A Balanced Approach: Increasing and Modernizing the Sales Tax

In our new Policy Brief, the Budget & Policy Center offers a balanced approach to dealing with the recession's impact on the state budget. To maintain our economic competitiveness and essential services for struggling families, we recommend that policymakers generate additional resources by modernizing and temporarily increasing the state sales tax -- Washington's largest source of revenue -- and funding the Working Families Tax Rebate.

Our proposal would generate an additional $1.2 billion in resources that could be used to prevent further economically damaging cuts. The remaining deficit could be closed through a combination of additional revenue strategies, an extension of federal recovery funds, and one-time transfers and changes (including accessing the Rainy Day Fund).

It is important to note that tax increases under this proposal would remain a modest share of total actions taken to close shortfalls during the FY2009-11 biennium. The graph below shows that tax increases under the proposal would account for barely one-sixth of total measures taken to balance the budget over the course of the biennium. Budget cuts, federal funds, fund-transfers and other changes, would each constitute larger shares of total budget solutions.



Click here to read the entire report.