The northwestern U.S. state of Washington's economy grew 3.7% in 2016, nearly two and a half times the national rate. Average income per head in 2009 was $41,751, 12th among states of the U.S.
The United States' largest concentration of STEM (science, technology, engineering and math) workers reside in Washington state. The state has a large volume of seaborne foreign trade with Asia. Leading economic sectors are government, real estate and rental leasing, and information; manufacturing comes fourth (8.6% of the state's GDP). Fruit and vegetable production, and hydroelectric power, are other important sectors. Important firms based in Washington include Starbucks, Amazon, Costco, and Microsoft.
Washington does not levy a personal income tax, but raises revenue through sales tax, property tax, and a gross receipts tax on businesses.
The state of Washington is one of only seven states that does not levy a personal income tax. The state also does not collect a corporate income tax or franchise tax. However, Washington businesses are responsible for various other state levies. One tax Washington charges on most businesses is the business and occupation tax (B & O), a gross receipts tax which charges varying rates for different types of businesses.
Washington's state base sales tax is 6.5 percent which is combined with a local sales tax which varies by locality. The combined state and local retail sales tax rates increase the taxes paid by consumers, depending on the variable local sales tax rates, generally between 7.5 and 10 percent. [1] As of March 2017, the combined sales tax rate in Seattle and Tacoma was 10.1 percent. [2] The cities of Lynnwood and Mill Creek have the highest sale tax rate in the state at 10.4 percent. [2] These taxes apply to services as well as products. [3] Most foods are exempt from sales tax; however, prepared foods, dietary supplements and soft drinks remain taxable.
An "ex" applies to certain select products such as gasoline, cigarettes, and alcoholic beverages. Property tax was the first tax levied in the state of Washington and its collection accounts for about 30% of Washington's total state and local revenue. It continues to be the most important revenue source for public schools, fire protection, libraries, parks and recreation, and other special-purpose districts.
All real property and personal property is subject to tax unless specifically exempted by law. Personal property also is taxed, although most personal property owned by individuals is exempt. Personal property tax applies to personal property used when conducting business or to other personal property not exempt by law. All property taxes are paid to the county treasurer's office where the property is located. Washington does not impose a tax on assets such as bank accounts, stocks or bonds. Neither does the state assess any tax on retirement income earned and received from another state. Washington does not collect inheritance taxes; however, the estate tax is decoupled from the federal estate tax laws, and therefore the state imposes its own estate tax.
The per capita personal income in 2009 was $41,751, 12th in the nation. [4]
Several notable billionaires, including Jeff Bezos, former Chairman & CEO of Amazon, and Bill Gates, technology advisor and former Chairman & CEO of Microsoft, live in the state. Other state billionaires include Steve Ballmer (Microsoft), Craig McCaw (McCaw Cellular Communications), James Jannard (Oakley), Howard Schultz (Starbucks), and Charles Simonyi (Microsoft). [5] [6]
Significant amounts of trade with Asia pass through the ports of the Puget Sound. Washington is the fourth largest exporting state in the United States, after New York, California, and Texas.
The ports of Washington handle 8% of all American exports and receive 6% of the nation's imports. [7]
Washington industries by GDP value added 2011
| Industry | GDP value added $ millions 2011 | % of total GDP |
|---|---|---|
| Government | 52,757 | 14.86% |
| Real estate and rental leasing | 43,123 | 12.14% |
| Information | 31,283 | 8.81% |
| Durable good manufacturing | 30,372 | 8.55% |
| Retail trade | 25,057 | 7.06% |
| Healthcare and social assistance | 24,798 | 6.98% |
| Finance and insurance | 17,317 | 4.88% |
| Non-durable good manufacturing | 13,763 | 3.88% |
| Construction | 12,883 | 3.63% |
| Administrative and waste management | 10,403 | 2.93% |
| Accommodation and food services | 10,104 | 2.84% |
| Transportation and warehousing | 9,724 | 2.74% |
| Other services, except government | 8,023 | 2.26% |
| Arts, entertainment and recreation | 2,700 | 0.76% |
| Educational services | 2,094 | 0.59% |
| Mining | 710 | 0.19% |
| Total | 355,083 | 100% |
Key businesses within the state include the design and manufacture of jet aircraft (Boeing), computer software development (Microsoft, Nintendo of America, Valve), online retailers (Amazon, Expedia, Inc.), electronics, biotechnology, aluminum production, lumber and wood products (Weyerhaeuser), mining, and tourism.
A Fortune magazine survey of the top 20 most admired companies in the US included four Washington-based companies: Starbucks, Microsoft, Costco and Nordstrom. [8]
Washington was one of eighteen states which had a government monopoly on sales of alcoholic beverages, although beer and wine with less than 20% alcohol by volume could be purchased in convenience stores and supermarkets. Liqueurs (even if under 20% alcohol by volume) and spirits could only be purchased in state-run or privately owned-state-contracted liquor stores. [9] This however was overturned by 2011's Initiative 1183 which ceased state-run liquor stores as of June 1, 2012. [10]
Washington is a leading agricultural state. (The following figures are from the Washington State Office of Financial Management [11] and the USDA, National Agricultural Statistics Service, Washington Field Office). For 2003, the total value of Washington's agricultural products was $5.79 billion, the 11th highest in the country. The total value of its crops was $3.8 billion, the 7th highest. The total value of its livestock and specialty products was $1.5 billion, the 26th highest. In 2010, the total value of the crops was $7.93 billion. [12]
In 2004, Washington ranked first in the nation in production of red raspberries (90.0% of total U.S. production), wrinkled seed peas (80.6%), hops (75.0%), spearmint oil (73.6%), apples (58.1%), sweet cherries (47.3%), pears (42.6%), peppermint oil (40.3%), Concord grapes (39.3%), carrots for processing (36.8%), and Niagara grapes (31.6%). Washington also ranked second in the nation in production of lentils, fall potatoes, dry edible peas, apricots, grapes (all varieties taken together), asparagus (over a third of the nation's production), sweet corn for processing, and green peas for processing; third in tart cherries, prunes and plums, and dry summer onions; fourth in barley and trout; and fifth in wheat, cranberries, and strawberries.
The apple industry is of particular importance to Washington. Because of the favorable climate of dry, warm summers and cold winters of Central Washington, the state has led the U.S. in apple production since the 1920s. [13] Two areas in Eastern Washington – the Yakima River valley and the Wenatchee River valley – account for the vast majority of the state's apple crop. [14] The Washington Apple Commission regulates the industry.
Washington is the leading producer of hydroelectric power in the U.S. Hydroelectricity makes up over half of electricity state's electric generation and nearly 35% of its total energy consumption. [15]
Employment by industry in Washington [16]
| Industry | Employment thousands March 2013 | Percent of total employment |
|---|---|---|
| Trade, transportation and utilities | 548.2 | 18.84% |
| Government | 540.9 | 18.59% |
| Education and health services | 392.2 | 13.4% |
| Professional and business services | 352.0 | 12.10% |
| Manufacturing | 288.0 | 9.90% |
| Leisure and hospitality | 281.7 | 9.65% |
| Financial activities | 142.3 | 4.89% |
| Other services | 112.4 | 3.86% |
| Information | 104.7 | 3.60% |
| Mining, lodging and construction | 6.1 | 0.21% |
| Total | 2,909.5 | 100% |
At $43 billion, real estate and rental leasing forms 12.14% of total GDP in Washington. (see above)
On December 4, 2016 Bloomberg compared the cost of housing between Vancouver, British Columbia and Seattle. There has been a 50 per cent increase in home prices in Seattle in the past five years, but the median home value is still less than in San Francisco and Los Angeles. As in Vancouver some of the increase in home prices is attributed to Chinese investors. [17] [18] On December 9, 2016, The Seattle Times mentioned proposed legislation to allow more and larger mother-in-law apartments and backyard cottages in neighborhoods zoned for single-family houses in Seattle. [19]
A tax is a mandatory financial charge or levy imposed on a taxpayer by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax compliance refers to policy actions and individual behavior aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax relief. The first known taxation occurred in Ancient Egypt around 3000–2800 BC. Taxes consist of direct or indirect taxes and may be paid in money or as labor equivalent.
Excise tax in the United States is an indirect tax on listed items. Excise taxes can be and are made by federal, state, and local governments and are not uniform throughout the United States. Certain goods, such as gasoline, diesel fuel, alcohol, and tobacco products, are taxed by multiple governments simultaneously. Some excise taxes are collected from the producer or retailer and not paid directly by the consumer, and as such, often remain "hidden" in the price of a product or service rather than being listed separately.
Tax exemption is the reduction or removal of a liability to make a compulsory payment that would otherwise be imposed by a ruling power upon persons, property, income, or transactions. Tax-exempt status may provide complete relief from taxes, reduced rates, or tax on only a portion of items. Examples include exemption of charitable organizations from property taxes and income taxes, veterans, and certain cross-border or multi-jurisdictional scenarios.
An ad valorem tax is a tax whose amount is based on the value of a transaction or of a property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT). An ad valorem tax may also be imposed annually, as in the case of a real or personal property tax, or in connection with another significant event. In some countries, a stamp duty is imposed as an ad valorem tax.
In addition to federal income tax collected by the United States, most individual U.S. states collect a state income tax. Some local governments also impose an income tax, often based on state income tax calculations. Forty-one states, the District of Columbia, and many localities in the United States impose an income tax on individuals. Eight states impose no state income tax, and a ninth, New Hampshire, imposes an individual income tax on dividends and interest income but not other forms of income. Forty-seven states and many localities impose a tax on the income of corporations.
A use tax is a type of tax levied in the United States by numerous state governments. It is essentially the same as a sales tax but is applied not where a product or service was sold but where a merchant bought a product or service and then converted it for its own use, without having paid tax when it was initially purchased. Use taxes are functionally equivalent to sales taxes. They are typically levied upon the use, storage, enjoyment, or other consumption in the state of tangible personal property that has not been subjected to a sales tax.
Ireland's Corporate Tax System is a central component of Ireland's economy. In 2016–17, foreign firms paid 80% of Irish corporate tax, employed 25% of the Irish labour force, and created 57% of Irish OECD non-farm value-add. As of 2017, 25 of the top 50 Irish firms were U.S.–controlled businesses, representing 70% of the revenue of the top 50 Irish firms. By 2018, Ireland had received the most U.S. § Corporate tax inversions in history, and Apple was over one–fifth of Irish GDP. Academics rank Ireland as the largest tax haven; larger than the Caribbean tax haven system.
Taxation in Ireland in 2017 came from Personal Income taxes, and Consumption taxes, being VAT and Excise and Customs duties. Corporation taxes represents most of the balance, but Ireland's Corporate Tax System (CT) is a central part of Ireland's economic model. Ireland summarises its taxation policy using the OECD's Hierarchy of Taxes pyramid, which emphasises high corporate tax rates as the most harmful types of taxes where economic growth is the objective. The balance of Ireland's taxes are Property taxes and Capital taxes.
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Sales taxes in the United States are taxes placed on the sale or lease of goods and services in the United States. Sales tax is governed at the state level and no national general sales tax exists. 45 states, the District of Columbia, the territories of Puerto Rico, and Guam impose general sales taxes that apply to the sale or lease of most goods and some services, and states also may levy selective sales taxes on the sale or lease of particular goods or services. States may grant local governments the authority to impose additional general or selective sales taxes.
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Washington, officially the State of Washington, is a state in the Pacific Northwest region of the United States. It is often referred to as Washington state to distinguish it from the national capital, both named after George Washington. Washington borders the Pacific Ocean to the west, Oregon to the south, Idaho to the east, and shares an international border with the Canadian province of British Columbia to the north. Olympia is the state capital, and the most populous city is Seattle.
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Sales taxes in British Columbia come in the form of the Goods and Services Tax (GST) and Provincial Sales Tax (PST).
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A value-added tax is a consumption tax that is levied on the value added at each stage of a product's production and distribution. VAT is similar to, and is often compared with, a sales tax. VAT is an indirect tax, because the consumer who ultimately bears the burden of the tax is not the entity that pays it. Specific goods and services are typically exempted in various jurisdictions.
