Tag Archives: tax reform

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.

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.”