Research Council: On multiple measures, Washington relies heavily on business taxes, which exceed U.S. average.

The Washington Research Council today released a report confirming our state’s continued heavy reliance on business taxes to support state and local government. The WRC summarizes:

Washington’s tax structure relies heavily on businesses. Before significant new taxes were enacted last year, Washington businesses paid about half of state and local taxes in 2018. That year, Washington ranked 6th highest in business taxes per employee, 18th highest in taxes as a share of business output and 13th highest in the share of state and local revenue derived from taxes on business.

Drawing on data prepared by Ernst & Young for the Council on State Taxation (COST), the WRC examines the three measures used by E&Y to assess the tax burden: average tax paid per employee, total effective business tax rate, and the share of state and local taxes paid by business. 

On each metric, Washington business taxes are higher than the US:

…the amount of state and local business taxes per employee, Washington ranked 6th. Washington businesses paid $7,800 per employee, compared to the U.S. average of $6,200.

With respect to the second metric, TEBTR, Washington ranked 18 . Total state and local taxes paid by businesses were 5.0 percent of private sector gross state product in Washington, compared to a U.S. average of 4.7 percent.

With respect to the third metric, business’s share of total state and local taxes, Washington ranked 13th. Washington businesses paid 49.6 percent of the total, compared to the U.S. average of 43.5 percent.

The data are from 2018; the COST report was published in late 2019. As we know, Washington tax revenues have grown substantially since 2018, including “significant new taxes … enacted last year.” 

Something to remember as the Legislature heads in the final weeks of session.