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As sales taxes grow, so does Washington’s income inequality

According to an index created by the Institute on Tax and Economic Policy, Washington state has the most unfair state and local tax system in the US. Their research shows that the lowest fifth of families by income (making less than $27,000/year) pay 17.8% of that income in state and local taxes.

The percentage share of income a family must devote to paying state and local taxes diminishes as you go up the income ladder. The result is that incomes are more unequal in Washington after state and local taxes are collected than before.

For families whose income puts them at the top 20% (making at least $150,000/year—no upper limit), as much as 7% and as little as 3% goes to state and local taxes. Do Washingtonians know how much we demand from the poorest among us in order to avoid having a state income tax?

The picture is similarly distressing where Olympia is concerned. Olympia residents pay a higher sales tax than 89% of Washington localities. The total sales tax is currently 9.4%, of which 2.9% is levied by the City. That amount will go up to 3% in July when the City begins to collect the Inspire Olympia taxes passed by a vote of 7,242 this April. In 2017 and 2018, Olympia voters also approved adding additional amounts to the sales tax: 0.1% for “public safety,” and 0.1% for a Home Fund dedicated to addressing homelessness.

In addition, Olympia Council members approved an increase in the municipal utility tax from 11.5% to 12.5%. This tax is calculated on the City’s bi-monthly charge to residents for water/garbage/sewer services. (City sales taxes are listed at Sales Tax Handbook.)

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