Our communities thrive when all people can meet their basic needs and have opportunities to prosper. Our state has invested in our shared future by providing health care for kids, ensuring support for seniors and disabled adults, and increasing access to education. However, during the worst economic downturn since the Great Depression, the needs of families have grown while the state has had fewer resources to help them.
Between 2009 and 2012, state budget shortfalls led to over $10 billion in cuts to health care, human services, education, and other critical services that our communities rely on during tough economic times. To make matters worse, voters in 2010 repealed several new taxes aimed at protecting the public systems that help people meet their basic needs and provide for the health of our communities. Voters also passed a measure that made it more difficult for the legislature to raise revenue to fund priorities. These on-going budget shortfalls threaten our quality of life, the future of our children, and our ability to recover from this economic crisis.
At the same time, the State Supreme Court, it what’s known as the McCleary decision, ruled that our state was failing to meet its “paramount duty” to adequately fund basic education. The ruling mandates the legislature invest billions into K-12 education by 2017. Unless our state reforms our tax structure and creates new revenue streams, the legislature will have little choice but to make new cuts to critical public investments.
In addition to lacking sufficient revenue and an unfunded mandate, Washington also has the most regressive tax system in the nation. This means that people with low incomes pay a higher percentage of their incomes to state and local taxes than in other state. The numbers are stark. The top 1% of Washington residents pays just 2.9% of their income to taxes, the middle 11.2% pays 11%, and the bottom 20% pays 17.3%.2
What we are doing about it
Advocating for new, progressive sources of revenue. In order to maintain important services, create jobs and opportunities, protect our most vulnerable, and ensure a secure economic future for our state, we must address our consistent budget shortfalls. It is time to be bold and creative, show leadership, and find a balanced budget solution, one that explores a variety of options, including raising revenue.
Poverty Action’s upcoming revenue priorities include:
- Passing a capital gains tax in order to create a progressive, steady revenue source that can support a healthy economy and meet the needs of our state. Capital gains are the profits made from the sale of a financial asset, such as stocks, bonds, or a vacation home. A capital gains tax, as proposed in House Bill 2563 in 2012, would only affect the wealthiest 3% of Washingtonians and would generate up to $1 billion a year in new revenue.3
- Closing corporate tax loopholes that are outdated, unnecessary, and are costing our state millions.
- Improving tax fairness by funding the Working Families Tax Rebate (WFTR). Passed into law in 2008, the WFTR would mitigate Washington’s regressive tax structure by refunding taxes for more than 400,000 low-income, working families in Washington by adding 10-percent to their federal Earned Income Tax Credit (EITC).
1. Washington State Budget & Policy Center (2012) “With Big Shortfalls Ahead, Gubernatorial Candidates Should Focus on Broken Revenue System” retrieved at budgetandpolicy.org
2. Institute on Taxation & Economic Policy (November 2009). “Who Pays: A Distributional Analysis of the Tax Systems in All 50 States”, retrieved at itepnet.org
3. Washington State Budget & Policy Center (2012) “A Capital Reform: Using Capital Gains to Fuel Job Creation and Economic Prosperity in Washington State” retrieved at budgetandpolicy.org