Island County has the 10th lowest tax burden in the state and a comparatively low tax burden in the nation, according to a new study by SmartAsset.
The personal finance technology company analyzed how much an average person would pay in income, sales, property and fuel taxes in all 3,007 counties in the nation.
The total was translated into a “tax burden index,” which can be used to compare counties.
Of the counties with the least total taxes in the state, Island County ranks as 10th lowest among the state’s 39 counties; the ranking takes into account taxes for both municipalities and unincorporated areas.
The county’s tax burden was the 231st lowest in the nation, the study found.
That’s good news for Island County’s economy and, especially, small businesses, according to Island County Economic Development Director Ron Nelson.
“When it comes to operating your small business, property tax bills can get really expensive very fast,” he said, noting that the county’s average property tax collections are especially low.
“It can make the difference when it comes to expending or just staying in business.”
Nelson said the comparatively low tax burden should give the county an edge over other counties when it comes to business location.
AJ Smith, the managing editor at SmartAsset, said the company’s aim in crunching the numbers is to provide transparency about tax burdens.
“The main goal was to provide people with information to keep in mind when they make decisions, whether it’s where they want to live or where they want to move a business,” she said.
The entire state seemed to fare well when it comes to taxes, she said.
In comparison, Washington, D.C.-based Tax Foundation found that the state’s average tax burden in 2001 was 9.4 percent, less than the national average of 9.8 percent. That translates to the state having the 27th highest tax burden.
The Tax Foundation determined the total amount of taxes raised in each state and divided the total by the state’s total income.
SmartAsset used the same hypothetical person — with the same average income and home value — to determine tax burden across all the counties in its calculations.
Island County’s total tax burden in significantly lower than its neighbors, with the exception of San Juan County — which has the lowest tax burden in the state, according to SmartAsset.
Skagit County is the 26th lowest and Snohomish County is the 35th lowest in the state.
The significant factor in Island County’s ranking is its low property tax rate. SmartAsset used the median property tax rate in the county to calculate how much the owner of a $250,000 house would pay.
The company came up with $1,985 a year for Island County, which makes it the eighth lowest in the state; the state average is $2,355, and Skagit County’s is $2,513.
Island County’s income tax collection, however, is higher than many other counties.
SmartAsset estimates that 35 percent of a person’s take-home pay is spent on taxable goods. Island County’s sales tax amounts to $1,437 a year, the study finds.
As of July 1, the sales tax rate in Island County will be 8.7 percent, according to the state Department of Revenue.
By comparison, most of Skagit County has an 8.5 percent sales tax. Snohomish County sales tax ranges from 7.7 percent in parts of the unincorporated areas to 9.5 percent in other parts of unincorporated areas and seven cities.
The Tax Foundation concluded that the average state and local tax rates in the Washington is 8.89 percent.
In calculating fuel taxes, SmartAsset didn’t look at the difference in pump prices in different counties, but calculated miles per licensed driver in each county. Using the national average fuel economy, the company figured out the average gallons of gas per driver and multiplied it by the fuel tax rate.
The fuel tax estimates hover around $200 in each county.
The estimated fuel tax that the average Island County resident pays is $225.
SmartAsset used the national median household income to gauge what the average person would pay in income taxes. Since Washington doesn’t have a state income tax, the amount for all counties is the same at an estimated average of $7,809 a year in federal income tax.
Island County Commissioner Jill Johnson said the low property tax rate is largely a remnant from past commissioners, who didn’t always increase property taxes by the total amount they could have.
State law currently limits the increase to 1 percent, unless residents vote to exceed that.
Having a low property tax rate has its advantages, she said. It makes the county a popular place in which to live; the county is often on lists of the best place to retire to.
At the same time, she said it makes it difficult to provide government services since many costs increase beyond the 1 percent a year.
At some point, the residents may be asked to pay more.
“Ultimately, it may be up to the voters to decide what level of service they expect from their county government and how much they are willing to pay for it,” Johnson said.