Building an Economy that Works for Everyone

Budgets from Senate and House Democrats Take Steps Towards a Fair Tax Code for Washington

Proposals includes new progressive revenues and sound investments—the right medicine to build a healthier and more equitable recovery

The state budget proposals just released by Washington’s Senate and House Democrats take steps toward a fairer tax code and make critical investments in individuals and working families hardest hit by the pandemic. This combination of moving toward a more balanced tax system and investments in Washington’s people is the right medicine to build a healthier and more equitable recovery.

We’ve all suffered in some way over the past year, but the pandemic recession has increased already stark economic inequality. Nearly half of Washington adults lost employment income over the past year. Sixteen percent are behind on rent or their mortgage. Many have lost health insurance along with their jobs. Child care providers and small businesses of all kinds have permanently closed. Meanwhile, well-paid professionals have largely been able to work from home at full pay, and the wealthy have watched their riches grow as the stock market soared.

These extraordinary times call for big targeted relief right now. Both the Senate and House proposals for the 2021-2023 state budget allocate large chunks of the federal funds coming to Washington state through President Biden’s and Vice President Harris’ American Relief Plan to health coverage, rental assistance, child care stabilization, public schools, immigrant relief, and paid family & medical leave for workers ineligible for the state program due to lost work during the pandemic. Both budgets increase spending on public health and behavioral health – long neglected areas more urgently needed now than ever.

Both proposals also make Washington’s tax system a bit more fair and able to sustain public services going forward by instituting a new tax on extraordinary profits from capital gains that will be paid by the wealthiest Washingtonians. The resulting funds will be reinvested for long-term assistance to low-income working families through the Working Families Tax Credit and to maintaining child care affordability and accessibility.

Shockingly, Washington’s outdated tax structure compounds our state’s economic inequities. After paying all state and local taxes in Washington, the richest 20% of households now end up with an even larger share of state income – nearly 60%, while the other 80% of households – including those who struggle to meet basic expenses – are left with a smaller share. Together the capital gains tax and Working Families Tax Credit rebalance the equation in a way that will help all of us thrive.

There are lots of differences between the Senate and House budget proposals that we will be parsing through over the next couple weeks. Both leave out important investments that we should be making. One notable lack is funding to increase wages for child care workers.

There will also be plenty of critics, claiming we can get by spending less and don’t need any new taxes.

But this is no time to think small. So many of our friends and neighbors have experienced extreme trauma over the past year. Right now we need an active state government that investments in health, education, small business recovery, and family economic security for the long haul. We can’t fund recovery on the backs of those already hurting. All of us at every income level and from every background need to come together and contribute our fair share.

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