OLYMPIA, WA – Washington remained in the lower half of U.S. states in terms of economic outlook, according to a Tuesday – Tax Day – report from the conservative Arlington, Va.-based American Legislative Exchange Council that faults the Evergreen State’s tax burden and high labor costs for the state’s No. 34 ranking.
Nevertheless, that’s a three-spot improvement from last year’s No. 37 ranking.
ALEC’s 18th edition of its annual “Rich States, Poor States” report ranks states based on their “economic outlook” per 15 metrics, ranging from rates for personal, corporate, property and sales taxes, to employer costs, including workers’ compensation and minimum wage.
“Each of these factors is influenced directly by state lawmakers through the legislative process,” the report’s authors noted. “Generally speaking, states that spend less – especially on income transfer programs – and states that tax less – particularly on productive activities such as working or investing – experience higher growth rates than states that tax and spend more.”
Washington placed 50th for having a state-level estate tax that ranges from 10% to 20% and applies to estates worth $2.193 million and up.
The state’s sales tax burden, calculated at $35.60 per $1,000 of personal income, ranked it 43rd.
Washington’s remaining tax burden of $24.82 – calculated by taking tax revenues from state and local taxes excluding personal income, corporate income, property, sales and severance per $1,000 of personal income – saw it rank No. 45.
Washington’s $16.66 per hour wage floor earned it a 50th in the nation ranking when it comes to state minimum wages, according to the report. Only Washington, D.C. – a federal district under the exclusive jurisdiction of Congress – has a higher quasi-state-level minimum wage: $17.95.
Washington state also lost ground compared to other states for not being a right-to-work state – that is, Washington employers and labor unions are free to negotiate contracts that require union membership.
It wasn’t all bad economic news for Washington.
The state ranked 10th in economic performance, a backward-looking measure based on three major factors: gross domestic product, absolute domestic migration and non-farm payroll employment.
Washington ranked No. 1 in terms of the top marginal personal income tax rate, including local taxes, if any, and any impact of federal deductibility, if allowed. Washington does not have an income tax, but it does have a 7% tax on capital gains above $270,000 in a year for individual taxpayers.
The state ranked No. 2 in terms of personal income tax progressivity, or change in tax liability per $1,000 of income, and No. 3 in terms of tax expenditure limitations.
This article was written By Brett Davis and originally published by The Center Square. It is republished here with permission.
