State legislators often lock themselves into a race to the bottom in pursuit of being labeled a “low tax state.” Analysis of data from the U.S. Census Bureau appears to lend support to Washington State’s reputation as a “low tax state.” Specifically, Washington ranks 30th nationally in taxes collected as a share of personal income. The state’s lack of a personal income tax also tends to lead casual observers to conclude that the state is “low tax.”
But this narrow lens does not provide a full picture, as it overlooks the fact that Washington’s tax system has vastly different impacts on taxpayers at different income levels. For instance, the lowest-income 20 percent of Washingtonians contribute 17.8 percent of their income in state and local taxes — considerably more than any other income group in the state. For low-income families, Washington is far from being a low tax state; in fact, it is the highest–tax state in the country for low-income families. 
Upside-Down Tax Code
According to the most recent data from the Census Bureau and Bureau of Economic Analysis, the state and local tax contributions of Washington taxpayers total 9.5 percent of personal income. This relatively small share of personal income collected in state and local taxes is 7 percent below the national average, affording Washington a reputation as a “low tax state.” But the state tax code is upside-down, that is, it requires taxpayers with the lowest earnings to contribute a larger share of their incomes in state and local taxes than the wealthiest taxpayers.
Analysis from the sixth edition of Who Pays? by the Institute on Taxation and Economic Policy (ITEP) finds the lowest-income 20 percent of Washington taxpayers — who earn an average income of $13,500 per year — contribute 17.8 percent of their income in state and local taxes, the highest state and local tax bill for this income group in the country. Similarly, among the next 20 percent of taxpayers — whose average income is $33,300 — state and local taxes, on average, account for 12.4 percent of their income. Washington offers no targeted tax benefits for low-wage workers. The legislature passed a 10 percent refundable Earned Income Tax Credit in 2008, but a decade later it has yet to be funded. The state does not offer a property tax credit, a low-income credit to offset the cost of sales and excise taxes or a child-related tax credit to offset the cost of child and dependent care.
Meanwhile, the top 1 percent of households in the Evergreen State — a group with an average income over $1.6 million — contribute just 3 percent of their income in state and local taxes. Compared to the rest of the country, Washington’s state and local tax levy on the top 1 percent is the 7th lowest (or 45th highest).
No Income Tax and High Reliance on Sales and Excise Taxes
Washington is one of just nine states that does not levy a broad-based personal income tax. Failing to levy a personal income tax comes at a high cost. To pay for state and local government services, Washington derives nearly two-thirds (62 percent) of its tax revenue from sales and excise taxes — far above the national average of 35 percent. As a share of statewide personal income, Washington’s sales and excise taxes are 64 percent higher than the national average, ranking the state third highest in the country by this measure. According to ITEP’s Who Pays?, the lowest-income 20 percent of Washington households spend 13.3 percent of their income on sales and excise taxes, compared to just 1.7 percent of income spent on these taxes by the top 1 percent.
Washington’s upside-down tax system is pushing the state’s impoverished taxpayers deeper into poverty. The state’s lack of a personal income tax has been a major contributor to its reputation as a “low tax state,” but it comes at a steep price as the state relies heavily on sales and excise taxes that fall hardest on low-income families. Moreover, the state’s lack of refundable tax credits leaves it with few options for offsetting the very high sales and excise taxes that it levies on families working hard to make ends meet.
 ITEP analysis of data from the U.S. Census Bureau and Bureau of Economic Analysis: U.S. Census Bureau. “2016 State and Local Government Finance Historical Datasets and Tables,” Sep. 12, 2018. https://www.census.gov/data/datasets/2016/econ/local/public-use-datasets.html.
Bureau of Economic Analysis. “State Personal Income and Employment,” Accessed Oct. 15, 2018. https://apps.bea.gov/regional/docs/DataAvailability.cfm.
 Meg Wiehe, Aidan Davis, Carl Davis, Matt Gardner, Lisa Christensen Gee, and Dylan Grundman. “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, 6th Edition,” Institute on Taxation and Economic Policy, Oct. 17, 2018. https://www.whopays.org
 Aidan Davis and Misha Hill. “State Tax Codes as Poverty Fighting Tools: 2018 Update on Four Key Policies in All 50 States, Sep. 17, 2018. https://itep.org/state-tax-codes-as-poverty-fighting-tools-2018/.