Via Goldy, the Institute on Taxation and Economic Policy has a new analysis of the distribution of the tax burden (pdf) in each of the 50 states. It turns out, to almost no one’s surprise, that Washington has the most unfair tax system in the nation.
Check out this table from page 2:
It’s not even close. No other state puts nearly such a high tax burden on its poor. It’s the result of a tax structure that includes no income tax, but does rely heavily on property taxes and a high sales tax.
I have to say, however, that I kind of hate the way this issue gets talked about. Not only do lots of folks get wrapped around the axle over any discussion of taxes, but progressives mostly do a horrible job of talking about It.
Problem number one, in my judgment, is using the word “regressive.” It’s an economist’s word that has no meaning for most people and therefore requires an explanation that quickly becomes cumbersome and tangled. The problem with regressive taxes is that they are unfair. And it’s really a pretty basic issue of fairness: poor families spend twice as much of their income on taxes as the middle class. And middle class families spend far more of their income on taxes than the rich. It’s not an issue of “regressivity,” it’s an issue of fairness.
As Washington braces for another huge budget shortfall, elected officials have an opportunity to make some lasting repairs to the state’s broken tax system. One solution, proposed by Marilyn Watkins at the Economic Opportunity Institute among many others, is to start up a state income tax — though it might be levied only on the rich and offset by reductions in sales tax.
Even if it didn’t generate additional revenue, an income tax would help stabilize the state’s revenue portfolio even while is softened the current unfairness. As things currently stand, the state government’s response to budget shortfalls has been to compound the unfairness in the tax system by slashing funding for low-income health care and other basic safety nets. In fact, it’s hard to imagine a more vicious fiscal plan than the one that Washington lawmakers have embraced up until now.