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Tax jot to newcomers help fuel I-695
Tax jolt to newcomers helps fuel I-695
Washington ranks high in the nation in taxes, especially those on sales and
motor vehicles, studies show
Beth Silver; The News Tribune
As a longtime California resident, Wavie Donaldson thought her taxes couldn't
get any higher. Then she moved to Washington.
Her property taxes doubled. Sales taxes were a shock. And don't even get her
started on the cost of license tabs for her 1996 GMC minivan.
"We noticed the taxes on everything, right away," she said a year after she
and her husband, Lyle, moved from Fairfield, Calif., to Parkland to be closer
to their two sons. "I knew our taxes were ridiculous (in California). But they're
worse here."
It's no surprise that newcomers to Washington complain about the taxes here.
Like the Donaldsons, they likely paid much less in their former home states,
even those with hefty income taxes.
From 1990 to 1998, Washington attracted 1.2 million new residents, most of
them from California, Oregon, Texas, Idaho and Arizona. On average, those states
taxed their residents hundreds of dollars less every year than did Washington.
In 1996, the latest year for which numbers are available, residents of Washington
paid an average of $2,795 in state and local taxes. That made its taxes the
10th-highest in the nation, according to U.S. Census Bureau figures.
Only New York, Connecticut, Arkansas, New Jersey, Hawaii, Massachusetts, Minnesota,
Wisconsin and Delaware were higher.
Those newcomers likely felt the tax pinch as soon as they pulled out their
pocketbooks for a seafood dinner or a swing through the mall. Washington's sales
taxes are higher per capita than any other state's, according to a Clemson University
study this year.
The newcomers also might have noticed the difference when they registered
their vehicles. Washington's motor vehicle excise tax and registration fees
are among the nation's highest, according to the California Research Bureau,
a nonpartisan organization.
"It just about throttled us," Donaldson said of the $411 she and her husband
paid for their minivan this year, more than double what they paid in California.
Undoubtedly, many of those supporting Initiative 695, which would cut the
cost of car tabs to $30 per vehicle per year, are either new to the state or
are longtime residents fed up with a very visible tax that has to be shelled
out at the licensing department or via mail every year.
"People who've lived here all their lives have grown up with the car tab tax,"
said Tim Eyman, the force behind the initiative. "Now we have the fresh perspective
from transplants who get a two-by-four in their face with the revelation that
we tax you to death (in Washington) on your vehicle. It's those people, certainly,
that gravitated toward the initiative."
Washington residents pay their dues to the state in the form of car tab, sales,
gas, property and inheritance taxes. According to the Washington, D.C.-based
Tax Foundation, about 59 percent of the state's tax collections come from sales
taxes, 29 percent from property taxes, 6 percent from motor fuel taxes, 4.5
percent from licenses and the rest from other, smaller taxes, primarily user
fees.
Washington is one of five states without an income tax. In the state's history,
13 attempts to impose a corporate or personal income tax have either been thrown
out by the courts or rejected by the voters.
Washington's constitution requires that the state tax all property uniformly.
And the state Supreme Court, in ruling that income is property, said that a
graduated income tax was unconstitutional.
"When someone moves here from another state, their immediate sense is, 'Wow,
I don't have to pay that income tax,' and it seems like a lower tax burden.
They can live here for years and not notice the overall burden," said Paul Guppy,
an economist with the Washington Institute Foundation, a free-market public
policy think tank.
Rep. Jim McIntire (D-Seattle) agreed.
"If (the motor vehicle tax) nibbled away at you like the sales tax, it probably
would be a little less onerous," he said.
Washington gets much of its revenue from sales taxes. And according to the
Clemson study, Washington collects more per capita in sales taxes than any other
state. On average, Washington residents pay $1,239 a year in sales taxes, the
study said.
"The average citizen tends to be paying out these taxes on a common day-to-day
basis," Guppy said. "Every April when everyone's figuring out their federal
income tax, it's all right there in front of you. Whereas, I don't think anybody
knows the sales taxes they've paid in one year."
McIntire also said the system is designed in a way that lower-income families
pay a larger portion of their incomes in taxes than do wealthy families.
"In a state that depends on consumption taxes, those paying a larger share
of their income for their taxes tend to be people that spend more of their money
and save less, which tend to be lower-income people," he said.
While Washington residents may pay more in taxes than residents of most other
states, they also enjoys quite a few benefits for those tax dollars, said McIntire,
the former director of the University of Washington's Fiscal Policy Institute.
McIntire pointed to the state's community college system, which he called
one of the best in the country; the state park system; and the quality of its
health services and insurance for children.
He also said the state's public library system is one of the best in the country.
"Does our economy look like it's suffering because of high taxes? I don't
think so," he said.
Cory DeMattei, who moved to Seattle last year from Long Island, N.Y., a state
with higher taxes than Washington on average, went from paying about $28 a year
in New York to writing a $300 check in Washington to license his new Ford Escort.
But he thinks it's worth it.
"Overall, we're doing much better," said DeMattei, a researcher at the Fred
Hutchinson Cancer Research Center in Seattle. "I figure we're going to end up
paying the money for this stuff somehow. I would rather have the car tabs than
income taxes."
But Bob Williams, president of the Evergreen Freedom Foundation, a conservative
public policy group, said Washington residents shouldn't have to pay as much
for the services they receive.
He said Washington taxpayers aren't getting their money's worth because the
state doesn't use competitive bidding for some of its services. Instead, a Washington
law passed in the 1980s requires that any activity done by unionized government
employees has to stay that way.
The state, for example, could save $25 million a year if it contracted out
its highway maintenance work, Guppy said.
"Other states with lower tax burdens seem to be satisfied with the services
they have," he said.
McIntire said he thinks the car-tab initiative taps into the groups struggling
with their taxes. But he said they are not likely to be the biggest beneficiaries
since they usually have less-expensive cars with lower-priced tabs.
Eyman, the initiative backer, said Washington has to do something to lower
its tax burden. He estimated that with a flat vehicle license fee, the overall
taxes average Washington residents would pay might fall by 2 percent.
"It's not a huge percent, but it's moving it in the right direction," he said.
* Staff writer Beth Silver covers politics and state government. Reach her
at 253-597-8603 or beth.silver@mail.tribnet.com
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SIDEBAR
What we pay, what we earn
Here's how the 50 states stacked up in state and local taxes collected per
person in 1996, the most recent figures available from the U.S. Census Bureau:
1. New York / $3,986.54
2. Connecticut / $3,831.08
3. Arkansas / $3,791.37
4. New Jersey / $3,436.33
5. Hawaii / $3,244.53
6. Massachusetts / $3,139.03
7. Minnesota / $3,127.79
8. Wisconsin / $2,946.79
9. Delaware / $2,822.46
10. Washington / $2,795.33*
11. Maryland / $2,786.22
12. Illinois / $2,756.78
13. Rhode Island / $2,738.05
14. California / $2,704.52
15. Nevada / $2,661.32*
16. Maine / $2,599.63
17. Michigan / $2,587.82
18. Vermont / $2,576.71
19. Nebraska / $2,531.13
20. Pennsylvania / $2,511.61
21. Ohio / $2,502.59
22. Kansas / $2,477.76
23. Iowa / $2,448.32
24. Wyoming / $2,421.71*
25. Colorado / $2,417.96
26. Georgia / $2,353.97
27. Virginia / $2,341.05
28. Florida / $2,330.35*
29. Arizona / $2,295.05
30. New Mexico / $2,263.40
31. Oregon / $2,259.06
32. New Hampshire $2,253.68
33. North Carolina / $2,251.29
34. North Dakota / $2,237.81
35. Indiana / $2,222.17
36. Missouri / $2,180.89
37. Kentucky / $2,166.15
38. Utah / $2,146.79
39. Idaho / $2,137.86
40. Texas / $2,128.01*
41. Montana / $2,027.43
42. West Virginia / $1,994.94
43. Oklahoma / $1,986.81
44. South Carolina / $1,981.11
45. South Dakota / $1,965.38
46. Louisiana / $1,945.66
47. Arkansas / $1,932.53
48. Mississippi / $1,893.69
49. Tennessee / $1,878.28
50. Alabama / $1,786.04
*States without an income tax.
Here's how the 50 states ranked in median household income (average of 1995-96
figures):
1. Alaska / $51,075
2. New Jersey / $46,345
3. Maryland / $43,123
4. Hawaii / $42,944
5. Connecticut / $41,775
6. Colorado / $41,429
7. Wisconsin / $41,083
8. Minnesota / $40,022
9. New Hampshire / $39,868
10. Massachusetts / $39,604
11. Illinois / $39,375
12. California / $38,457
13. Michigan / $38,364
14. Virginia / $38,252
15. Nevada / $37,845
16. Delaware / $37,634
17. Utah / $37,298
18. Rhode Island / $36,695
19. Washington / $36,647
20. Oregon / $36,470
21. Pennsylvania / $35,221
22. Missouri / $35,059
23. Ohio / $35,022
24. Iowa / $34,889
25. Maine / $34,777
26. Indiana / $34,759
27. New York / $34,707
28. North Carolina / $34,262
29. Idaho / $34,175
30. Nebraska / $33,958
31. Georgia / $33,801
32. Vermont / $33,591
33. Texas / $33,029
34. South Carolina / $32,297
35. Kansas / $31,911
36. Wyoming / $31,707
37. Arizona / $31,706
38. Kentucky / $31,552
39. North Dakota / $30,709
40. Florida / $30,632
41. Tennessee / $30,331
42. South Dakota / $29,989
43. Louisiana / $29,518
44. Montana / $28,631
45. Alabama / $28,530
46. Oklahoma / $27,263
47. Mississippi / $27,000
48. Arkansas / $26,850
49. New Mexico / $25,922
50. West Virginia / $25,431
Source: U.S. Census Bureau
- - -
SIDEBAR
What car licenses cost
Last year, the California Research Bureau, a non-profit, nonpartisan research
organization, surveyed the largest cities in all 50 states to determine how
much it cost to license a vehicle there. The organization looked at several
vehicles that were just purchased, 5 years old and 10 years old. In the most
populous cities in the states that many Washingtonians move from, here's what
they found:
HONDA CIVIC: $11,900
New / 5 years old / 10 years old
Washington / $321 / $255 / $127
Arizona / $300 / $159 / $76
California / $287 / $180 / $85
Idaho / $62 / $42 / $30
Texas / $83 / $62 / $52
Oregon / $34 / $24 / $24
FORD EXPLORER: $24,400
New / 5 years old / 10 years old
Washington / $596 / $458 / $212
Arizona / $600 / $316 / $146
California / $537 / $330 / $135
Idaho / $62 / $42 / $30
Texas / $83 / $62 / $52
Oregon / $34 / $24 / $24
CADILLAC SEVILLE: $39,625
New / 5 years old / 10 years old
Washington / $931 / $706 / $316
Arizona / $965 / $506 / $230
California / $842 / $513 / $196
Idaho / $62 / $42 / $30
Texas / $83 / $62 / $52
Oregon / $34 / $24 / $24
© The News Tribune
