Tax rankings are a popular way of comparing tax burdens among
states, but the results can be misleading. A recent report by
Forbes Magazine that Washington ranked eighth-highest in
personal taxes per capita is an example of how apples sometimes
get compared to oranges. The Forbes comparison purports to only
count personal taxes paid by state residents, but erred by
mistakenly counting Washington’s Business and Occupation Tax as
a personal tax while excluding corporate income and other
business taxes paid in other states. That error occurred because
the Census Bureau classifies the B&O tax as a sales tax, and the
Forbes analysts failed to notice that. Excluding the B&O tax as
it should have done would have dropped Washington’s ranking
substantially. In addition, because the ranking only compares
certain state taxes and leaves out local taxes, the Forbes
ranking fails to take into account some unique aspects of
Washington’s tax system. Washington has a state school property
tax levy that flows into the state ge