Washington taxes slightly below national average
OLYMPIA – As someone who commutes about 50 miles a day to work in Spokane, Jeanie Smith is irked that Washington’s gas tax, at nearly 38 cents a gallon, is the highest in the nation.
“I think this state is really overtaxed compared to other states,” she said. “We need a huge overhaul in taxes in this state.”
But a state report released Tuesday suggests that total state and local taxes in Washington are actually a bit below the national average. When taxes are weighed against personal income, Washington came in 28th highest among the states. Idaho came in 29th. (All the numbers are from 2006 data.)
“Washington is pretty much in the middle of the pack, tax-wise,” said Mike Gowrylow, a spokesman for the state Department of Revenue, which compiles the annual report.
To be sure, there are some wince-inducing standouts: Washington’s high gas tax, for example. The liquor tax is among the highest in the nation and, at about $2.03 per pack, Washington has the fourth-highest cigarette tax.
But the data suggests that even the state’s property taxes compared to average income are relatively modest: Washington ranks 29th on that measure. Idaho was 30th.
“I don’t doubt that some people are stressed by taxes, particularly people with limited incomes and valuable homes,” said Gowrylow. And it’s true, he said, that residents in some rural counties that reassess only every four years have suffered sticker shock at steep jumps in their property values.
But compared to personal income, he said, property taxes in Washington are “well below the national average.”
For every $1,000 in income, a typical Washingtonian paid about $112 in state and local taxes in 2006, the report says. Idahoans paid about 40 cents less than that.
Ignore income and the disparity looks much greater. On a per capita basis, Washington taxes are 18th highest in the nation. Idaho’s 45th.
That’s because Washington is a much richer state than Idaho, which at $31,031 in 2006 had one of the lowest per capita incomes in the nation. Washington’s was $39,705.
Many economists believe the best measurement of the tax burden is to compare it to income, Gowrylow said. By that measure, the two states are virtually identical.
The conservative Tax Foundation, a nonpartisan group based in Washington, D.C., annually compares government spending per capita. Under that calculation, Washington looks like a spendthrift: 16th highest state spending compared with Idaho at 37th. Add in local government spending, the group says, and it looks even worse: Washington comes in sixth to Idaho’s 47th.
In Ritzville, retired businessman Eric Walker said he agrees that per capita comparisons aren’t particularly useful. He, too, believes that income’s a better basis for comparison.
“An increase in dollars per capita doesn’t mean a thing,” Walker said, “because income in New York City is different from income in Selma, Ala., or in Spokane, Wash.
“I don’t enjoy paying taxes, but we have to. There are things we have to have that only governments can provide.” Things like national defense, street repairs and police, he said, are directly linked to the willingness of taxpayers to pay for them.
The state report also suggests Washington’s tax burden is easing slightly, compared to average income. In 1997, for example, Washingtonians’ state and local tax burden was 11th highest. Tax-cutting ballot measures helped pare that back.
In most years from 2000 onward, that ranking has hovered around 30. It fell to 37th in 2005, but that was largely due to a large Microsoft stock dividend and the short-lived suspension of Washington’s estate tax.
“There’s every indication that we’ll go down a little next year,” said Gowrylow, because average personal income here continues to grow rapidly compared to other states.
He also noted that a significant amount of Washington’s tax burden is self-imposed. The state relies heavily on sales tax, some of which is discretionary spending. And one-third of a typical property tax bill consists of taxes approved by voters.