Tag Archives: property tax

Income Tax Initiative to Kick Off Tomorrow

Proponents of a fairer tax system to benefit middle and lower income cititens of Washington State plan to officially announce the kick off their campaign tomorrow, April 21, 2010 at 10 AM at SoDo Coffee at 1918 Yesler in Seattle. Several drafts of the initiative have been filed with the Secretary of State’s Office in the last month so it is no secret that a tax reform measure was being considered. What was uncertain was whether such an effort would be done this year or next.

The measure that has been settled on is officially Initiative 1077.  The ballot title and summary as posted on the Secretary of State’s website site is as follows:

Ballot Title

Statement of Subject: Initiative Measure No. 1077 concerns taxation.

Concise Description: This measure would tax “adjusted gross income” above $400,000 joint ($200,000 individual), reduce the state property tax levy, reduce certain business and occupation taxes, and direct any increased revenues to education and health.
Should this measure be enacted into law? Yes [ ] No [ ]

Ballot Measure Summary

This measure would establish a tax on “adjusted gross income,” as determined under the federal internal revenue code, above $400,000 for married couples filing jointly, and above $200,000 for individuals; reduce the state property tax levy by 20%; and increase the business and occupation tax credit to $4,800. Revenues from this measure would first replace revenues lost from the reduced levy and increased credit. Any remaining revenues would be earmarked for education and health services.

Click here to see the text of I-1077.

The campaign will provide more details and answer questions at the press conference tomorrow. Bill Gates Sr. is one of the backers of this measure.He has been a long time proponents of tax reform in our state and about 10 years ago headed the Gates Commission which did a report of tax reform.  The state has done little to change our regressive tax system since the report came out.

A preliminary summary provided by the campaign notes that state property taxes would be reduced by 20%, saving the average homeowner $180.

Small business tax credits for the B&O tax would increase from the currrent $420 to $4800 annually.  This would eliminate B&O taxes for 80% of businesses in the state.

Dedicated revenue would be generated to fund education and health services by the state from a tax on high earners in the state, defined as couples with income over $400,000 and individuals with adjusted gross income over $200,000.  This would apply to only 3% of households in the state. The remainder
of households would see a reduction in their taxes.

Watch for more details as the campaign kicks off, including where you can get petitions to collect signatures.  The initiative deadline to turn in signatures is July 2, 2010 to get on the November ballot.  Sponsors must submit the signatures of 241,153 registered voters.  Typically extra signatures need to be turned in to account for an invalid rate of up to 20%, which means the campaign will have to submit 300,000 signatures to be relatively sure of qualifying.

Tim Eyman’s Initiative 1033 Grassroots Joke

We all love a good joke. Tim Eyman told one the other day on KING 5 News Up Front Blog. He was bragging about how much grassroots fundraising support Initiative 1033 had gotten.

Initiative 1033 is Eyman’s latest wealth transfer scheme. This one is to transfer state tax revenue, of which 57% comes from the state sales tax, to commercial and residential property owners in the form of reduced property taxes. The more property you own, the larger your tax break or loophole.

Anyway, twice on the Up Front blog comment thread Eyman couldn’t resist claiming I-1033 has “a very broad base of grassroots support.” He claims that he has “received 2063 individual donations totaling $664,769 so far. 2063 – that’s really extraordinary…”

What’s extraordinary is that how big a misrepresentation of the facts this is. The fact is that only 3 donors contributed some 86.5% of the money raised for I-1033.

Michael Dunmire of Woodinville gave $300,000. Tim Eyman borrowed $250,000 and loaned it to the campaign. And Kemper Holdings LLC of Bellevue owned by Kemper Freeman who owns Bellevue Square Mall gave $25,000.

These top 3 donors in the campaign contributed 86.5% of the total cash raised. This hardly sounds like a grassroots campaign to me. Especially since they spent $598,081 to get the signatures. That’s an average of $1.89/signature.

I was also curious how Eyman’s number of individual donations doesn’t match up with what the Public Disclosure Commission has.

The PDC reports Eyman raised $664,769 through June. This is the figure he used in his comment. Yet the PDC website lists only some 897 contributions. A closer look revealed that some contributors gave 2 or 3 or 4 times, so the numbers of contributions is actually more than the number of contributors.

The PDC in addition lists without names or amounts some $20,345.56 Eyman reported as small contributions so I’m sure that this is where his 2063 “contributions” come from.

The funny part is that under named contributors he lists one person as giving 5 cents four different times. (That’s 4 contributions!) Another gave 7 cents 2 different times (That’s 2 more contributions!) and a third contributor gave 2 cents.

Manipulating numbers is so much fun. The number of contributions is obviously not the same as contributors and can easily be manipulated. And recording someone giving a nickel to I-1033 four times makes it easy to inflate the number of contributions made.

Have one person give me $25.00 in pennies one at a time and I’ll have more grassroots support than Eyman. What a joke!

Eyman I-747 Express Train Roars Through Olympia

With train bells clanking and next year election year jitters agitating them like caffeine addicted fiends, Washington State legislators at the prodding of Governor Gregoire, jumped aboard the Eyman Express. With Train Engineer Christine Gregoire driving and with Conductors Frank Chopp and Lisa Brown punching tickets and screaming this train is leaving, Washington State Legislators stampeded, trampling over each other trying to get seats on the train before it left.

Eyman could be seen laughing his head off at them. He mocked them and insulted them even as they bought his over hyped tickets for the train ride and pledged to carry out his revenue cutting agenda framed as the people’s will.

Watching the Washington State Legislature in Special Session yesterday as it dealt with Governor Gregoire’s request to re-enact Eyman’s 1% Property Tax Limit was quite a spectacle.
Unfortunately it was a sad one. They treated the Eyman contrived 1% property tax limit as if it had some relation to a reasonable and justifiable policy proposal when in reality it only related to Eyman’s continued drive to limit government and taxes.

Credit needs to go to those legislators that in the end voted no on re-enacting I-747. In the House they were Representatives Dickinson, Hunt, Nelson, Pederson, Pettigrew, Santos, Simpson and Sommers. In the Senate they were Senators Fairley, Jacobsen, Kline, Kohl-Welles, McDermott, Murray, Pridemore, Spanel and Weinstein. In addition Senator Oemig made strong efforts to amend the legislation as did Senator Kohl -Welles.

Eyman’s I-747 sugar candy solution to people hurting from rising property taxes is nothing more than that – sugar candy. The people who are most in need of property tax help are lower and middle income people who pay a higher proportion of their income in property taxes than do high income people. I -747 does not change that equation since it’s an across the board limit to a 1% increase per year in overall property tax collections. The law benefits rich property owners more than less wealthy ones.

There was no ‘taxpayer revolt’ in Olympia yesterday. Conspicuously absent were homeowners demanding that I-747 be re-enacted. Maybe they know that it really gives very little tax relief , not having seen any significant impact for the 5 years it was law before the Washington State Supreme Court overturned it.

What there was yesterday in Olympia was a railroad brought on by elected officials unwilling and unable it seems to take the time to enact real property tax reform that would help low and middle income taxpayers. What occurred was that the Legislature again turned a blind eye to the fact that I-747 does not provide relief to those that need it most – low and middle income homeowners dealing with property tax bills rising faster that their income and who pay a greater percentage of their income in property taxes than do the wealthy.

The legislature has held hearings the last two years on real property tax relief in the form of a Homestead Exemption that some 40 states have. The Washington State Budget and Policy Center has done detailed analysis on another form of property tax relief known as circuit breaker legislation. But Gregoire didn’t even put these on the table.

Instead Gregoire comes out with an unvetted bill which is nothing more that a reverse mortgage. She called her property tax relief – a deferral of up to one half of property taxes per year for people earning less than $57,000 a year that have lived in their home for 5 years and have equity buildup.

Watching the Legislators deal with the Governor’s tax deferral bill was truly like watching sausage being made. The bill was surprise legislation not introduced in the Legislature before, that had only a day to be analyzed and considered. Committee Chairs were not allowing amendments to be made to it in the hope it would be rushed through. Many objections were raised in the two committee hearings, particularly by county auditors who saw many problems.

It was obvious from the discussion and critique at the hearings in the House and Senate that the bill had lot of problems. One Legislator characterized it as no more than a reverse mortgage that as a mortgage broker he said he would never offer. Eyman called it predatory lending. In this I agree with him. The current senior deferral has a fixed 5% interest rate.

The interest rate on the Governor’s deferral bill is 2% over the current Fed short term lending rate which is now 5%. This make the interest 7% this year. Since it is in essence an adjustable interest rate, what happens when inflation surges? The homeowner unfortunately goes more and more into debt.

Probably very few people will take advantage of her tax deferral. But she will still claim that she did something.

Tell the Legislature To Enact Real Property Tax Reform, Not I-747

The following is an e-mail message from the Washington Tax Fairness Coalition urging that you contact the Legislature to urge them to pass real tax reform, not I-747. It states the case well. Please read it and respond.

The State Supreme Court recently ruled that Initiative 747 (the 1% cap on general property tax levies) is unconstitutional.
The Governor has called a special session this week to pass a bill reinstating the provisions of Initiative 747. Good policy is seldom – if ever – made in a big hurry. Someone needs to remind our elected officials of that!
Please take a minute to email your representatives and the Governor to tell them, “don’t be hasty!” The property tax system is complicated. Rushing to re-establish a deeply flawed policy is not the answer.
Click here to send your email now:
If our elected representatives feel that they absolutely must reinstate a 1% cap — they should do so only on a temporary basis. This would give the Legislature time to hold public hearings that never happened as part of the initiative process and to study the impact of I-747. The state has never done an analysis of its effects.
Most importantly, it would create the space needed for the Governor and Legislature to propose, debate and enact REAL property tax reform — something that makes the system fairer and generates enough revenue to fund vital local services like fire, EMS, libraries and more.
We need to remind Olympia that we’ve lived under the provisions of I-747 for five years, and it has done nothing to target assistance to lower and moderate income homeowners, who pay the highest percentage of household income in property taxes. It has, however, systematically under-funded vital services we all rely on and benefit from.
We’ve drafted a sample message that you can edit or send as is – either way a minute of your time will help restore some perspective on an important issue.
Click here to send your email now:
There are better options: A circuit-breaker would target assistance to lower income homeowners and renters. A homestead exemption is certainly another viable option. Combining one of these creative solutions with a cap that allows for a reasonable inflation adjustment would constitute real reform.

If you can make it to Olympia to testify please do so. The House Finance Committee Hearing is at 8:15 AM Thursday November 29, 2007 in the John L O’Brien Building, House Hearing Rm B. The Senate has a hearing scheduled for 10:45 AM in the Cherberg Building Senate Hearing Room 4.

Governor Gregoire Not Listening to Public on Initiative 747

When you send a message to the Governor you would hope that someone actually reads it. I’m sure the Governor doesn’t read all of her e-mail but someone should at least be keeping track of what the public is saying.

So you figure – I sent a message to the Governor questioning the rush to pass I-747. We need property tax relief that addresses the unfairness of laws like I-747 with its across the board cuts that benefit wealthy property owners more than middle and low income property owners. Re-enacting I-747 doesn’t address the real property tax problem.

So the Governor responds back with the following e-mail.

Thank you for contacting me regarding the Supreme Court’s decision to overturn Initiative 747. I know that voters are disappointed by this, and I am committed to acting quickly to resolve the situation.

I-747 was approved in 2001 by a large margin, and the will of the voters should be respected. I have called the legislature into a special session on November 29 to address this issue, and will be asking that the one percent property tax limitation be reinstated.

Again, thank you for sharing your concerns. During this year’s election I heard loud and clear that voters are concerned about their tax burden. It is our responsibility to move quickly, recognizing these concerns and reinstating the will of the voters.


Christine O. Gregoire

Whoever reads the Governor’s e-mail and whose job it is to respond should at least write up 2 different responses – one for those supporting her position and one for those opposing it. I was not disappointed by the Supreme Court overturning I-747. Many voters are not disappointed because it is an unfair tax that doesn’t provide the type of help low and middle income property owners could use.

I am disappointed in Governor Gregoire – that she is caving into Tim Eyman and Dino Rossi and seems to have no clue about real property tax reform. She should be looking at ways to relieve the tax burden on low and middle income taxpayers and proposing legislation for a homestead exemption or circuit breaker legislation.

People forget that there is no magic in a 1% limit that doesn’t allow government revenue to even keep pace with inflation. People forget that Eyman first wrote an initiative with a 2% limit that voters passed but which the courts threw out.

As the Tacoma News Tribune wrote in an editorial recently, ” I-747 wasn’t thoughtful; it was a spiteful attack on all local governments because a handful of them had challenged I-722’s 2 percent limit in court.” To now just re-enact I-747 without considering the long term consequences that are building up because it prevents revenue from even keeping up with inflation, would be irresponsible on the part of the Legislature.

The Washington State Legislature should show leadership on this issue and only approve I-747 as a holding pattern on property taxes by adding a sunset provision. Then they should do a study of the impacts of I-747 on needed revenue for local and state government. They should hold hearings and pass legislation for a homestead exemption or pass circuit breaker legislation.

But just reinstating I-747 without evaluating its impacts on local and state governments and without exploring alternatives that are more helpful and fairer to low and middle income taxpayers would show a Governor and a Legislature out of touch with the real world.

Initiative 747 Fails to Address Tax Fairness

The strange thing about Governor Gregoire’s rush to re-enact I-747 by calling the Washington State Legislature into Special Session this Thursday is that according to figures from the Washington State Department of Revenue, Washington State’s Property Taxes are below the national average.

In 2004 Washington State ranked 28th in property taxes paid at $31.68 per $1000 of personal income. The national average was $34.75.

In 2005, according to a press release by the Dept of Revenue,”Washington also fell below national averages in property taxes. Property taxes dropped by $1.08 to $30.60 per $1,000 of personal income in Fiscal Year 2005, although Washington’s ranking among the states remained at 28th, the same as in Fiscal Year 2004. Washington ranked 24th in property taxes per capita at $1,055 in Fiscal Year 2005, down from 22nd in the 2004 rankings.”

These figures are surprising and contradict statements by Tim Eyman that would have you believing that we were drowning in taxes. Eyman talks about the need “to protect taxpayers from our obscene and unsustainable property tax burden“. To Tim of course, every tax is obscene and a burden.

The Washington State Department of Revenue’s press release noted that “Washingtonians pay less state and local tax relative to their incomes than residents of 36 other states…”
They stated that, “Tax experts believe measuring taxes against income is the most meaningful comparison because it reflects both ability and willingness to pay taxes for desired governmental services. “

Even Governor Gregoire issued a press release at the time. “Washington ranked 37th nationally, paying an average of $105.91 in taxes for every $1,000 in personal income in Fiscal Year 2005, compared to a national average of $112.94. Washington ranked 29th in Fiscal Year 2004.”
These tax figures for Washington also need to be considered in relation to the fact that 43 of the states also have an income tax to raise revenue, which Washington State doesn’t.

The Governor and the Legislature need to keep these facts in focus before permanently enacting I-747 again.

The issue is one of tax fairness – the Washington State Budget & Policy Center notes that “lower income homeowners pay a much larger share of their income in property taxes (6%) than higher income homeowners (2.8%).

Across the board tax reductions like I-747 do not change the regressivity of Washington State’s tax system. The Legislature needs to looks at circuit breaker and homestead exemption legislation as ways to help reduce the burden on lower and middle income tax payers and should only enact I-747 with a provision that it sunset when legislators enact a fairer property tax system than the current one.

It’s time to look at some new ideas to address tax fairness and quit recycling old ones that fail the test of helping those that need help the most in paying property taxes.

And its time to accept that overall taxes in Washington state, while the most regressive in the country because of their over reliance on sales taxes and property taxes and no income tax, are actually pretty average compared to other states. If we can just relieve some of the burden placed on lower and middle income taxpayers, then we would have a much fairer system.

Put Sunset Clause on any I-747 Legislation.

The Washington State Legislature is going to hold a special session this Thursday to consider re-enacting Initiative 747. I-747 was overturned by the Washington State Supreme Court. Governor Gregoire has called for the Special Session to put I-747’s 1% overall property tax increase limit back as law.

The Legislature needs time to consider property tax reform that helps those that need help most – low and middle income homeowners. Legislators should only consider enacting I-747 as a holding pattern until they can present and consider other measures like a circuit breaker or homestead exemption. By placing a sunset clause on I-747, like Jan 2009, Legislators can consider alternatives and hold meaningful hearings and allow time for adequate public input and evaluation of real property tax reform – something a one day special session doesn’t allow.

The best one or two proposals, if the legislators want public acceptance and involvement and debate, could be placed on the November 2008 ballot and go into law if passed. If the public rejects them I-747 would stay in place.

I-747 is not progressive tax legislation and does nothing to change the regressiveness of existing property tax laws that put a burden on low and middle income homeowners, forcing them to pay a higher proportion of their income in property taxes than those in higher income brackets.

I-747 is a quick fix that helps rich property taxpayers like mall owners and housing development owners. Gregoire called the special session out of a concern that some property taxing districts might hike their property taxes by more than the 1% limit before the regular legislative session starts in January. Reverting to the old law in place gives taxing districts the ability to increase property taxes collections up to 6% or inflation whichever is lower. Inflation last year, tracking the consumer price index, was about 3.7%.

This does not means that your property taxes under the old law would have gone up 3.7% last year if I-747 hadn’t been law. It means overall property tax collections to keep pace with inflation could have risen 3.7%, which includes combined taxes on existing houses as well as new construction.

There actually is a 1% limit on your property taxes independent of I-747. You can not be taxed more than 1% per year of the value of your home. Why your taxes would go up is because the value of your home has gone up. What is confusing is that I-747 does not limit ant tax increase on your home to 1% per year – it limited overall property tax collections to no more than 1% per year.

Property taxes need to be balanced with the need to pay for public services. Even with no income tax, Washington state’s property taxes are about the median according to the Washington State Department of Revenue.

Enacting an income tax like over 40 other states have would be a fairer system, allowing a reduction in real estate taxes or sales taxes, while paying for public services. It’s something for taxpayers to consider. You have to pay property taxes whether your income has gone up or not. The same is true for sales tax. Both are regressive taxes. But with the income tax, you only pay tax if you have income. If your income goes down you pay less tax.

Governor Gregoire Panders to Ghosts of Christmas Past

It’s Christmas time and Governor Gregoire has become like Ebenezer Scrooge. She’s busy visiting and revisiting the ghosts of Christmas past. In a trance like daze she calls for a Special Session of the Washington State Legislature to re-enact a flawed policy wish of her right wing opponents – Initiative 747.

Never mind that the Legislature is scheduled to meet in January and the issue of property tax reform deserves more than a one day session to fairly resolve.

The ghosts of Tiny Tim and Dino the DINO flit about in her harried brain. “I must be re-elected. I must be re-elected. Remove these demons!” she screams. “Give them whatever they want, just leave me alone.

Quite the contrary, Christine, feeding these waifs of thin air only give them more substance and embolden them in their mischievous pranks to throw rotten eggs at state and local governments.

These ghosts are not here to help the citizens of this state that are looking for leadership to change the way we raise revenue in Washington state and end our de facto tax motto of “most regressive tax system in the nation.

These ghosts are not here to tell the public “when compared to the other 49 states, state and local property taxes in Washington appear to be about in the middle. For fiscal year 2004, Washington state ranked 28th in property taxes at $31.68 per $1000 of personal income, below the national average of $34.75. Calculated on a per capita basis, Washington ranked 18th at $3452 per person.

The above statement comes from “2007 Legislative Guide to Washington State Property Taxes ” and was prepared by the Senate Ways and Means Committee and the Legislative Evaluation and Accountability Program.

These ghosts will not tell the public that those most in need of property tax help are lower and middle class homeowners whose tax bill is going up due to assessed values on homes increasing faster than their income is going up.

What the ghosts will not tell you is that “In 1995, commercial value of property represented 41.5 percent of the statewide assessed value, and therefore paid 41.5% of the property tax. Since then, the relative share of commercial assessed value (and therefore taxes) has decreased by 8.7% points to 32.8%.” (from 2007 Legislative Guide.)

Re-enacting I-747 will do nothing to address this fact – that homeowners are picking up more and more of the property tax burden.

And I-747 will do nothing to address the fact the the Washington State Legislature also continues to give new tax breaks to businesses .This further reduces the available revenue base and shifts more and more tax tax burden onto individuals and families.

As the Economic Opportunity Institute noted in it’s report “Adding Up: New Tax Breaks in Washington 2004 -2006″ “In the three Legislative sessions from 2004 through 2006, the Washington Legislature passed at least 61 measures either granting new tax preferences or extending old ones. These new tax breaks will cost the state nearly half a billion dollars in the 2007 – 2009 biennium.”

Washington state needs to do tax reform, not keep failed tax policies in place. When compared with alternatives like Circuit Breaker Legislation as proposed by the Washington Budget & Policy Center or a Homestead Exemption as proposed by Tax Sanity.org, Initiative 747 pales.

The Legislature needs to look at property tax alternatives that will help those most feeling the increased pressure of residential property taxes – low and middle income individuals and families . Relief should be considered first on one’s principal residence which homestead exemptions do or by circuit breaker legislation which specifically helps lower income families and homeowners.

But Governor Gregoire and the Democratic controlled Legislature need to leave behind the ghosts of Christmas past and look to what the future can bring. This is why it was encouraging to read the comments of Senate Majority Leader Lisa Brown and House Finance Committee Chair Ross Hunter in today’s Seattle PI. that the issue is not as simple as just passing a 1% limit.

Senate Majority Leader Brown notes that “The 1 percent limit has been in place for 5 years and there are still people out there who are struggling with property taxes.”