Washington State, where politics is as liberal as it gets, has an initiative on its Nov. 2 election ballot to levy a personal income tax on the “rich,” according to an Oct 26 special report by the Tax Foundation. Presently it’s one of seven states with no personal income tax. Washington State voters, along with other Americans will be anxiously awaiting Congress’s decision in the lame duck session next month whether to let the Bush tax cuts expire on Dec. 31. President Obama and his fellow lefties in Congress have bellowed endlessly that the Bush tax reductions favor the “rich.”
Washington State’s Initiative 1098 would introduce an income tax on high earners at a rate of 5 percent on income over $200,000 ($400,000 for couples) and 9 percent on income over $500,000 ($1 million for couples). “Officials estimate that the new tax would raise approximately $2.2 billion per year. Of that amount $600 million would be used to reduce property taxes by about 4 percent and provide additional credits against the state gross receipts tax.” New spending on health care and education would claim the remaining $1.6 billion.
If proposition 1098 passes, “a constitutional challenge is likely,” writes Joseph Henchman. Director of state projects for the Tax Foundation. Since the income tax was ruled unconstitutional in the state, voters there have rejected previous attempts to adopt an income tax. “Washington’s proposed new income tax “would be out of the norm in two respects, said Henchman. “It will apply to all adjusted gross income with no exemptions or deductions, and it will apply only to high-income earners.” Further, “just as several other states are overturning so-called millionaires’ taxes or allowing them to expire, Washington would be adopting one.”
Washington’s constitution has a uniformity clause. Its purpose has been described as “strict constitutional provisions requiring equal and uniform taxation.” The initiative’s extremely narrow base (exempting over 98 percent of taxpayers) would probably violate that provision,” Henchman wrote. In essence, a majority of voters would decide whether to impose a tax on 1.2 percent of the population.
State income taxes for late-adopting states generally expand over time, the study said. Eleven states have adopted a state income tax since World War II. “Their history with these taxes generally shows a pattern: introduction at a certain level, rate increases across-the-board to a peak, and a slight reduction in at least the highest rate in the last twenty years,” Henchman pointed out. “Of the eleven late-adopting states, most have raised their rates on both low-and high-income people,” he added. This trend is also seen in the federal income tax. Introduced in 1913, at rates ranging from 1 percent on income over $2,500 to 7 percent on income over $500,000. The good old days!
The lowest rate today is 10 percent. But it, along with other rates, will shoot up, if the Democrats let the Bush tax cuts die.
“Before 2004,” Henchman notes, “double digit state income tax rates had effectively disappeared….States had come to recognize that their tax systems must be competitive in attracting capital investment, job creation, and entrepreneurial activity in an increasingly globalized economy….Some states have bucked this trend in recent years, turning to income taxes on high earners. Beginning in 2003, New York adopted two new top brackets. New Jersey followed its neighbor state in 2004 with an 8.97 percent tax rate on income over $1 million.. That same year, California created a 10.3 percent rate on income over $1 million. Maryland in 2008 included a top rate of 6.25 percent on incomes over $1 million, due to expire at the end of this year. “Paying for broadly available public services through disproportionate taxes on high-income earners raises serious equity questions,” said the non-partisan Taxpayers Foundation study.
“Initiative 1098, as a high-earner income tax, mimics an income tax increase earlier this year in neighboring Oregon, which itself followed an income tax increase in California [all democrat-dominated states]….Millionaires’ taxes will generally raise revenue in the short term without a sudden exodus of wealthy people leaving to the state next door. But over the medium term, as businesses make planned location decisions, the taxes will hurt the state’s economy,” the study determined.
Because residents have turned down income taxes for the state in the past, the Washington State initiative may affect the Senate race there. One of this year’s tightest senatorial races is in Washington. Ultra-liberal “mother in tennis shoes” Patty Murray is trying to hang onto her seat against Republican nominee Dino Rossi.
Obama was in Seattle Oct 21 to try to boost Murray’s chances. “She was the mom in tennis shoes who was just looking to help a few people solve a few problems,” the President recalled about Murray’s first election in 1992. “That’s exactly what she’s done….And now she needs our help so she can keep on fighting for you in the United States Senate,” he told a crowd at the University of Washington.
“Women in 1992 sold themselves as responsible with budgets, full of common sense and not part of the old boy’s network,” ABC News reported. But Murray has been one of the biggest providers of earmarks to projects in her state. The Seattle Times reported earlier this year, according to the ABC New story that Murray has collected more money from lobbyists and lobby firms than any other member of the Senate Democrat leadership, except for money-bag Majority Leader Harry Reid of Nevada. Murray is 4th ranking in leadership, proving it doesn’t require a lot of brainpower to work one’s way up the Democrat leader ladder.
Murray’s opponent in the Senate race, Republican Rossi told ABC News that Murray “seems to be more interested in pleasing folks” in Washington, D.C. …Why can’t Sen. Murray and her friends in D.C. understand that we can’t keep spending money we don’t have.”
This is a lesson that most Democrats in Washington have found impossible to learn.