This tax day, it’s time for Washingtonians who care about economic and social justice to take back the conversation about our broken tax system.
The powerful organizations that rail against taxes and seek new tax breaks for the 1 percent are primarily funded by a select group of rich individuals and corporations. And they have held the microphone on the issue of taxes for too long. They are diverting attention from the fact that our state’s tax system disproportionately relies on revenue from low- and moderate-income people. They don’t want to draw attention to this because the current system serves the affluent so well.
Let me give you an example. A full-time worker making the state minimum wage ($19,698 per year) and struggling to meet basic needs pays state taxes at a rate seven times higher than the rate paid by a millionaire living in a gated community. In other words, the minimum-wage worker pays 17 percent of his or her income in state taxes. The millionaire pays 2.4 percent.
This is because of complicated, unbalanced tax policies. As just one example, Washington has an excessive reliance on the sales tax, which is applied to basic necessities. But it doesn’t tax services frequently used by people with more spending money (think financial planning, spa services and cosmetic surgery).
Washington has the most upside-down tax system in the nation.
Yet a powerful segment of our state’s most wealthy and a number of our multi-billion dollar corporations keep fighting the efforts to reform our tax system. After all, the status quo is working well for our state’s richest residents: One-hundred percent of the income gains made since the recession ended have gone to the top
1 percent. Meanwhile, the salaries for low- and middle-income Washingtonians actually decreased during this period, making it even harder for them to get ahead. It’s the working definition of income inequality.
And our tax system is not only fundamentally unfair, it’s also not sustainable. We have a huge revenue shortfall in our budget, making it impossible for our state to adequately invest in things that will improve our economy and make our state a better place to live. For example, our K-12 schools are struggling without adequate resources for students, teachers and classrooms. The state isn’t investing enough in the important public services that we all rely on, such as parks and recreation, job training, health care clinics and public safety. As a result, an increasing number of Washingtonians are having a hard time making ends meet, and too many are living in poverty or are homeless.
The good news is we can fix our broken tax revenue system. Members of our government’s legislative and executive branches are currently debating proposals that could help make the system better and more equitable, including a tax on high-end capital gains (profits from the sale of stocks and bonds) and the closure of wasteful tax breaks. These changes could bring $1.5 billion in new revenue, while ensuring that all our residents and corporations pay their fair share.
But in order to move policymakers to adopt better tax policies, the electorate must be more vocal. Those of us who recognize how the system creates income inequality must speak up. Fixing our tax system is not only the best thing to do for people and our economy, it is also the right thing to do. Our state cannot make progress when the system is rigged to benefit the wealthy few.
So speak up when your neighbor complains about taxes but is also upset that his daughter’s school has shortened the school year. Talk to your family members and friends who question why the tax system seems so unbalanced but don’t know what to do about it. As more community members, activists, faith leaders and concerned high-income earners speak out against our broken tax system, share their messages with your networks. It’s time to ensure that our tax policies no longer cater to those with the most resources.
Lori Pfingst is the Research and Policy Director at the Washington State Budget and Policy Center.
For more information about Washington’s tax system and how to fix it, view the new Progress Index report at budgetandpolicy.org.