Washington and Oregon are friendly but competitive siblings, with their rivalry extending to matters of economic prosperity and tax fairness. Although Oregonians are famously unhappy about state and local taxes, a new report shows our state doesnt have much to complain about compared to Washington.
The nonprofit Institute on Taxation and Economic Policy (ITEP), which advocates for progressive tax policies, said in a report this month that Washington is the least-fair tax system in the nation.
Empirical data show that Washington taxes the poorest one-fifth of its residents a staggering 16.9 percent of their average annual income of $11,500, while the top 1 percent pay 2.8 percent state and local taxes on an average annual income of more than $1.1 million. The second-most unfair state, Illinois, imposes 13.8 percent in state and local taxes on its poor.
Washingtons taxes on the middle 20 percent of citizens who make $49,900 a year total 10.4 percent. This is on the high side nationwide.
In contrast, for all our bellyaching about them, Oregon has a far fairer tax regime. State and local taxes on our lowest-income people the one-fifth whose average income is $10,600 is 8.3 percent. The top 1 percent of the wealthy in Oregon pay 7 percent taxes on average annual income of $772,900, while the middle income bracket pays 7.6 percent on income of $41,100.
Only seven other states tax their poor less than Oregon does. Delaware is best, at 5.7 percent.
And Oregon is in the bottom 10 states nationwide in taxation of its middle-earners, with Alaska imposing the smallest tax total of 4.5 percent.
Despite the obvious disparity in tax structures that results in Washington subsidizing its richest citizens, there isnt much outcry. The state takes countless small bites in the form of sales tax, in contrast to Oregon big bites of income and property taxes.
Although Oregon does comparatively well at avoiding too-high taxes, ITEP recommends several worthwhile steps to help the neediest. These include expanding property tax breaks for the poor, increasing the earned income tax credit from its current 6 percent, and fine tuning tax credits for child and dependent care expenses.
Oregon clearly is far fairer than Washington. But our state taxing its poor 8.3 percent and the ultra-rich only 7 percent has nothing to brag about.