See update at end of story.
As the traditional fireworks display burst around the fog-shrouded Space Needle in Seattle three months ago to ring in 2014, something explosive took place two time zones away. Cook County, Ill., lowered its portion of the local sales tax by 0.25%. So the total rate in Chicago fell from 9.5% to 9.25%. That broke a tie and left Seattle’s 9.5% rate all by itself as the nation’s highest among big cities.
As far as I can tell, this was a sub silentio event in Seattle, with no local recognition. Of course, that’s not surprising. There are some things you just don’t want to brag about being No. 1 in.
Since becoming New To Seattle, I have become quite aware of the stiff local levy. Two years ago in this space I was one of the first in Seattle to note the 9.5% top-sales-tax tie between Seattle and Chicago. That was the result of recent sales tax reductions in Chicago and Los Angeles, which at one point both had 9.75% rates. The rate in the City of Angels fell by a full percentage point and in the Windy City by a quarter-percent.
I learned of the Emerald City’s sole front-runner status only this week when I did some quick research after receiving a mail ballot (the way elections are conducted across most of Washington State). Voters in King County, which includes Seattle, are being asked to raise the collective sales tax by 0.1% to 9.6% mainly to stave off what are described as crippling cuts to area mass transit. (In case you wonder, the nation’s highest combined sales tax for cities of any size is the 12.725%–more than one penny out of every eight–that tiny Tuba City, Ariz., levies on unknowing tourists motoring through en route to the Grand Canyon.)
Seattle prides itself as a liberal city in so many ways (especially when it comes to such issues as legalized recreational pot and gay marriage). Why, voters even just elected a socialist to the City Council. But to my thinking it’s tough to square that image with its regressive tax structure, which really sticks it to the poor and disadvantaged. Regressive here means that taxes take a larger percentage from lower-income people than they do from higher-income people.
By its very nature, a sales tax falls disproportionately upon those of lesser means. Bill Gates and Jeff Bezos pay a far smaller percentage of their incomes in sales tax than does a cashier at a Fred Meyer store. Washington State is also one of only a handful of states that has no state income tax (which voters turned down in 2010). That means Paul Allen and I pay exactly the same rate and amount–nothing. Somehow, I think Allen has a lot more left over. Experts say Washington State has the nation’s most regressive tax structure.
The absence of a state income tax, of course, is the main reason why the sales tax is so high. Since government has bills to pay, it’s going to get you one way or the other. On top of the visible sales tax system in Washington State is an invisible-to-the-public system of business and occupational taxes, one of the country’s most expansive. The state gets nearly a fifth of its budget from these regressive levies, which aren’t broken out on a receipt handed customers but which enterprises figure into what they must charge to make a profit. The B and O taxes are as regressive as hell. They are a major reason why the cost of living is so high in Seattle and other places across the state.
Now, it’s probably hard to make much of a moral argument against a sales tax increase directed to mass transit, which tends to benefit more the poor and those who can’t afford cars. But politicians and other governmental officials know that, which is why when it comes to fiscal issues they cynically tend to let the public vote only on such popular issues, all the while issuing dire threats of what a defeat might entail. Another local example: Two years ago, the Seattle City Council sent to the voters a property tax levy earmarked for libraries, threatening draconian cutbacks. Not surprisingly, voters approved the hit.
The elected politicians in Seattle (and elsewhere) are very adept at what is known as the magician’s choice, giving someone–here, the voters–the false perception of a free-will decision. That’s why there’s one fiscal issue I imagine we won’t get to vote on: salaries of elected officials. But boy, would that create fireworks.
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I still see a disconnect in Seattle between the city’s prevailing liberal philosophy and the tax structure that unduly burdens the poor.
The state’s tax system is widely recognized as regressive but every time an income tax is proposed, it’s always in addition to a (reduced) sales tax, not in lieu of one. The problem is, the voters know that it’s much easier to raise the sales tax rate back up than it would be to re-establish the system de novo. It wouldn’t be long before we had both an income tax and a high sales tax rate again. If an income tax were proposed along with the abolishment of the sales tax, it might have a chance to pass.