The 5-5-5 Plan

Fixing Washington’s Broken Tax System

The typical Washington individual or family making under $340,000 per year will see a tax cut of approximately $1,700 per year.

Everyone making under approximately $220,000 (single) / $440,000 (joint) per year will see a tax cut.

Problem

Washington is one of only four states without an income or corporate tax. The 5-5-5 Plan fixes that.

While 70% of Americans live paycheck to paycheck and the wealth gap keeps soaring, Washington State has, in most analyses, one of the most regressive tax systems in the country. Our reliance on sales, excise, and property taxes is inefficient, unfair, and outdated. Relying on the capital gains tax too heavily is dangerous (volatile year-to-year) and also limited (small base, diminishing returns).

Sales and property taxes are regressive taxes. Everyday taxpayers pay a far larger share of their income in sales and property taxes than the wealthiest residents and corporations do. At the same time, our tax code is inadequate long-term and increasingly contradicts today’s economy.

Our state’s funding model leans on sales, property, and excise taxes— it is one that does not align with the modern economy’s tax base. The latest forecasts confirm this: Washington now anticipates $845 million less in revenue through 2029 than previously projected, primarily due to falling sales tax collections.

Our current tax structure is not just unfair—it’s fragile and rigid. As economic conditions lead to one revenue source becoming less fruitful, the state loses capacity to fund and is in a perpetual state of a budget crisis. Basic accounting and economics demands a more versatile tax system.

The 5-5-5 Plan diversifies revenue beyond unstable sales and gross-receipts sources. By introducing a surtax on high incomes and a corporate tax, we add dependable, versatile streams of revenue. Our tax system goes from being a total outlier and mismatch, to looking structurally very close to what 40 out of 50 states already have.

Solution: The 5-5-5 PLAN

  • 5% SURTAX ON VERY HIGH INCOMES
     • Only on dollars earned above $170,000 (single) / $340,000 (joint).
    • Raises about $1.5-2.0B.

  • 5% CORPORATE PROFITS TAX
    • Applies only to C-corporations on profits in Washington.
    • Pass-throughs (LLCs, S-corps, partnerships) not affected.
    • Raises about $2.0-2.5B.

  • Cut 5 taxes

  • CUT sales tax 15%
    • Lower state sales tax from 6.5% → 5.55%.
    • Savings: about $2.3B.

  • CUT property tax 10%
    • Applies to the state levy portion only.
    • Average homeowner saves $110–$130/year on a $600k home.
    • Savings: about $0.50B.

  • CUT business and operations tax 10%
    • Across-the-board reduction for all business receipts.
    • Significant tax cut for small and mid-size businesses.
    • Savings: about $0.5B.

  • CUT real estate excise tax 10%
    • Drops the lowest REET bracket by 10%.
    • Helps first-time and mid-range homebuyers.
    • Savings: about $0.15B.

  • CUT insurance premiums tax 5%
     • Rate trimmed from 2.0% → 1.9%.
    • Provides modest relief on insurance costs.
    • Savings: about $0.15B.

  • REVENUE NEUTRAL TO POTENTIAL SURPLUS

    Under this plan, the average Washington family will save about $1,400–$2,000 per year.

FEDERAL OFFSET NOTE:

High earners’ surtax is significantly reduced by federal tax rules.

  • For those in the 32–37% brackets, 25–35% of the surtax is offset.

  • Example: $1,000 in surtax = $650–$750 in total tax actually paid.

  • Net effect: More tax revenue stays in Washington instead of D.C.

  • High income earners will also benefit from the reductions to the other 4 taxes.

Broad Agreement Across the Spectrum

This isn’t a new debate. For over 40 years, bipartisan commissions, economists, and civic leaders have all reached the same conclusion: Washington needs to cut regressive taxes and introduce an income* and corporate profits tax.

  • Institute on Taxation and Economic Policy (ITEP): “Washington State has the most unfair tax system in the US.”

  • Economist Dick Conway: Washington has “by far the most regressive tax system in the nation” due to reliance on sales taxes.

  • Washington Tax Structure Study Committee (bipartisan): Advocated a flat-rate personal income tax while reducing sales and eliminating the state property tax.

  • Washington State Economic Development Board (business + government leaders): Recommended reducing sales tax and instituting a personal income tax.

  • Championed by leaders: Bill Gates Sr., Gov. Christine Gregoire, Nick Hanauer, the League of Women Voters, SEIU, and others.

The verdict is clear: our system is broken, and fixing it is long overdue.

*IMPORTANT NOTE: THIS 5-5-5 PLAN IS NOT AN INCOME TAX - IT IS A SURTAX ON VERY HIGH INCOMES THAT MERELY MIMICS A TARGETED INCOME TAX.