Building an Economy that Works for Everyone

Fairer Taxes for Washington: A High Incomes Tax

INCREMENTAL STEPS TOWARD TAX REFORM:DISCUSSION BRIEF #1

The problem: Washington suffers from an outmoded and regressive tax structure. State and local taxes fall too heavily on low-and middle-income residents, yet public revenues are not sufficient to finance the improvements needed for world-class education and transportation systems. The national economic downturn compounds these problems by further reducing tax revenue. Without new sources of funds, Washington will be forced to cut essential services and postpone important new investments to improve public services.

Other states have achieved more progressive and flexible tax structures by including a broad-based income tax in their mix of public revenues. However, because of a State Supreme Court decision dating back to the 1930s and past votes of the people against a state income tax, most Washington policymakers are hesitant to consider a broad income tax.

A step in the right direction: Rather than cut services or increase rates on existing regressive taxes, Washington could implement a new tax on the highest income state residents. A high incomes tax could raise enough revenue to allow a reduction in regressive sales or property taxes, while still raising new funds to invest in high priority services.

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