is the difference between a Conservative…and a nutcase.
Hey, I thought the Atheist Progressives won and were in charge??
Seems like the rewards for all your venom and vicious campaigning has been kind of slim to date.
What exactly have you won so far??
@30 “I’m grateful to the wealthy people”
The hilarious Mr. KKKlynical is soooo grateful that the rich pay such a low percentage of their income in taxes compared to himself.
“What have you won so far”
Your’s and Puddy’s total, complete humiliation has sufficed quite nicely so far, thank you.
Citizens group: Don’t solve King County shortfall by raising taxes
“Most of the 406 “citizen councilors” who completed a survey as part of the Countywide Community Forums said the biggest reason for King County’s budget problems is spending increases — not limits on the amount of tax it can collect.”
http://seattletimes.nwsource.c.....et08m.html
And my guess is this sentiment extends to the state level . . .
@11 Legislators already are part time, idiot.
@14 What you’re leaving out is that voters approved those local sales tax increases.
Let’s bottom-line this. Goldy has pointed out, and backed up with data, that state spending as a percentage of personal income has declined over the years.
In addition, he has used unchallenged data to demonstrate what has been well known ever since the Gates Report came out, that Washington’s poorest citizens pay many times the percentage of their income to state and local taxes that the affluent do — by a factor of about 5 1/2-to-1.
And what do we get from the trolls? A lot of “don’t tax me! don’t tax me!” screaming. What it boils down to is they want the poor to subsidize them.
@35
Voters also more recently “approved” Gregoire at the state level based on an unequivocal no tax, no fee increase pledge. She was placed in office for her leadership and judgment, and that’s what we have . . .
@36
And that “anti-tax” sentiment isn’t just being voiced by Gregoire – whom you and Goldy supported with open arms – but by those citizen councilors in @33 and by the Seattle Times readers who are expressing their feelings about a county tax and taxes in general very, very clearly.
Gregoire has it right. If only some of her supporters weren’t losing faith in her very sound judgment . . .
@34 I didn’t say legislators were “full time”, idiot. Reading comprehension is the key. They’re officially 70% time by a state board, IDIOT. 1/2 of that would be 35% and about $20,000 less annualy for a salary.
Oh, and some do work full time even though the salary isn’t there. It would be nice if those particular ones didn’t work working so much and said “No” a little more to people that run to the government to fix everything.
Less government, less entitlement mentality, more personal accountability.
@38 Yes, I’m for less entitlement mentality. I’m specifically referring to the political/economic class that thinks they’re entitled to get all of the money and pay none of the taxes.
@38 Exactly how is one supposed to comprehend gibberish?
Based on the study, here are the average income and annual state taxes paid by income group.
Avereage Annual Income by Group
Lowest 20%: $9,600
Second 20%: $23,300
Middle 20%: $38,500
Next 15%: $98,700
Next 4%: $225,000
Top 1%: $1,650,000
WA State Taxes Paid
Lowest 20%: $1,690
Second 20%: $2,982
Middle 20%: $4,274
Next 15%: $7,304
Next 4%: $11,700
Top 1%: $51,150
It’s not enough for the libtards that the top 1% pay 90% of the tax. They want them to pay 99%. In fact people like Roger Rabbit have stated the desire to mass murder the rich just for kicks. The left should be rounded up and put in re-education camps for our own safety!
To post #3:
“No tax can be increased without the approval of voters.”
The King Co council approved the increase in sales tax for the ferry boats and mental health without voter approval. Also many would argue Sound Transit extended the taxes it could collect without voter approval before the voters did approve the extension (as well as new taxes) last fall.
Under your proposal, would the level of income taxed be indexed for inflation? Would you have the amount vary from year to year depending on whether the people were in the top 1%? eg, in 2009, top 1% might be say $300K. In 2010, top 1% might be $330K. So would the amount that people are taxed on vary based on where they were relative to other income earners?
And by the way, what is income? If a person has owned a business for 20 years and then sells it, is that “income?”
An overall comment: the sales tax is driven in large part by major purchases: cars, home construction, home remodeling, major building projects like commercial high rises. I’m not sure how the numbers account for commercial construction, but the major purchases are a boom/bust type of expenditure.
Right now, consumers are taking on less debt which means fewer major purchases. Overall, one’s percentage of income spent on sales tax is going to vary a lot from year to year, depending on whether they are making one of those major purchases or not. Instead of one year snapshots, the real question should be what is one’s percentage of individual sales tax paid to income over a 10 or 20 year period?
One reason why purchases that can be taxed have declined is the increase in health care spending, and also in education (including school loans). Money going to pay back school debt is not available to spend on cars, housing etc.
As someone said, if you want this to happen, file an initiative. I’m sure there are some high income earners out there who would pay for your time, and also pay for signature gathering. Good luck!
So, how much do you HAers think the carbon tax on gasoline will be. BO and the Dems are sure being quiet about that. My guess is that it will pay for half of BO’s new spending. About $3.50 to $4.00 a gallon. That would make our gasoline prices right in line with Europe and we know how BO loves Europe.
Goldy,
A thoretical income tax is progressive. Once inacted and with loopholes built in it will be much less progressive. Most numbers showing income taxes being progressive are tautological – because they measure income as defined by the tax system as compared to the income tax collected by the tax system. If economic income or disposable income is compared to tax rates they are much less progressive.
I have an econonomics degree – was a research assistant in economics at two local universities, and have a law degree with a specialty in federal taxation.
Income tax – JUST SAY NO!
Steve @45,
That sounds like the “we might do it wrong, so we better not do it at all” argument.
But regardless, it’s all relative. Even if a progressive income tax turned out to be mildly regressive, it would still be less regressive than what we have now.
Goldy @3,
I’m telling you, pal, you’ll regret the shit out the day you ever suggested having an income tax in WA. We need to work at getting rid of the federal income tax, not expand income tax to include Washington.
@47
No thanks, I don’t wish Washington’s structural deficit and ultra-regressive tax “system” on the rest of the country.
@48,
And there’s no way I’ll ever support an income tax in Washington. That’s one issue about which I’ll really, really take action on.
If you want a state income tax, make a check payable to “DOR” and mail it to:
Department of Revenue
PO Box 47450
Olympia, WA 98504-7450
They’ll take a money order, too, for those of you without bank accounts.
The Government should just dictate how much money everyone should have and if you make more than that it all goes to the government so they can make things fair. How’s that? Then we don’t have to worry about a “regressive tax” or progressive tax.
Rabbit can you post your thoughts around regressive taxation again. I love to read it.
Also, why not a flat tax if you want an income tax. If you want it then everyone should pay…or anyone makeing over say $10K. THat would be fair and equitable to all. Oh wait, back to regressive….darn those people making more money, having more money than someone else. they must be haters.
Oh…what is a living wage again? I forget what you folks believe that should be? I think that question loops me back to the 1st…government should just say everyone gets to keep a certain amount. Then it would be fair. So i pick $50K per person. How’s that?