Lynne Dodson on:

Tax Fairness

If you feel you're paying too much in taxes, you may be right. That's not because public services are over-funded – far from it. But our state tax system puts the burden on low- and middle-income families and small business, instead of on those with the greatest ability to pay. Our state has the most regressive tax system in the country. The poorest 20% of non-elderly Washington families pay 17.6% of their income in state and local taxes. The wealthiest 1% pay just 3.3%. The poorest Washingtonians pay five times more of their income in tax than the wealthiest families.

Why is there such an imbalance? We rely more heavily on sales tax than any other state. Sales taxes take a bigger bite from the income of poor and working people. A progressive income tax is based more on the ability to pay.

Short-term, there are some steps that can help:

  • We have to defend the Washington estate tax, a modest tax on estates of over $2 million, currently under attack by the right wing.

  • In the last session, the Legislature mandated a periodic review of all tax exemptions (“loopholes”) every ten years. That's a start. We need to enact sunset provisions on all tax exemptions – they should be reviewed frequently and not automatically last forever. We also need accountability and disclosure policies that tell the public which companies are getting how much in tax subsidies, and whether family wage jobs are being created as a result. We can maintain an adequate tax base and take some of the burden off working families by closing loopholes for the wealthy.

  • As your legislator, I'll hold tax accountability sessions with the voters of the 43rd District on a regular basis, to discuss with the community how our taxes are being spent, and what we can do to make the system fairer and more responsive to the public need.

But these are stop-gap measures. We need fundamental restructuring of our tax system:

  • I support a replacing the business and occupation tax (B&O) with a modest tax on corporate profits. Unlike business taxes in most states, the B&O is based on gross receipts, not profits. It's passed on to consumers as a hidden sales tax. It hurts small businesses that help build our communities, which operate on a smaller profit margin than big corporations.

  • We need to repeal the state sales tax, eliminating the 6.5% state sales and use tax, while leaving local sales taxes intact.

  • I also support a property tax swap - a $100,000 homestead exemption from the state portion of the property tax, which would be paid for by increasing the state property tax rate on all remaining taxable property, except low-income rental housing. This shift would provide some tax relief to young working families and to the working poor, while statewide property tax collections would remain unchanged.

  • Finally, and most importantly, we need a progressive income tax. It should exempt the first $30,000 of income for married couples ($15,000 for singles) and allow an additional $10,000 exemption for each dependent. Income would be taxed at modest, progressively increasing rates depending on income level, with families earning over $100,000 paying the top rate.

These changes maintain our tax base with a more equitable system. They provide tax relief for working families and small businesses, and a more secure future. This would eliminate taxes that place an excessive burden on those least able to pay, substituting a system based on tax fairness. It would provide surer funding for our basic needs: schools, mass transit and roads, health care and other community needs. Our schools will remain economically insecure without these changes. We work hard, and we deserve to maintain a high standard of living in our region. A solid revenue base rooted in economic justice has been a long time coming. The people of Washington deserve a raise.

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