Local Tax Burden Comparisons from DC Report
Posted: February 25th, 2014 under Councilmember Burgess.
Every year the District of Columbia government issues a report comparing tax rates and tax burdens in the most populous city of every state. These reports provide a good opportunity to see how Seattle ranks with other major cities across the country. As we continue to look at issues related to affordability in Seattle, we must keep in mind an individual’s or a family’s tax burden—even if the tax structure is set at the state level.
The latest report looks at 2012 data. Overall, the report placed Seattle 45th out of the 51 cities reviewed (meaning the tax burden here is relatively low compared to the other cities).
A look at the detailed analysis reconfirms what we already know: Washington State’s regressive tax structure hurts those who have the least. Relative to income, the tax burden is nearly double for a family of three making $25,000 (13%) compared to a similar family making $150,000 (6.6%).
When it comes to property tax, arguably the most visible tax in Seattle given that major increases must be approved by voters, the report finds that Seattle’s effective rate per $100 of home value is $0.97, ranked 39th out of 51. The median rate for the cities surveyed is $1.56.
These numbers reinforce the need for comprehensive tax reform in Washington State. By substituting an income tax for portions of today’s sales, property and business and occupation taxes, we could levy the same amount of revenue in a way that does not place an unfair burden on the poor. The tax burden percentages on the chart above should be flipped, with lower incomes shouldering a lesser burden.
And for those who would argue against an income tax, keep in mind we already have one: Washington’s business and occupation tax is a corporate income tax on gross income. I do not see a reason why taxing gross income is more advantageous than taxing a company’s net profit.
More detail on the estimated taxes for Seattle families is below.