But we also have lots of room for improvement. We have the most upside-down tax code in the country, and we’re ranked 34th in the nation for access to mental health care. Our overreliance on sales tax exacerbates inequality: people in Washington making under $24,000 annually (the bottom twenty percent) pay almost 18% of their income in taxes, whereas people making over $546,000 (the top one percent) pay only 3% of their annual income.
Being upside down is awful. We should know. Here in Washington, we have the most upside down tax code in the country. Let’s flip it around; a balanced tax code helps us move forward.
Posted by Balance Our Tax Code on Friday, December 14, 2018
The legislature widened the inequality gap during the 2008 recession by slashing budgets for human services. While we aren’t tax experts here at YouthCare, we are experts about what happens to youth and families when vital human services are cut:
- A homelessness crisis: Last year, the state had the sixth highest number of homeless students in the nation with over 40,000 students experiencing housing instability or homelessness. More than 22,000 people experienced homelessness in Washington and over 12,000 were homeless in King County.
- A housing crisis: Since 2012 rents have risen sharply across the state. In Seattle, alone, rents have skyrocketed by 42% since 2013. For every 100 households at or below 30% the median income, there are only 29 affordable rental units available statewide.
- An affordability crisis: In 2018, a minimum wage worker would have to work an average of 75 hours per week to afford a one-bedroom apartment at fair market rent in Washington. In Seattle, the number was much higher: 102 hours per week.
If we want to address these crises in our state, we must commit to filling the gaps. We must invest deeply in our mental health and chemical dependency system and fix our disastrous foster care system. We must fund anti-poverty and social safety net programs so that inequity does not reproduce itself generation after generation. And we must build more affordable housing.
But there can be no new investments if we don’t have new revenue.
For this reason, YouthCare is supporting progressive tax reform, and hope you will too. Specifically, we support closing the tax break on capital gains earnings through stocks, bonds, and other assets. A capital gains tax would affect a small percentage of Washington taxpayers—approximately 1.2%—while benefiting thousands more.
We also support a progressive Real Estate Excise Tax (REET). This will change the flat tax rate on the REET by making it smaller for homes valued under $500K and higher for homes over $1.5 million. This change will provide tax relief for 75% of Washington State homeowners.
For too long, low-income residents and people of color have disproportionately shouldered the burden of our tax code. It’s time to finally address our tax system and give all Washingtonians the opportunity to thrive.