It’s Time to Transform our Tax Code
The tax system has not evolved to adjust to the rise in income among wealthy few. Instead, taxation in the US has become more regressive - people struggling to make ends meet pay more of their income, while the very wealthy pay less. Our tax code exacerbates economic inequality, harming everyone - even the wealthiest among us. People with fewer resources at their disposal experience the worst health outcomes through exposure to harmful environments, decreased opportunity for educational and occupational advancement, and decreased access to the resources necessary to prevent and cope with disability and disease.
The Wealth Gap is at an All-Time High
Since the 1970s, economic inequity in the United States has continued to increase and currently parallels the disparities witnessed in pre-Great depression times.
The growth of income inequality is multifactorial and complex but is generally attributed to technological advancements, stagnated growth in educational attainment, globalization, regressive taxation, and the decline of labor unions.
French economist Thomas Piketty explores the impacts of capitalism on equality in Capital in the 21st Century. His analysis reveals the alarmingly unequal wealth distribution that continues to widen due, in part, to generational wealth accumulation. It is clear that there are various factors acting as catalysts for the widening wealth distribution in the United States, which makes it increasingly difficult for societies’ lower earners to achieve upward mobility while simultaneously meeting their basic needs. WPSR is working to address economic inequity in hopes to achieve a future where all of Washington’s citizens can thrive.
We All Deserve The Resources to Live a Healthy Life
Photo Attribution: Fibonacci Blue
One way to address economic inequity is by ensuring that all Washingtonians have the money and resources they need to live a healthy life. People struggling to make ends meet have fewer options in terms of food, exercise, living conditions, and preventative medicine.
That's why we joined the movement of people advocating for a $15 minimum wage, as our program began. Since then, we’ve advocated for the Working Families Tax Credit (WFTC), which passed in 2021. Today, we continue to advocate for expansions of the WFTC, as well as a Guaranteed Basic Income and a statewide baby bonds program.
Whatever we do to raise the floor, as long as the wealthiest among us remain disproportionately wealthy and uncontrolled, our health will never improve compared to so many other nations.
Washington State’s Regressive Tax Code
Washington state has the second most regressive taxation system in the United States. The wealthiest Washingtonians pay the smallest portion of their income, while Washingtonians who make the least pay the largest portion of their income. Because Washington disproportionately taxes those with the lowest incomes, some call Washington state’s tax code “upside down.”
Image: Who Pays? 7th Edition - ITEP
Until recently, Washington state’s tax code was even more unfair. For decades, our state has had the most regressive tax code in the country. A 2024 report from the Institute on Taxation and Economic Policy (ITEP), revealed that Washington state finally moved up one place in the national ranking. This major milestone is thanks to years of collaborative advocacy - including the work WPSR’s Economic Inequity & Health Task Force.
49th place is better, but clearly leaves a lot of room for improvement. Washington state still has an extremely regressive tax code. Incomes are more unequal in Washington after state and local taxes than before, and our current system disproportionally taxes BIPOC communities, perpetuating structural racism.
WPSR is part of several coalitions working to transform our state’s upside-down tax code. These coalitions combine the insights of organizations and individuals to create a more just and equitable Washington through more progressive taxation and spending policies. This includes lessening taxes for people struggling to make ends meet, eliminating tax breaks that only benefit very wealthy, and producing more resources for our communities.
This chart shows how the Washington state tax code has improved between 2018 & 2024. Now, people with the lowest incomes pay 13.8% of their income in taxes (they paid 17.8% before). People with the top 1% of incomes pay 4.1%, while they used to pay 3%. This is a step in the right direction, but Washington's tax system is still extremely inequitable.
Policies that Made a Difference
Much of the change described above comes from two policies that passed in 2021 - both of which were a top priority for WPSR:
The Working Families Tax Credit: A new cash payment of up to $1,200 per year for low to moderate income people in Washington. Undocumented immigrants and mixed status families are eligible.
The Capital Gains Tax: A 7% tax on the sale of financial assets such as stocks and bonds. The tax applies only to profits over $250,000 and does not apply to real estate or retirement accounts. The funding from this tax goes to education.
While Washington has a long way to go, seeing this progress is encouraging. Keep an eye out for our current policy priorities, which will continue to make our state’s tax system more fair.