Opinion: Don’t forget tax relief while providing government employee pay raises

Jason Mercier of the Washington Policy Center reacts to Gov. Jay Inslee’s decision to re-open negotiations for state employees’ pay raises

Jason Mercier
Jason Mercier

Jason Mercier
Washington Policy Center

On the same day the Governor ordered state employees (and others) to be vaccinated or face employment termination, state employee unions announced Inslee has agreed to re-open their 2021-23 contracts to negotiate pay raises. If government employees are going to receive pay raises, a sales tax cut should be on the table too. It has long been past the time for Washingtonians to receive a broad-based tax cut.

Washington has historically ranked among the leaders across the country with strong tax revenue growth. In fact, according to The Pew Charitable Trusts, Washington’s tax revenue growth has outpaced the nation since 2015. Our tax revenue growth at 39.4 percent, since 2008, is now the highest in the country. For comparison, the 50-state average tax revenue growth since 2008 was 15.9 percent. In fact, the state’s June Revenue Forecast projected $2.6 billion more than was previously expected when lawmakers wrote the 2021-23 budget earlier this year.

Jason Mercier of the Washington Policy Center reacts to Gov. Jay Inslee’s decision to re-open negotiations for state employees’ pay raises.

Though they’ve enacted some targeted tax cuts in recent years (including finally funding the working family rebate), Washington’s lawmakers have not shown interest in broad-based tax relief. While other states across the country were adopting “record” tax cuts this year, our state was one of just a couple that raised taxes instead by imposing the first stand-alone capital gains income tax in the nation.

The state’s sales tax is primed and ready to be cut. When it was first imposed in 1935, Washington’s sales tax rate was 2.0 percent. It is currently imposed at 6.5 percent and has not seen a rate reduction since 1982. For each 0.1 percent reduction in the state sales tax rate, approximately $306 million in tax relief could be provided.

This means, for example, lawmakers could reduce the sales tax rate by 0.2% and provide more than $600 million in tax relief, fund state employee pay raises, and still have money available for further growing the state’s emergency reserves or other priorities.

What type of message will it send if state officials agree to mid-budget pay raises for government employees while refusing to provide broad-based tax relief for all Washingtonians? 

Additional Information

$2.6 billion reasons to cut taxes

Jason Mercier is the director of the Center for Government Reform at the Washington Policy Center.

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Ken
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Ken
1 month ago

This makes no sense. We are in uncharted waters right now and we need the government to be staffed by excellent employees and you’re wanting to cut taxes that are being used to try to retain employees that provide those services? We don’t need tax cuts or tax increases. We need to get through this debacle. Get people to stop spreading stupid theorys and misinformation. How many Washington residents are homeless? How many landlords could use help from the state? How many small businesses & family farms could use help? Taxes can provide a way to help those who are in dire need.. so paying an extra 8 cents per dollar We spend here and there is a good investment if the money is spent correctly. Reading your opinion makes me think you’re really more upset about the capital gains tax than the sales tax.. no?

RCxyz
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RCxyz
1 month ago

The big question for me is how much of a pay raise with the state employees get? If it is beyond a ‘cost of living’ increase, I will have a problem with it. A reduction in sales tax should only be considered after the employee salaries are negotiated and it is determined that the budge can handle it with a small buffer. IMHO.

Jonathan Marianu
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Jonathan Marianu
1 month ago

Jason Mercier, your logic makes no sense. Why ask the Washington state government to spend more more by raising salaries and at the same time to take in less revenue by lowering taxes?

The only way to raise salaries without going into deficit is to cut funding in another program or raise revenue by raising taxes. (or create currency if you are the federal government)

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