Washington’s taxes make it the worst state to be poor. See how it compares to others

Poor people in Washington have the worst tax burden in America, according to a new online survey.

Financial services website WalletHub conducted a survey of all 50 states, plus Washington, D.C., to determine which states were the best, and which were the worst, to be poor when Tax Day comes around.

To that end, WalletHub generated state-specific tax burden estimates for residents at three income levels: $25,000 a year, $50,000 a year, and $150,000 a year, using data from the Institute on Taxation and Economic Policy’s 2018 report.

Washington ranked dead last for low-income earners, falling behind all 49 other states plus the nation’s capital.

Medium-income households didn’t fare much better. The Evergreen State ranks No. 48 in that category.

Washington is comparatively easier to be rich in, for tax purposes. The state ranked No. 13 for high-income earners.

So where’s all that tax income coming from?

Sales tax made up the single highest portion of tax burden for both low and medium income earners; 11.14 percent for low-income people, 8.65 percent for medium income people. It also made up the highest portion of high-income earners, but that totaled up to just 4.84 percent of their total income.

The poorest pay a proportionately greater amount of their income, 14.59 percent, than do the richest, at 7.32 percent.

Washington’s state sales tax rate is 6.5 percent. Cities and counties have their own local sales taxes, which often have Washington residents effectively paying a total sales tax rate of 8 percent to 10 percent.

Washington does not collect income tax. Gov. Jay Inslee has proposed a 9 percent tax on capital gains, which opponents say runs counter to the state’s long history of rejecting income tax proposals.

According to the latest U.S. Census data, the median household income for Washington is $66,174.

So what’s the best state to be poor?

For tax purposes, it’s Delaware. Taxes take up just 5.24 percent of the earnings for someone making $25,000 a year.

Alaska took No. 1 for both middle- and high-income earners, in large part because there is no income tax in the state. On the opposite end of the spectrum, New York took No. 51 for both middle- and high-income categories.

The full report can be viewed here.

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Andrew Sheeler covers California’s unique political climate for McClatchy. He has covered crime and politics from Interior Alaska to North Dakota’s oil patch to the rugged coast of southern Oregon. He attended the University of Alaska Fairbanks.