Why Are These Three Liberal States So Hard On The Poor?

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Liberals generally contend that a robust safety net and a progressive tax system are not just economically sound policies, but that they are also characteristics of a moral society. At the federal level, Democratic politicians generally push policies aligned with this core liberal belief. However, at the state level, many Democratic politicians are less prone to implement this type of policy. While liberal states in general tend to have fairer tax systems and thicker safety nets than conservative states, three solidly blue states have the opposite.

Almost no one argues in favor of taxing the poor more heavily than the rich. Regressive taxation is widely recognized as being both economically damaging and unfair. The American public as a whole has consistently held that the moderately progressive federal tax system is not progressive enough, and Democrats overwhelmingly believe that. And yet, every single state has opted for a tax system that is not just inadequately progressive or flat, but that is actually regressive. The states’ tax policies range from mildly regressive to brutally regressive. In the state with the least regressive tax system (Delaware), the lowest bracket pays 0.7% more of their income to state taxes than the top one percent pays. But, in the state with the most regressive tax system (Washington State), the lowest income bracket pays 16.8% of their income to state taxes while only 2.4% of the top one percent’s income goes to state taxes. Generally, states that rely more heavily on the sales tax have more regressive tax systems and states that rely more on income taxes have less regressive tax systems.

The states also vary widely in terms of how much they invest in their safety nets. For example, the state that spends the least on welfare benefits (Arkansas) spends only $5 a year per resident on cash assistance for the poor while the most generous state (Maryland) spends $233. The variation is not limited to cash assistance. For example, Alaska spends three times as much per person on its entire safety net as Nevada does.

Republican politicians often argue in favor of policies that liberals believe benefit the rich at the expense of the poor. So, when red states have thin safety nets and regressive tax systems, as many of them do, it is not entirely surprising. But Democratic politicians frequently tout, and their constituents strongly support, policies that are designed to aid the poor. So, when the Democratic Party controls both the legislature and the governorship in a state, one would expect that the state would implement policies that are at least less hostile to the poor. And that is often the case. Minnesota, New York, Vermont and Delaware, for example, have some of the least regressive tax systems and some of the most robust safety nets. Poor people in those states pay little in taxes and they get a lot back in return.

Yet three liberal states stand out for having both unfair tax systems and thin safety nets: Washington, Illinois and Hawaii. Each of those three states has both a tax system that is more regressive than the median state and a thinner safety net than the median state. Their tax systems are the most regressive of any of the states controlled by Democrats. In fact, Washington has the most regressive tax system of any state, including the Republican-controlled states, by a wide margin. To make matters worse, the same three states are also three of the four Democratic states with the thinnest safety nets. Of the three, Washington is again the worst, spending $306 less per person on its safety net than the national average. The low dollar amounts expended on the safety net are exacerbated by the relatively high costs of living in each of these three states. This is especially problematic in Hawaii, which has the highest cost of living of any state yet spends less on its safety net than states with low costs of living.

Poor people in Washington, Illinois and Hawaii pay a lot of state taxes and get little back from the state in return. The voters in these states chose to elect Democrats to serve as governor, gave the Democrats the majority in both houses of their state legislatures (with the exception of Washington, which split control of the legislature) and voted for President Obama by very wide margins. The tax systems and safety nets in those states seem to be in conflict with the clear liberal alignment of the populace.

Americans tend to look to federal policy for solutions to poverty and economic inequality. State policies often do not get the same degree of scrutiny as federal policies, despite the fact that state policies can play at least as big of a role in people’s lives. At least until 2017, the extraordinary partisan gridlock will prevent us from tackling poverty or economic inequality at the federal level. We should use that time to focus on the areas where we can make progress, and Washington, Illinois and Hawaii are the obvious places to start.

Nathan Salminen investigates the social and economic effects of policy. After working as a techie for years, Nathan went to Columbia Law School and worked for the Senate Committee on the Judiciary as a law clerk. Nathan currently practices law in New York and runs Politics that Work.

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  1. I’m a washington resident and would love for our state to adopt an income tax. Every year, reactionaries make political hay off the inevitable transportation, property, and sales tax increases that affect the poor and middle class. We just keep slapping bandaid after bandaid on budget shortfalls, while the amazon and tech millionaires turn seattle into a san fransisco-style money pit.

  2. I used to live in SF – and, yes, it has turned into a money pit. In the last twenty-five, thirty years, SF has gone from a remarkably diverse, bohemian, very culturally-rich city to nothing more than a playground for the wealthy. I know a few people still there, but they’ve been property owners for decades. Even many of the physicians who work for UC or other hospitals inside SF proper cannot afford to purchase a home there.

    I love The City and will treasure memories of my years there, but the whole place is nearly all Pacific Heights-wannabes. The divide between the haves and have-nots is very stark. I’ve never been to Seattle, but I sure feel what you are saying.

    That said, I have no idea if a state tax would help the situation. These great places get these wonderful reputations and create very welcoming environs but then everyone who has the money who wants to live there can drive the car and leave the rest of us on the side of the roads.

  3. But, in the state with the most regressive tax system (Washington State), the lowest income bracket pays 16.8% of their income to state taxes while only 2.4% of the top one percent’s income goes to state taxes.

    That’s because Washington has no income tax, and relies heavily on its sales tax as a result, which of course is the most regressive form of tax there is. That this is not explained in the article is a real disservice to readers.

    I would add that there are a significant number of people who actually work and shop here in Oregon, but live just over the river in Vancouver WA, because they are tax cheats. Oregon has no sales tax and Portland is the largest job market in the area. So they work here, but since they are legally residents in Washington, don’t pay income tax, avoid the higher property tax (which Oregon has to help offset having no sales tax) but do most of their shopping (particularly on big ticket items) here in order to avoid paying Washington sales taxes.

    On a minor subjective anecdotal level, they also tend to drive like total assholes as well.

  4. Ditto. All the compassionate Christians in the 'burbs and rural areas of Snohomish, King and Pierce Counties along with all the rednecks east of the Cascades have made it impossible to replace the sales tax with a state income tax. Jeff Bezos was particularly vocal in his opposition to this when the wealth tax was proposed two year ago. It will never happen as long a Boeing think it’s a non-profit organization and if guys like Gate and Allen sit on their hands. I’m convinced that the only way to get that changed here is a public shaming campaign by the very people who would pay the most.

  5. I agree. I was a 20 year resident of WA, with my parents currently living in OR. I live in Germany, so I look at coming to OR as a great way to buy big ticket items with no tax (ex. new Nikon D7200) - which I would pay 19% VAT here in Germany.

    However, here, I see the benefits of a higher tax burden. I am not low income so don’t know how deductions work out for them, but I do know I pay at least 40+% in income tax, + other tax, + 19% VAT. But I do see the benefits of health care, infrastructure, civility…

    Going back to WA/OR in April for business/family made me want to get back home to Germany again… it’s an equality thing…

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