An Incremental Approach to Improve Washington State’s Tax System: A Proposal for a Tax on High-Income Households

Washington state’s tax system is antiquated and unsuited for the 21st century economy. The state’s heavy reliance on sales taxes gives Washington the most regressive tax system in the  nation. The current array of taxes also does not produce revenues that grow along with the economy. As one result, Washington is slipping behind many other states in providing services that are essential for a vibrant economy and high quality of life. According to the Census Bureau, Washington ranked 30th in per pupil spending on elementary and secondary education in 2002. Washington is near the bottom among all states in providing upper division college slots for young adults and in funding transportation and parks.

Washington is one of only seven states with no personal income tax. A new tax on high-income households would more fairly distribute taxes and produce revenues that would grow with the state’s economy and need for services, particularly if linked to a reserve account and reductions in other taxes.

See the full brief for discussion of:

  • changes in the distribution of household income over the past quarter century
  • lessons from other states
  • constitutional and political questions
  • volatility and a rainy day fund
  • administrative costs
  • linking the new tax to reductions in existing taxes.
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