Chris Cargill: Cut Washington’s regressive sales tax rate – now

By Chris Cargill

The holiday shopping season begins in earnest today. For many working families facing government-induced inflation, it will be a struggle not only to provide a nice Christmas but also cover everyday expenses.

Federal and state officials, however, are not struggling for money. Politicians in Olympia have more money than they know what to do with, according to surplus tax collections reported last week.

The newest state revenue forecast shows taxpayers have sent almost a billion dollars more to Olympia than lawmakers were expecting. And that’s just the latest forecast.

In total, lawmakers have $7.7 billion more (over a four-year period) than expected since the last budget was adopted.

Washington has historically ranked among the leaders across the country with strong tax revenue growth. In fact, according to the Pew Charitable Trusts, Washington’s tax revenue growth has outpaced the nation since 2015.

Simply put, taxpayers are being overcharged. They deserve a break.

Leaders in Olympia know they have a lot of extra cash. In fact, Gov. Jay Inslee decided to give out $412 million more in union employee pay increases. At the time, the governor’s advisers said the improved taxpayer revenues allowed them to “recognize the hard work and commitment” of state employees.

Where is the recognition of the “hard work and commitment” of taxpayers?

One way for the state’s leaders to show goodwill is to move to immediately reduce the state sales tax. For each 0.1% reduction in the state sales tax rate, approximately $306 million in tax relief could be provided to the public.

When it was first imposed in 1935, Washington’s sales tax rate was 2.0%. It is currently imposed at 6.5% and has not seen a rate reduction since 1982. Local sales taxes are added on top of the state portion.

With massive surpluses, there is no reason lawmakers can’t provide $1.5 billion in tax relief by reducing the state sales tax rate from 6.5% to 6.0%. This adjustment would provide relief for everyone in the state and fight inflation, while cutting regressive taxes, specifically helping lower income families.

Washington and New York were the only two states that raised taxes instead of cutting them during a year of COVID-19 lockdowns. In fact, Washington lawmakers added a new state income tax starting with capital gains, as well as a new, unpopular long-term care payroll tax.

Other states have done things differently to help their residents. In California, two thirds of residents benefited from a $12 billion tax rebate adopted this year. In Oregon, lawmakers stumbled upon a “stunning” revenue forecast and decided to issue rebates. In Idaho this year, lawmakers passed the single largest tax cut in state history.

Washington state residents continue to pay record-high taxes, while their neighbors get financial relief.

What type of message will it send if state officials agree to mid-budget pay raises for government employees while refusing to provide broad-based tax relief for all Washingtonians?

When lawmakers return to Olympia in January, they should immediately cut the state’s regressive sales tax, return some of the surplus and give all working Washingtonians a much-needed break.

Chris Cargill is the Eastern Washington director for Washington Policy Center, an independent research organization with offices in Spokane, Tri-Cities, Seattle and Olympia. Online at washingtonpolicy.org. Members of the Cowles family, owners of The Spokesman-Review, have previously hosted fundraisers for the Washington Policy Center, and sit on the organization’s board.