Editor's Note: We're taking a closer look at Washington's tax system through a week-long series. This is the fourth installment of “Where’s the Dough? On the Hunt for Washington’s Missing Tax Dollars." The first installment explored the history of the state's tax system, and the second story took a closer look at the efficacy of tax exemptions. The third piece looked at the tax incentives Washington approved for Boeing, and the fourth story examined tax breaks for consumers.
If you’re poor and you live in Washington state, you wind up forking over almost 17 percent of your income in state and local taxes. That’s according to a recent report from the Institute on Taxation and Economic Policy.
But if you live in, say, Boise or Coeur d’Alene, Idaho, state and local taxes only eat up 8.5 percent of your income.
The reason boils down to how the two states collect revenue. Washington relies heavily on a sales tax, along with property tax and a gross receipts tax on business called the business and occupation tax. All of that means low-income people shoulder a much bigger tax burden as a percentage of their income than the richest 1 percent. And that earns Washington the dubious distinction of having the most unfair state and local tax system in the country, according to ITEP.