Mention taxes and people either get irate or their eyes glaze over. But one well-known Seattle economist has spent a lot of time thinking about our state tax system and says it stinks. And, he says, it’s time we all paid attention.
Before we get to that economist, here’s what people on the street said they think of the state’s tax system.
“I really don’t think it’s fair,” said Beatrice Green. “Seems like everything that used to didn’t cost nothing, now everybody has to pay for it. The bridges, the free buses they used to have over here on Third [Avenue], now we have to pay for it.”
“What I don’t like is when middle class and poorer people get taxed to provide benefits for the rich, you know?” said Garrett Cole.
“I think we’re fair-taxed,” said Jane Mangers when asked whether she thought we were overtaxed, undertaxed or fair-taxed.
But economist Dick Conway thinks we have “an absolutely terrible tax system.”
“I mean, across the board, there’s nothing good to say about it,” Conway said.
Conway says our tax system is unfair, inadequate, not transparent and unstable. He has just finished a report comparing Washington’s tax system with other states.
Washington is among a handful of states that don’t have an income tax. Washington does have a high sales tax, and that means the burden falls disproportionately on low-income residents. Conway says these residents are overtaxed, but not the rest. Compared to other states, our overall tax burden is light.
“We’re collecting about 10 percent less tax revenue per dollar of personal income than everybody else on average,” he said.
Conway says we’d have enough money for bridges and tunnels and schools if we’d collected at the national average over the past decade. He knows his solution is not popular: “The only answer to this fiscal bind is an income tax.”
Conway says one solution would be for the state to throw all the other taxes out and replace them with a flat-rate income tax. It would be fairer and more transparent, and the state's tax revenue would rise as personal income climbs.
Still, many political realists say it’s not going to happen. But if we don’t do something, says Conway, the state will be even worse off 10 years from now.