Washington State Government Is Doing Less Than in 1980

I was born in 1980. My whole life I’ve heard something like a fundamentalist mantra - “taxes are too high, and the government too big.”

This is despite the fact that I was born in the comparatively threadbare public-sector US, and have lived here my whole life. In the US, taxes as a share of the economy are much smaller than in most other rich-world economies, and so we don’t have basic public goods like universal healthcare and childcare. In the OECD, a club of mostly rich-world economies, the US is 31st out of 38th when it comes to total tax take as a share of the economy. The federal workforce is also smaller than when I was born, even though we have more than 113 million more people living here!

But, you might think, it is different in progressive Washington State. You may have heard that our local leviathan is eating up all our economy. After all, Microsoft executives and leaders at the Chamber of Commerce are actively campaigning to scare you with doom-filled-threats about how all the rich and their businesses are going to leave if we dare tax them a bit more.

Of course they have every reason to know that economists have studied this issue carefully, and rich people basically do not move to optimize their taxes. Similar research has shown that low taxes do not grow the economy and instead only increase inequality. And they have “no detectable impact on startup activity,” according to the Federal Reserve.

But the corporate lobbyist folks love to talk about increases in spending in our state in the last few years. They conveniently fail to mention decades of shriveled government following ugly cuts early this century.

So for perspective, I looked back at Washington State government spending as a percentage of the economy during my birth year—1980. This is hardly the peak of the New Deal or Great Society—Jimmy Carter was already moving with the times toward a more neoliberal perspective, and the US elected Reagan in 1980.

In 1980 our state budget was $4.37B, and our economy was $52.7B. That means 8.3% of our economy was dedicated to public spending. Today it is 8.55%.

This is despite the fact that service-intensive sectors that cannot be automated—public and private—like healthcare, construction, and education, become more expensive compared to the rest of the economy over time. Government work is largely service-intensive. So to simply deliver the same level of government service, the share of the economy going to the public sector would have to increase over time. But despite us becoming much, much richer, we have held spending as a share of our economy flat for 45 years. This means that in Washington State, we are actually doing substantially less than we did in 1980.

This shows in how we stack up against other states. Relative to the rest, we are 29th of 50 in terms of how much taxes we pay. Of the 15 blue states, Washington pays the least in taxes. We are about in the middle of swing states. And there are 11 deep red states—Utah, Kansas, Iowa, Nebraska, Ohio, Indiana, Arkansas, Mississippi, West Virginia, Louisiana and Kentucky - that have higher taxes than us. We are also a net exporter of state funds to aid other states, meaning we are probably even lower down the list when it comes to actual spending. This miserly approach is probably why 31 states put more of their economy toward K-12 education than Washington, some much more.

This of course is made worse by the fact that we in Washington tax the poor much more heavily than the rich. We are second worst in the nation when it comes to that.

So, if you

1. Look at all 50 states and economists have shown that the range of taxes does not impact migration and jobs and economies

2. Look at all 50 states and see that we are a low tax economy—something a conservative economist recently called a tax haven like the Caman Islands.

3. See that we have extremely low taxes for the rich compared to everyone else

4. See that we haven’t actually increased the size of the government in 45 years

5. See that we have a budget crunch and aren’t fully funding basic goods like public education, affordable housing, and transit

I think we can all safely say it’s time to tax the rich.

A lot more.