Seattle-Tax Sinkhole or Source?

“All (or most) of our tax money goes to Seattle.” Ever hear that? It’s a point of view that appeals to the universal human tendency to believe we pay more than our fair share. It is statement that is easy to believe. Depending on your point of view, Seattle either has so many more public amenities or so many more problems than rural Washington it must use up more than its share of state revenues. It just “stands to reason,” doesn’t it? Well, no.

The truth is that, any way one parses the numbers, every county in Eastern Washington receives more money from the State of Washington General Fund than its taxpayers pay in. In other words, the economic activities, i.e. the taxpayers, on the west side of the State of Washington are subsidizing the residents of the east side.

There is a special irony here. Stevens County, the epicenter of Rep. Matt Shea’s theocratic State of Liberty secession movement, ranks number two (with a ratio of 2.00) among counties of Washington State for the highest ratio per capita dollars received over tax dollars remitted, bested for this dubious title only by Ferry County, it’s neighbor to its west. (Spokane County ranks 24th out of the 39 counties with a ratio of 1.33, i.e. we’re still a net consumer of state funds.) Visit the State of Liberty website to read their lie about taxes.

If you have read of this 2.00 ratio before and wondered if it were true, you are not alone. I wish to thank Danny Westneat, a columnist for the Seattle Times, for the link to the source of the numbers, Washington State’s Office of Financial Management (OFM).  (Westneat’s article, “Why are we exporting billions of dollars around the state?’ The coming showdown over Seattle’s money,” is a response to the passage of Eyman’s I-976. It is well worth reading.)

The document that presents the detailed statistics, “State Expenditures and Revenues by County: Fiscal Year 2016,” can be reached from the OFM’s website, but the link is not obvious–a general problem with government data.

The Washington State’s Office of Financial Management (OFM) is not in the business of teaching statistics (or civics) or putting out flashy press releases to the general public. That is unfortunate, because this is exactly the data one needs to counter the fact-free arguments of politicians like Matt Shea.

The document, “State Expenditures and Revenues by County: Fiscal Year 2016” is worth a look. It is not an easy read, couched in jargon made worse by confusingly written notes. Nonetheless, it is the real data. The confusion arises fundamentally from the intricate and confusing nature of Washington State’s tax system.

Washington State has the most regressive tax structure of all the states of the Union. Lacking an income tax, Washington State relies on a complex mixture of sales taxes, property taxes, and a “Business and Occupation Tax” to fund state activities. (I explain those funding sources in the context of the article WA School Funding and Taxes.) Teasing out the state’s portion of revenue from county and city taxes is no small task. The complexity of the revenue side of our state funding works to the advantage of those who perpetuate simplistic, self-serving myths like “Seattle depends on our east side tax dollars.”

But now you know the source for the truth.

Keep to the high ground,