Building an Economy that Works for Everyone

Washington’s sales tax: Older than this guy’s mustache

WA Gov. Clarence Daniel Martin signed the Revenue Act in 1935, the last comprehensive overhaul of Washington’s tax code

While short-term fixes to backfill +$10 billion in budget cuts since 2009 are essential to avoid further damage to Washington’s economy (62% of state spending goes to the private sector), the state faces some long-term structural problems with its tax code that also need to be addressed.

For example, consider the source of half of all state revenue: the sales tax. It applies only to goods, not most services. It’s a swell deal for attorneys, accountants and stock brokers (to name a few) whose services are exempt from the sales tax – but not so good for everyone else.

See, services are becoming a much larger part of Washington’s economy, and because we exempt them from taxes, it means a) the tax base is shrinking, and b) consumers who buy more goods effectively subsidize those who buy more services.

A “goods-only” sales tax was a fine idea for Washington’s 1930’s agrarian economy (the last time Washington’s tax code was seriously updated) – but today it’s a relic that’s holding back public investment in a modern service-based economy.

To solve these kinds of problems, state lawmakers need to look for solutions to the short-term revenue shortfall that lay the foundation for long-term tax reform. Here are a few ways to accomplish that.

  • Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More To Read

November 1, 2024

Accessible, affordable health care must be protected

Washington’s elected leaders can further expand essential health care

September 24, 2024

Oregon and Washington: Different Tax Codes and Very Different Ballot Fights about Taxes this November

Structural differences in Oregon and Washington’s tax codes create the backdrop for very different conversations about taxes and fairness this fall

September 10, 2024

Big Corporations Merge. Patients Pay The Bill

An old story with predictable results.