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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

February 15, 2012 at 1:28 PM

How Washington and the Northwest stack up on taxes

The Tax Foundation is out with its latest report on state-by-state taxes. Nationally, the per-capita tax burden is $4,160, while in Washington it’s $4,408, 11th in the country. Elsewhere in the Northwest: Oregon, $3,761 (25th) and Idaho, $3,276 (36th). Connecticut at $7,256 ranks first in tax load, while Mississippi at $2,678 is 50th. The numbers come from fiscal 2009.

As a percentage of state income, Washington’s tax burden is 9.3 percent, below the national average of 9.8 percent. In Oregon, it’s 9.8 percent and 9.4 percent in Idaho.

The research organization also ranks states by their overall tax climate as of July 1, 2011. Washington’s overall rank is 7th thanks to its No. 1 ranking in income tax. Otherwise, the state ranks 30th in corporate taxes; 48th in sales taxes (which fall hardest on low-income people); 18th in unemployment insurance taxes, and 22nd in property taxes. Idaho’s overall ranking is 21st, while Oregon’s is 13th.

Getting deeper into the weeds, Washington’s sources of revenue are striking: 30 percent from property taxes, 45.7 percent from general sales taxes and 24.3 from other taxes, such as those on alcohol, tobacco, motor vehicles, etc.

My takeaways: There’s no correlation between tax burden and economic performance. For example, nobody would claim that Mississippi’s economy or prosperity is anywhere near those of supposedly high tax states. The report also implies a very narrow tax base for Washington, one that might have worked 50 years ago but, along with initiative-based tax limits, isn’t providing the funding necessary for a populous, urbanized state in the 21st century. But I suspect many readers will disagree.

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Today’s Econ Haiku:

The Greek tragedy

Is decades of poverty

Bankers are laughing

Comments | More in Pacific Northwest economy, State fiscal conditions, Tax policy

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