Study Overview
The Washington Research Council (WRC) used their WRC-REMI model to quantify the potential impacts of increases in the sales and business & occupation (B&O) tax rates on the state economy. Four tax scenarios were examined for this report: a permanent state sales tax rate hike from 6.5% to 7.3%, a raise of the state sales tax to 8.6%, an increase to the B&O tax that generates the same revenue as increasing the sales tax to 7.3%, and a B&O tax hike that generates the same revenue as increasing the sales tax to 8.6%. While modeling the impacts of each scenario, researchers were able to illustrate the general property that the negative effects of taxes on employment build over time to a greater extent than the positive effects of spending due to the effects of taxes on population migration and business location.