Washington Policy Center’s Jason Mercier reacts to Governor Jay Inslee’s decision to resume negotiations on government pay increases
Washington Policy Center
On the same day, the governor ordered state employees (and others) to be vaccinated or fired, state labor unions announced that Inslee has agreed to reopen its contracts for 2021-23 to negotiate salary increases. If civil servants receive pay increases, a sales tax cut should also be on the table. It is long gone for Washingtoners to receive a large-scale tax cut.
Washington has always been one of the front runners across the country with strong tax revenue growth. In fact, Washington has outperformed the country’s tax revenue growth since 2015, according to The Pew Charitable Trusts. Our tax revenue growth of 39.4 percent since 2008 is now the highest in the country. For comparison: the average tax revenue of the 50 states since 2008 was 15.9 percent. In fact, the state’s June revenue forecast projected $ 2.6 billion more than previously expected when lawmakers put the 2021-23 budget earlier this year.
Although they have enacted some targeted tax cuts in recent years (including finite funding of the working family rebate), Washington lawmakers have shown no interest in broad-based tax breaks. While other states across the country rolled out “record” tax cuts this year, our state was one of only a few to raise taxes instead by introducing the country’s first standalone capital gains tax.
The state’s sales tax is prepared and ready to be lowered. When it was first introduced in 1935, the Washington sales tax rate was 2.0 percent. It is currently 6.5 percent and has not been lowered since 1982. For every 0.1 percent decrease in the state sales tax rate, approximately $ 306 million in tax breaks could be granted.
That means lawmakers could cut sales tax rates by 0.2%, for example, and provide more than $ 600 million in tax breaks, fund pay increases for government workers, and still have money to further expand the state’s emergency reserves or other priorities Have available.
What kind of message will it send when state officials approve mid-budget pay increases for state employees while refusing to give all Washingtoners sweeping tax breaks?
$ 2.6 billion reasons for tax cuts
Jason Mercier is the director of the Center for Government Reform at the Washington Policy Center.