Virtual state tax town halls starting next week

Sep 15, 2021

If you care about state taxes and whether Washington imposes an income tax, you'll want to participate in the virtual tax town halls occurring across the state. These town halls are being run by the state Tax Structure Work Group authorized by lawmakers via the budget. WPC held an event yesterday with this group to learn more about its recommendations (video here). Depending on your perspective, Washington’s tax code is either the envy of the nation or the worst in the country.

We know that since 2008 Washington has led the nation in tax revenue collection and the state consistently receives high credit ratings due to the stability of tax collections since we don’t rely on volatile income taxes. There are problems though with our great depression era “temporary” and “emergency” B&O tax and imposing the highest excise (sin) taxes in the country.

WPC has long recommended maintaining the state’s competitive advantage by not imposing an income tax, replacing the B&O tax with a margins tax, and reducing the sales tax rate (which hasn’t been cut since 1982).

When it comes to our state tax code, do we need tweaks, or should the entire system be blown up? Lawmakers are now exploring that question with the Tax Structure Work Group and the upcoming tax town halls.

Here are my questions for the Tax Structure Work Group:

  • Are these scenarios interchangeable or take it and leave it in packages? There are interesting aspects, but each seems to be tied to addition of an income tax or compensation tax.
  • Are these recommendations in the form of constitutional amendments or just statutory changes and rates that can be changed by future simple majority legislative votes?
  • Are there any recommendations to repeal or reduce our high excise (sin) taxes?
  • Is there an option to just replace the B&O tax with a margins tax/VAT without also coupling with an income tax?
  • How would a major change to the state taxes be complimented at the local level? Is local pre-emption included in these replacement scenarios?

Here are the details on the Tax Structure Work Group tax town halls. You can find your region here and then register using the links below:

These town halls are your chance to be heard before the Tax Structure Work Group makes formal recommendations back to the legislature. Speak now or risk being surprised by the tax decisions to come.

Additional Information
Washington Policy On the Go: Insider Update with Washington State Tax Structure Workgroup
House Finance Committee Tax Structure Work Session
Replacing the Business and Occupation Tax with a Single Business Tax
Washington Research Council: Getting the Tax Structure Right - It’s Complicated
Tax reform doesn’t mean tax increases
$2.6 billion reasons to cut taxes
Tax Foundation VAT resources