Share this story...
washington, tax gap, local taxes
Latest News

We’re the worst: Washington has the worst local taxes in the US

It’s doesn’t matter if you are at the bottom of the income ladder or among the top 1 percent, Washington state has the absolute worst state and local taxes in the nation, according to finance website WalletHub.

RELATED: Why Bill Gates is happy (he’s rich for starters)
RELATED: Bill Gates wants to pay more taxes

“Washington has the highest overall tax burden for low income earners, 14.59 percent, and the fourth highest for those with middle income, 11.26 percent,” said Jill Gonzalez, an analyst with WalletHub. “The state has the highest sales and excise taxes in the country, which is the main reason behind its poor ranking.”

WalletHub recently ranked Washington as 51st in the nation when it comes to state and local taxes (they include Washington D.C.). After accounting for low-, middle-, and high-income earners, the state is sucking more money from residents (in relation to their income) than anywhere else. Jumping over to Idaho (ranked 9th) or Oregon with its income tax (ranked 12th) would save residents more tax money.

“The states at the bottom of the rankings have the highest overall tax burdens,” Gonzalez said. “Even without an income tax, Washington’s low income earners pay the highest taxes in the country. This is due to the the state’s very high sales tax, which isn’t necessarily uncommon for states with no or low income taxes.”

WalletHub derived its rankings using a recent report from the Institute on Taxation & Economic Policy (ITEP). The national average for state and local taxes is 11.4 percent for low income residents; 9.9 percent for middle income; and 7.4 percent for high income earners (the top 1 percent).

It appears that while it’s better to be a high-income earner in Washington, it will still place you at 13th in the country. If you’re low income, sorry, you’re at the bottom of the list.

Gonzalez notes that the assessment is not influenced by the tax bill passed under the Trump administration. It is more a reflection of local, state-level taxes. Another point she makes is that despite Washington’s thriving economy — such as Seattle’s tech hub — with high-paid employees, the tax burden still weighs heavily.

“Washington’s economy, and more specifically, each state’s cost of living is factored into our analysis,” Gonzalez said. “For example, in states with a higher cost of living, the actual tax burden may be higher for residents, despite the fact that tax rates are lower.”

Breaking down the local taxes, Washington is 48th for medium income earners; 51st for low-income residents; and 13th for the top 1 percent. The state also has the highest tax burden between the rich and poor, and the highest sales and excise tax burdens between the rich and poor. The only list Washington doesn’t bottom out on is the property tax burden between rich and poor.

In case you are wondering, Alaska is about the best place to live across the board, ranking first for high and middle income earners, and third best for low income (Delaware is the best for low-income residents).

Source: WalletHub
Most Popular