When the general election ballots make it to your door, you will find the usual alphabet soup (do they make numeric soup?) of ballot measures. It can definitely get confusing, and those little blurbs on the actual ballot are usually just enough to remind you that you don’t know what the heck it’s all about. Ten ninety who? R fifty cent? Never fear, the Bus has got wheels so we’ve got a head start towards the whole initiative circus, and its looking much clearer now. We’ve already given a nod, a nudge and a wink to Referendum 52, one of this year’s ballot heroes. Now meet its best friend, the awe-inspiring Initiative 1098, who is here to save Washington’s future in a big big way.
I-1098 will set up a trust fund for education (BOOM), health care (BAM), and middle class tax relief (KAPOW), a true investment in the future of Washington. And the investment is substantial – over $2 billion is expected to be accrued to the fund every year. Our state education system would be seeing an extra billion dollars every year, health care would benefit from roughly a half-billion, and the remaining would allow for tax relief for property owners and nearly 90% of businesses. These aren’t numbers I pulled out of a hat (that was indeed a rabbit); local experts such as the Economic Opportunity Institute, Sightline Institute, Our American Generation, and the Washington State Budget and Policy Center have all done their homework. Follow each link to see what those folks have got to say about 1098; the Economic Opportunity Institute in particular is on their shizznat. You can also check out the measure with your own spectacles here.
The “Education, Health Care, and Middle Class Tax Relief Fund” will get its cash flow from a modest-income tax on the wealthiest 1.2% of Washingtonians. Individuals will still have zilch income tax until they make at least $200,000/year, or $400,000 for couples filing jointly. The income tax will be a marginal tax rate set at 5%, which means only income above and beyond that mark is taxed (so if you make $200,001 in a year, your annual income tax will add up to a whopping one nickel). The marginal rate increases to 9% for incomes above $500,000/year, or $1 million for couples. Predictably, this concept of creating a new tax has sparked quite a bit of debate around the fairness of this measure (someone should hide those barrels of tea at the port). However, the idea that 1098 will hurt entrepreneurship or punish rich people is way-dumbed-down way of looking at it. 1098 is about fixing an unfair tax system, not piling on the taxes. Not to mention Washington State is currently ranked dead last in tax fairness in the whole country.
The two-thirds of Washingtonians who are home owners will all benefit from state-owned property taxes being reduced 20%, and I would bet my next-month’s rent that more rich people than poor people own their houses. Even better, the benefit of these property tax reductions will likely be passed on to home renters via reduction in rents. An even greater positive effect on our economy will come from eliminating the Business and Occupation Tax for 89.6% of businesses (a B&O tax is style of tax that has largely disappeared in the U.S. because of its unequal and unintelligent burden on small businesses; it is usually replaced by a business income tax). Now I’ll put November’s rent on the line to claim that probably more rich people own business than poor people, allowing them most of the benefit of eliminating the B&O tax. Calling I1098 the “Robin Hood tax” as some have playfully put it, “robbing the rich to feed the poor” is actually the harshest way one could describe it, and to a great extent that comparison is plain wrong. In reality, Initiative 1098 is a smart reworking of Washington State’s unfair tax system. It removes undue burdens upon poorer families, while imposing a modest-to-nonexistent burden on our wealthiest 1.2%.
To recap, the benefits of 1098 from Washington State’s first, yet modest, income tax will be spread widely amongst our population via four mechanisms:
- Education Investment
- Health Care Investment
- Eliminating the B&O tax for almost 90% of businesses
- Reducing the state portion of property taxes by 20%
The Washington Bus and YOU both know that hating taxes for the sake of hating taxes is not what its all about. Let us leave our unfair tax system behind. Let us reduce the burden of taxes on our poorest citizens, so they don’t have to spend all their money on taxes. The families among the lowest 20% of incomes end up paying 17% of their income in state and local taxes, while the top 1% of earners fork over less than 3%. Let us make it easier for small business to enter a market and compete. Most of all, let us invest in our future, by saving money every year that will be dedicated explicitly to improving education and health care. We can do it Bus people! Let’s all get out and say a loud YES on 1098!