We’ll concede this much: Jim McIntire knows more about taxes and income and finances than I do. At least I hope he does, considering that he is the state treasurer and has a Ph.D. in economics from the University of Washington.
So, because McIntire makes his living thinking about this stuff, it makes sense to pay attention when he starts talking. It makes sense to listen when he throws out the idea of instituting an income tax in Washington.
This might sound like anathema to, well, just about everybody in the state. We have, after all, never had a personal income tax, and most residents regard that anomaly as a birthright.
Never mind that the situation was born largely of happenstance. In 1932, Washington voters joined those in many states across the country by approving an income tax. Something about there being a Depression and a need to keep government up and running. Anyway, Washington’s income tax was tossed out by the state Supreme Court in a 5-4 vote, and the next year the Legislature enacted a sales tax in its stead.
McIntire’s plan would establish a 5 percent income tax but would eliminate the state property tax and reduce business taxes. It would, he says, raise billions of dollars. It would, undoubtedly, raise trillions of hackles, considering the anti-tax fever that is pandemic. But, as McIntire said, “We need to have less of an ideological conversation about this.”
On that part, we can agree. Discussions about taxes and the role of government have reached the level of absurdist comedy in this country. Take FOX commentator Bill O’Reilly, for example. As The Washington Post recently wrote: “There are three types of lies: Lies, damned lies, and tax statistics from Bill O’Reilly.” Which isn’t particularly germane, but I thought it was humorous.
Anyway, O’Reilly apparently recently said, “Taxes are through the roof on affluent Americans and business profits, but for the rest of Americans things are not so bad.” See what we mean about absurdist comedy? After all, the top marginal tax rate is 39.6 percent — the same as it was during the Clinton era and much less than the 70 percent top rate that was in place when Ronald Reagan took office. As the Post surmised: “Our tax burden is pretty low by historical standards.”
Again, that’s when we’re talking about federal income tax. Never mind payroll taxes and gas taxes and every other manner in which government dips into the pockets of everyday Americans. The federal payroll tax collects 73 percent as much revenue as federal income tax; the federal gas tax brings in 18.4 cents per gallon — on top of the state’s 37.5 cents, which is about to increase. Those things hit low-wage earners just as hard as the super rich.
Are taxes too high?
Considering all that, I don’t know whether or not taxes are too high, but I’m quite certain that complaints they are too burdensome for the wealthiest Americans are ridiculous. I’m quite certain that suggesting tax breaks for the rich is the “Alice in Wonderland” of tax policy, considering that we’re talking about absurdity.
Yet I digress. The point here is McIntire’s proposal of a state income tax and, to a larger extent, Washington’s tax system in general. The problem, it would seem, was articulated when Reagan said, “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth.”
For example, once upon a time Washington enacted the Business Activities Tax of 1933 which, according to the Washington Policy Center, “was adopted as a temporary, emergency revenue measure during the Depression.” That emergency tax lives on today as the Business & Occupation Tax. So much for temporary.
All of which has created a climate that means McIntire’s income-tax proposal has no chance of sprouting. But it still might be a good place to begin a discussion worth having.