Washington and Oregon are friendly but competitive siblings, with their rivalry extending to matters of economic prosperity and tax fairness. Although Oregonians are famously unhappy about state and local taxes, a new report shows Washington residents have more legitimate reasons to complain.
The nonprofit Institute on Taxation and Economic Policy (ITEP), which advocates for progressive tax policies, said in a report this month that Washington has the least-fair tax system in the nation.
Empirical data show that Washington taxes the poorest one-fifth of its residents a staggering 16.9 percent of their average annual income of $11,500, while the top 1 percent pay 2.8 percent state and local taxes on an average annual income of more than $1.1 million. The second-most unfair state, Illinois, imposes 13.8 percent in state and local taxes on its poor.
Washingtons taxes on the middle 20 percent of citizens who make $49,900 a year total 10.4 percent. This is on the high side nationwide.
In contrast, Oregon has a far fairer tax regime. State and local taxes on Oregons lowest-income people the one-fifth whose average income is $10,600 at 8.3 percent is less than half of Washingtons. The top 1 percent of the wealthy in Oregon pay 7 percent taxes on average annual income of $772,900, while the middle income bracket pay 7.6 percent on income of $41,100.
Despite the obvious disparity in tax structures that results in Washington subsidizing its richest citizens, there isnt much outcry. Our state takes countless small bites in the form of sales tax, in contrast to Oregons big bites of income and property taxes.
ITEPs recommendations implicitly recognize that Washington isnt likely to change course and implement an income tax that would shift more of the burden to wealthy residents. Instead, ITEP suggests extending the current property tax break for senior citizens to low-income homeowners of all ages. The institute also advocates state-funded credits for childcare and for low-income people in general.
Any such changes would cost big money in a state where economic recovery is geographically spotty and where budget writers are already struggling to find funds for court-mandated school spending.
But we shouldnt be content to go on with taxes that hit hardest at those least able to pay them. We need to find a better way.