Why there’s more work to do to make Washington’s tax code and budget more equitable

Washington state is known for being forward-thinking and innovative – a place where we pass progressive policies to ensure everyone can thrive. Thanks to the work of so many coalitions and advocates, our state has been a trailblazer by raising the minimum wage, enacting paid sick and safe leave, and passing protections for home care workers, farmers, and undocumented immigrants. 

When it comes to tax justice, it has also been powerful to see the progress we’ve made in our state in the past few years. For example, the new capital gains excise tax brought in almost $1 billion in its first year – simply by ensuring the ultra-wealthy pay what they owe – to support schools, child care, and early learning initiatives. And the Working Families Tax Credit helps families and individuals living on low incomes make ends meet by providing up to $1,255 per year in a refundable tax credit. This has provided a much-needed cash boost to more than 162,000 Washington households since its launch last year. 

These policies will help people now and in generations to come. They are also a big reason why Washington’s notoriously upside-down tax code – which relies on those with the least to pay the most as a share of income – is no longer the most inequitable tax code in the nation, according to the Institute on Taxation and Economic Policy. 

But we still have a long way to go to make our tax code more equitable (ranking second worst in the nation behind only Florida is nothing to brag about) and to ensure our state budget amply funds the programs and services we all need. That’s why it’s especially unfortunate that lawmakers missed opportunities to make more progress this past legislative session. 

Despite Rep. April Berg and affordable housing advocates’ efforts to pass the Affordable Homes Act, it stalled in the legislature. It would have generated revenue from a new transfer tax on real estate sales above $3.025 million and created a revenue source for affordable housing programs during a time when our state faces a houselessness crisis. 

The wealth tax, another progressive revenue policy, didn’t even get a hearing. The transfer tax and the wealth tax are sensible policies to build on progress from the Working Families Tax Credit and capital gains tax. Washington needs these kinds of progressive revenue solutions to ensure we can pay for schools, affordable housing, and other supports that help our communities thrive.

Now, three initiatives coming before voters this November threaten the progress we’ve already made. These measures could overturn the payroll tax that funds the state’s long-term care insurance benefit; remove $1 billion annually from schools and early learning by overturning the capital gains tax on the uber-rich; and undo the Climate Commitment Act, which supports efforts to curb air and water pollution and helps fund programs like public transportation and programs that make homes more energy efficient.

Children and people who are aging or who have a disability need the funding provided by the capital gains tax and the long-term care benefit. And programs designed to protect our environment will ensure a healthier future for everyone. As such, we all need to keep working for a more equitable tax code that raises the revenue to fund these critical services, and we need to ensure the state doesn’t go backward in areas where we’ve made progress.