Washington ranks 35th in economic and political freedom report

The 2024 Index of Freedom report, published by Schweitzer Engineering Laboratories, ranks Washington state 35th out of 50 states in terms of economic and political freedom, a decline from its previous position of 32nd. This report evaluates states based on government efficiency, regulatory freedom, and energy resiliency, utilizing data from various reputable sources including the American Legislative Exchange Council and the CATO Foundation. Washington's ranking reflects a complex regulatory environment that poses challenges for businesses, despite the absence of typical state personal or corporate income taxes. The report highlights Washington's capital gains tax, enacted in 2021, which has faced legal scrutiny but remains in effect. Additionally, the state's business and occupation tax, a gross receipts tax, complicates the business landscape. Economist Paul Turek from the state Employment Security Department commented on the report's findings, acknowledging its partisan nature while recognizing its insights into Washington's economic conditions. Turek noted that the SEL report emphasizes energy resiliency, which may be a factor in the company's decision to maintain its headquarters in Pullman. He pointed out that the gross receipts tax is generally unpopular among the business community, adding to the costs of operating in Washington. This tax structure is seen as a tradeoff for the lack of a personal income tax, which some businesses may find appealing. Ultimately, the report serves as a reflection of the ongoing debate between conservative and liberal economic principles, particularly regarding taxation policies. Individuals and businesses in Washington must weigh these factors when making decisions that impact their economic and political futures.