Study: Washington businesses pay half of all state and local taxes, 5 percent of private sector gross state product

Washington business pay half of all state and local taxes, according to a new report by the Council on State Taxation (COST). Our business share of taxes, 49.6 percent, is significantly higher than the U.S. total share of 43.5 percent,

Washington also ranked among the states with the largest growth in business tax revenues, a result stemming from both the relative strength of the state economy and a higher-than average business tax burden. (Note that in the chart below, some of the large percentage changes occur in states with comparatively small economies.)

The study, based on data for the 2018 fiscal year, finds Washington business taxes for the year amounted to $21.9 billion dollars, about 5.0 percent of private-sector gross state product. COST calls this the total effective business tax rate, or TEBTR. Washington’s TEBTR is higher than the U.S. average of 4.7 percent.

COST also calculates the business tax burden per employee. Washington businesses pay $7,800 per employee, again well above the U.S. average of $6,200.

The COST data and the Tax Foundation’s State Business Tax Climate Index are among the metrics we use in the Opportunity Washington Scorecard.