Lu Hill: Let’s keep up the momentum toward a more equitable state tax code

By Lu Hill

“We’re No. 1!” It’s a chant we hear at events from our kid’s soccer matches to Gonzaga basketball games.

“We’re not last!” doesn’t quite have the same ring, but I’m proud that we’re making progress on our tax code.

Earlier this year, Washington moved up one spot in the rankings of equitable tax codes by the Institute on Taxation and Economic Policy. After decades of being dead last, this new data is proof that the work that advocates and legislators did to strengthen our tax code is working!

We moved up thanks to key policy wins that legislators passed in recent years – namely the capital gains tax and the Working Families Tax Credit.

The capital gains tax and WFTC both launched in 2023 after being signed into law in 2021. If you’ll allow me to be wonky for a minute, the capital gains tax is a modest excise tax that the wealthiest 0.2% of Washingtonians pay on the profits they make on high-end stocks and bonds above $250,000. The funding from this tax is providing a much-needed infusion of support for child care, early learning and schools across Washington. It has already brought in almost $900 million in revenue – far surpassing original estimates – to support kids, families and child care workers. The WFTC provides a cash boost of up to $1,200 for households with low incomes in Washington. This has been a game changer for many people struggling to make ends meet, allowing them to cover necessities like medications and car repairs.

It’s great to know that these policies are making a real difference in people’s lives and making our tax code better. But, let’s be clear, second worst is still terrible. For a state known for its innovative spirit and wealth, we shouldn’t have such an inequitable tax code.

As I’ve written in a previous column (“For healthier communities, we need to fix our tax code,” July 13), Washington’s tax code is rigged by the wealthy few. For decades, wealthy people and corporations – and the politicians who prioritize them – have designed and maintained a tax code that allows them to build unimaginable amounts of concentrated wealth. While they enjoy their fortunes and pass it on to their descendants, the rest of us foot much of the bill for our public schools, our health care, and the social services our communities share.

In fact, right now, a millionaire hedge fund manager is trying to buy himself a tax cut by promoting two initiatives that would roll back the progress we’ve made on the tax code.

Initiative 2109 would repeal the state capital gains tax, taking away nearly $900 million in annual funding for preschools and affordable child care and investments in K-12 public schools and give it to the richest people in our state.

Another initiative, Initiative 2111, appears to ban income taxes. But ask yourself the question: Why do we need an initiative to create a state law banning an income tax when no one is even proposing a state income tax? The reality is this ballot measure is an attempt to harm other programs that are popular with the public and with voters. The extremist sponsors of this initiative are using confusing language that points to the possibility that important policies and programs like paid family leave could be at risk.

Both initiatives are examples of an effort by the wealthy few to keep our unfair tax code just the way it is: benefiting them and hurting the rest of us.

When wealthy people and corporations refuse to pay what they truly owe to our communities by blocking progressive tax policies, they compromise the well-being of all Washingtonians, and particularly the wealth-building power of Black, Indigenous and People of Color communities, working people and small business owners.

Our lowest-income residents are still paying the highest share of their income in taxes, while the wealthiest pay the least. That signals to me that there’s still a lot of work to do.

There are several bills in front of the Legislature this session that could continue to balance our tax code, like a Real Estate Transfer Tax on multimillion dollar properties, a wealth tax on billionaires and the expansion of the WFTC to include people without kids.

So let’s come together and get loud. Let’s hold state elected leaders accountable for building an equitable tax system that ensures opportunity for all Washingtonians, no exceptions. Let’s keep insisting that the wealthy pay what they truly owe in taxes.

Lacrecia “Lu” Hill is a fourth-generation Spokanite who has long been involved in supporting the community in the nonprofit, philanthropic, and small business sectors. She currently is the community engagement and strategy director at Empire Health Foundation. These thoughts are her own.