Two words — when uttered by politicians — are certain to trigger fear and revulsion among taxpayers: “Trust us.”
Regarding Initiative 1098 on the Nov. 2 ballot, those two words are not being uttered by legislators — yet. They’re being offered soothingly by Bill Gates Sr. and other promoters of I-1098, which, if approved, would create the first state income tax in Washington history. (It would also be the first new state income tax in America in almost two decades.)
The taxpayers’ trust bucket has dried up in recent years. Oh, but I-1098 would only tax the richest 3 percent of Washingtonians, you say? Trust you? Sorry, we can’t. And even if we could trust I-1098’s promoters, we can’t trust legislators to hold the line on 3 percent.
Oh, but the measure also prohibits any increase in the new state income tax without a vote of the people, you say? Trust you? Sorry, but again, we just can’t. And even if we could, we cannot trust legislators to resist hiking the tax in years to come. They know all too well that the state constitution allows them to amend any initiative after just two years by just a simple majority vote of the lawmakers (that’s one reason The Columbian most often opposes initiatives).
These trust vacuums are only part of the reason The Columbian recommends a “No” vote on Initiative 1098.
Another strong reason has to do with our state’s business future. We’re one of only nine states without a state income tax. The Wall Street Journal reports that these states combined “had an average 18.2 percent growth rate in jobs over the past decade, more than twice the 8.4 percent job growth of the nine states with the highest income tax rates.” The Journal also explains why no state income tax has been instituted since Connecticut created one almost 20 years ago. There, the “experience has not been happy. The top rate in Hartford began at 4.5 percent but has since climbed to 6.5 percent.” And if I-1098 passes, “Washington would move overnight … to having the eighth highest (state income tax) rate in the country.”
We also like the West Coast advantage that Washington enjoys by not having a state income tax. California’s top income tax rate is 10.5 percent and Oregon’s is 11 percent, the Journal reports. Our state’s rate, to paraphrase a Saturday Night Live skit, is zero point zero zero percent.
I-1098’s supporters have turned to some minor class warfare to stoke their cause, insisting that only individuals making more than $200,000 (and couples making more than $400,000) would be taxed. That rationale falls flat because of timing. The Great Recession is the worst time to raise (or worse, create) taxes. Already this year, the Legislature has abused recession-ravaged taxpayers to the tune of $800,000 in new revenue. The state income tax would extract another $2 billion annually.
To salve that wound, I-1098’s authors promise to cut the state property tax 20 percent and eliminate the B&O tax for small businesses. Trust them? Sorry, but history reminds us how temporary tax cuts can be.
Here’s the big payoff, according to I-1098 proponents: vast riches for cash-strapped K-12 education, college tuition, the Basic Health Plan and long-term care for seniors. But that flowery future ignores this fact: What our state needs is not more money but massive reform in how government services are delivered, plus stronger sacrifices by state employees who provide those services, sacrifices more in line with those made by private-sector workers.
Having no state income tax is one of many things that makes Washington a great place to live and work. Extinguishing that asset would be a big mistake.
On the facing page today, The Columbian presents a pro-con package of opinions about Initiative 1098.
