Tax Freedom Day 2015 (April 24th)

The Tax Foundation calculates the 2015 Tax Freedom Day as April 24, 2015.

This is calculated as the day of the year when the nation as a whole has earned enough money to pay its total tax bill for that year.

Tax Foundation Key Findings:

• Americans will spend more on 2015 taxes than they will on "food, clothing, and housing combined."
• Americans will pay 31% of the nation's income in taxes.
• Americans will pay $3.3 Trillion in federal taxes, $1.5 Trillion in state and local.
• Washington residents Tax Freedom day: April 29, 2015
• Idaho residents Tax Freedom day: April 14, 2015.

Graphic from the Tax Foundation:

Washington State: Ranked 11th on State Business Tax Climate Index

The Tax Foundation has recently released its 2015 State Business Tax Climate Index. The full report can be found here.

Washington State ranked 11^th overall on the index for best State Business Tax climate nationwide.

The purpose of the index is to enable "business leaders, government policymakers, and taxpayers to gauge how other states his tax systems compare."

In making its rankings, the Tax Foundation surveys each State's tax system comparing over 100 different variables in five areas of taxation (corporate, individual, sales, unemployment insurance and property). Then it compiles those results to create its final overall rankings.

However despite the fact that Washington scored well overall, it has one of the highest combined state and average local sales tax: at 8.88%.

Washington has the highest tax rate on spirits ($35.22 per gallon).

Looking at the corporate tax component alone, Washington ranked 28^th.

Looking at the individual income tax component alone, Washington ranked 6^th.

Looking at the sales tax component alone, Washington ranked 46^th.

Looking at the property tax component alone, Washington ranked 23^rd.

Looking at the unemployment insurance tax component alone, Washington ranked 19^th.

U.S. is in bottom 10% of OECD Countries for Tax Competitiveness

The Tax Foundation has recently issued its 2014 International Tax Competitiveness Index (ITCI) for the 34 OECD countries.

Overall, the United States ranked as 32^nd most competitive out of the 34 OECD countries (i.e. the bottom 10%). The ITCI notes that the largest factors behind United States's poor score are:

1. The US has the highest corporate income tax rate in the developed world (39.1%) (OECD average 25%),
2. The US is one of the only countries in the OECD that does not have a territorial tax system (the top 5 all have territorial tax systems),
3. The US has a relatively high progressive individual income tax (combined top rate 46.3%) which taxes both dividends and capital gains.

The top 5 and bottom 5 overall OECD Scores under the ITCI are:

	Country Name	ITCI Overall Score
1.	Estonia	100.0
2.	New Zealand	87.9
3.	Switzerland	82.4
4.	Sweden	79.7
5.	Australia	78.4
30.	Spain	50.8
31.	Italy	47.2
32.	United States	44.6
33.	Portugal	42.9
34	France	38.9

Within the OECD, the United States has the 3^rd worst tax environment as calculated by the ITCI. This puts it in the bottom 10% of the OECD. This has tremendous implications for long-term investment and job growth within the United States. Congress needs to address this reality and make our tax code more competitive with the rest of the OECD. As stated in the report:

In today's globalized world, capital is highly mobile. Businesses can choose to invest in any number of countries throughout the world in order to find the highest rate of return. This means that businesses will look for countries with lower tax rates on investments in order to maximize their after-tax rate of return. If a country's tax rate is too high, it will drive investment elsewhere, leading to slower economic growth.

Washington Legislature Considering new Income Tax

On February 14 the Washington Senate Ways and Means committee has scheduled a public hearing on various tax increase bills. According to the Washington Policy Center, if all bills were adopted the Washington Policy Center projects that the 10-year tax increase would exceed $38 billion.

One of the bills up for debate is a Washington State Income Tax bill sponsored by Senators Chase and Kline (SB 5166).

This income tax uses generally follows the federal income tax structure. Washington "taxable income" is an individual's (federal) "adjusted gross income" less Washington exemptions and deductions. The proposed tax rates are below.

Married filing jointly

If Taxable Income is:	The tax is:
Not over $49,900	2.2 of taxable income
Over $49,900 but not over $120,650	$1,098 plus 3.5% of the excess over $49,900
Over $120,650	$3,574 plus 6.0% of the excess over $120,650

Head of household

If Taxable Income is:	The tax is:
Not over $37,425	2.2 of taxable income
Over $37,425 but not over $90,488	$823 plus 3.5% of the excess over $37,425
Over $90,488	$2,681 plus 6.0% of the excess over $90,488

Washington’s sales, excise and gross receipts taxes

The Tax Foundation reports that Washington State has the highest proportion of its state and local tax revenues generated from sales, excise and gross receipts tax. Washington State generates 60.5% of its state and local tax revenues from sales, excise and gross receipts tax. The Tax Foundation's tax map with all other states is included below and can also be found here.

The balance of Washington State's state and local tax revenue comes from property taxes (31.5%) and other taxes (8.0%). Washington State has no individual income tax or corporate income tax per the Tax Foundation's report on The Sources of State and Local Tax Revenues.