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Income tax backers point to tax inequality

Post by Jordan Schrader / The News Tribune on July 1, 2010 at 11:31 am with 7 Comments »
July 1, 2010 11:31 am

Washingtonians who don’t want an income tax, Bill Gates Sr. has a few numbers for you:

The poorest 20 percent of non-elderly people in the state, those who make less than $20,000, pay 17.3 percent of their income in state and local taxes. The middle 20 percent pay 10.8 percent of their income.

And the top 1 percent pay just 2.6 percent of their income in taxes.

The numbers come from the Institute on Taxation and Economic Policy, which says Washington has the most regressive tax system in the country. Gates cited them today in making a pitch for voters to approve an income tax on high earners.

Gates, small business owners, purple-clad state employee union members and other supporters dropped off petitions for Initiative 1098 at the secretary of state’s office today. They say there are more than 360,000 signatures, 50 percent more than the number of valid names required to get on the November ballot. If it passes, larger businesses and the rich would pay more and the money would go to education and health care.

Opponents note that much of the regressive nature of the tax code is due to high sales taxes, which would be unchanged by I-1098. But the institute’s brief shows it’s also because of the state’s business-and-occupation tax, which companies pass along to their customers, and property taxes. Both would drop if I-1098 is approved.

The campaign says by raising the B&O tax exemption from $420 to $4,800, 81 percent of businesses in the state would be exempt from B&O taxes.

Opponents say the measure will send entrepreneurs heading for the exits. The lack of an income tax gives Washington an advantage over other states in attracting business, they say.

Leave a comment Comments → 7
  1. The biggest problem with an income tax is that any law that has been proposed has not also included a simultaneous elimination and prohibition of reenactment of an equal or greater amount of other taxes. ALL sales and ALL property taxes (state and local) need to be eliminated permanently to offset the added cost of an income tax. Otherwise, the income tax is an ADDED tax, not a substitute. This state has never eliminated a tax, at least not without just renaming it something else, like a ‘fee’.

    Proponents of an income tax always say other taxes ‘will be reduced’ to make an income tax revenue neutral. However, there is no such binding guarantee in the income tax proposal…only a vague mention, not really a promise even. And we all know how well the legislature abides by such ‘promises’. Also, today’s promise of ‘stick it to the rich’ will inevitably be expanded by our revenue drunk legislature and Governor to include tomorrow’s lower and middle class. Count on it.

  2. Let me say this, the income tax well eventually be passed on to the middle class.

    Two, most low income families don’t pay any federal income taxes, and they often receive a refund check even though they don’t pay any federal income taxes, when you add in all the tax credits they receive.

    Three, low income families are also more likely to receive state and federal paid benefits.

    Fourthly, elderly low income individuals get a disproportionate amount of old age benefits from the federal government.

    For the amount taxes that the poor contribute, they get more then their fair share from the government in return.

    If the poor can afford satellite/cable tv, cigarettes and booze, they can afford to put something in the kitty.

    I will vote no if this initiative makes the ballot.

  3. Proconsul8 says:

    It is the richer folks in this state who create jobs through investment in companies that they believe in (or that they own themselves). It is the richer folks in this state that endow charities, universities, churches, and other social institutions in ways unachievable by the salaried man and are more efficient in benefiting the community. It is the height of inanity to take money from a richer person and expect that by giving it, through a government program to a poorer person that the poorer person shall invariably become richer. Let’s watch the exodus of small business and the wealthy from our state in the same way as is happening in NY State right now. Oh, and by the way. If you have to have a tax at all, why can’t it apply to each equally and not target one segment? Who is the liquor and cigarette tax hurting?

  4. coovertc says:

    I can certainly see how eliminating the hate B&O tax will be a huge incentive for business owners to leave. Give me a break.

    The arguments against this initiative are tired, contradictory and illogical. I get it, rich people want to keep their money. There is no other good argument against putting an income tax on all income over $200,000. Remember, everyone gets their first $200,00 income tax free.

  5. EatonvilleTaxPayer says:

    As a middle income small business owner I can say that the B&O tax is nothing compared to a state income tax, which will no doubt be spread to other income levels over time.

    I agree with the one statement: What about getting rid of the B&O tax and the LAND TAXES, which are ridiculously high. Senior citizens and low income people would be greatly helped by deleting land taxes.

    People are fools to trust our money hungry state government. They will seek taxation of more than just the wealthy AND they won’t be reducing taxes or eliminating anything else either.

    As far as the reduction on the land taxes….it is only on the STATE portion, which if you review your own tax statements will amount to peanuts in savings.

    VOTING NO ON STATE INCOME TAX. I also do NOT appreciate the deceitful tactics signature gatherers used to get this on the ballot. Many people have experienced problems there.

  6. Please understand this is NOT a tax against the wealthy!!!! It is a tax against high earners, HUGE difference. Who is pushing it? Bill Gates Sr., a very wealthy person, but one who doesn’t have a high income. High income earners are the people who spend their money, and are working at building wealth. Many people making over 200,000.00 are not wealthy, and provide a customer base for many businesses, still spending money in your local community even during this recession/depression. Watch businesses leave our state. The figures are blatantly false/misleading in this editorial. In our state, a person making 20,000.00 a month pays ZERO federal income tax, if they have a family and earn a w2, they are getting an earned income credit(yes, a tax refund of someones elses taxes paid-more money back than they paid in). Food is not taxed, so there tax burden is what? 5.00%? Oh, are you adding their social security of 7.65% to the equation, trying to fake people out just like the signature gatherers of this petition did?

  7. meant 20,000 a year:)

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