Taxes are an equity issue

August 3, 2020

10.1% That’s how much you are paying when you purchase most basic necessities, except unprepared food. Diapers, household goods, and prepared food are all subject to sales tax. Sales taxes are regressive taxes where everyone pays the same tax rate regardless of their income. Because everyone pays the same, higher-income taxpayers pay a smaller percentage of their income than lower-income taxpayers because the tax is not based on the ability to pay. Washington State’s tax system is the most regressive in the nation, with the state’s wealthiest households spending about 3 percent of their income on taxes. By contrast, the poorest families spend 17.8 percent. In Washington, it’s a far larger gap than any other state.

A progressive tax is a type of tax that takes a larger percentage of income from taxpayers as their income rises. That’s why the Neighborhood House board took a position in favor of progressive revenue. We were one of the early supporters of Jumpstart Seattle, which the Seattle City Council passed last month. Jumpstart Seattle, asks companies with more than $7 million in annual payroll to pay 0.7% on salaries above $150,000 a year, with a slight increase of 1.4% for salaries at $500,000 a year or more. The rates would slightly increase for the largest, most profitable companies with $1 billion or more a year in payroll.

Jumpstart Seattle will help mitigate the impacts of COVID and the economic crash on workers, families and small businesses. Jumpstart Seattle would:

  • Provide rent stabilization and immediate housing assistance for unhoused families.
  • Expand nutrition assistance vouchers to help struggling families put food on the table from local grocers.
  • Provide direct grants to small business owners to help them keep the lights on, keep people employed, and bring back workers, which in turns stimulates economic recovery.
  • Provide direct assistance for immigrant and refugee people and families who were intentionally excluded from Federal CARES Act aid and are ineligible for unemployment insurance because of their immigration status.

We are grateful to the leadership of the City Council, especially Council Member Mosqueda for listening to concerns about last year’s controversial “head tax” and writing this new legislation that approaches solutions that center equity.

At the state level, there is much work to be done to implement progressive revenue. The state budget supports ECEAP, Colleges and Universities, Basic Education, TANF, and much more. Regressive taxes place the largest burden of Washington State’s budget on those that can least afford to pay. Learn more here.

By Janice Deguchi, Executive Director