In Washington State there's a fierce battle underway between supporters and opponents of ballot Initiative 1098. I-1098 will establish an income tax on the wealthiest 1.2% of Washingtonians, while lowering taxes for the middle class and for small businesses. Recently newspapers, blogs, and the airwaves have been filled with pleas for and against I-1098.

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In Washington State there's a fierce battle underway between supporters and opponents of ballot Initiative 1098. I-1098 will establish an income tax on the wealthiest 1.2% of Washingtonians, while lowering taxes for the middle class and for small businesses.

Washington is one of only seven states to have no state income tax, the other six states being Alaska, Texas, Florida, Nevada, South Dakota, and Wyoming.

Recently newspapers, blogs, and the airwaves have been filled with pleas for and against I-1098. A google search will turn up the flavor of some of these ads and articles.

The new tax imposed by I-1098 applies only to yearly incomes above $200,000 for individuals and $400,000 for couples. It will lower the state proportion of property taxes by 20% and will lower the Business & Occupation Tax on small businesses. The B&O Tax is based on revenues, not profits, and so hits small businesses particularly hard. See here and here for more details on the tax.

The Institute on Taxation & Economic Policy has called Washington's tax system the most regressive in the nation. About 60% of state revenues come from sales tax, which hits the poor the hardest. As reported here, "The institute estimates that the poorest 20 percent in Washington pays 17.3 percent of their income in state taxes while the top 1 percent pays 2.9 percent."



Due to the recession, state tax revenues have been severely impacted, and over the past few years Washington, like most US states, has run big deficits. It has had to slash spending on social services and eduction. Washington ranks 47th in K-12 spending, according to the Census Bureau.

When many Americans think of Washington State, they imagine a progressive green utopia, with ample funding from Boeing and Redmond-based Microsoft providing a high standard of living. But Washington's unemployment rate is nearly 9%. Corporations and the rich have a powerful hold on state government. Boeing has received numerous tax concessions from the state legislature over the years and has repeatedly threatened to move its operations out-of-state if it is not given favorable tax treatment. The conservative BIAW (Building Industry Association of Washington) is a powerful conservative lobby that influences Republicans and many middle-of-the-road Democrats. See this article and this report.

Moreover, the state constitution has built-in conservative tenets. It has language requiring that all taxes be "flat" (non-progressive) on property. And it prohibits gas-tax money from being spent on anything but road construction and maintenance.

Washington State voters have rejected income tax proposals seven times since 1935.

The constitutionality of I-1098 will likely be challenged in court. I-1098's survival depends on whether income is considered property and on whether $200,000/$400,000 exemption violates the constitution. Most observers expect I-1098 to survive constitutional challenge.

But this year, there is hope that the middle class voters will wise up and stop voting against their own interest. The state has had to slash government services to balance the budget. Further cuts are expected next year, due to the continued recession.

Bill Gates, Sr. (the father of Microsoft's founder) is a strong supporter of I-1098. He appears in this funny video ad for I-1098. Recently, Mr. Gates has announced that his son (the founder of Microsoft) also supports I-1098.

Voters in neighboring Oregon passed a state income tax increase in 2009.

On the other hand, Microsoft CEO Steve Balmer and Amazon CEO Jeff Bezos recently came out against I-1098; each man donated $100,000 to the anti-I-1098 campaign.

The Seattle Times' editorial board has repeatedly editorailized against I-1098. The Seattle Times is the only surviving major daily newspaper in the Seattle area, due to the collapse/virtualization of its long-time competitor the Seattle Post-Intelligencer. The Seattle Times regularly endorses fiscally conservative candidates. (In its defense, the newspaper is moderate or liberal on many social, environmental, and war-related issues.)

Another regressive force in Washington State politics is the Washington Policy Center, a right wing think tank that produces videos and articles critical of government and of progressive policies.

Conservatives are coming out with all sorts of claims about I-1098. Many of the conservative editorials and letters-to-the-editor warn voters not to allow the Democrats to start an income tax because in the future, they say, the Democrats will extend it to more than just the top 1.2%. Don't let them get their foot in the door, they warn.
As reported in this report by the Economic Opportunity Institute, "The wording of I-1098 clearly anticipates the issue; it requires a vote of the people to adjust either the tax rates or income thresholds."

Or they warn that it's unwise to raise taxes in a recession. (In fact, unemployment compensation and other social programs that benefit the poorer people directly lead to increased demand for goods and less recessionary pressure.)

In America wealth has been concentrating into fewer and fewer hands over the past several decades. In 1976 the wealthiest 1% of Americans had about 20% of the national wealth. Now they have about 35%. The wealthiest 10% of Americans have about 73% of all wealth. (See Wealth, Income, and Power.)

"From 1980 to 2005, more than 80 percent of total increase in Americans' income went to the top 1 percent." -- The Great Divergence, by Timothy Noah

The conservatives are right. There's too much socialism and too much redistribution of wealth in America. It's socialism for the rich, and redistribution of wealth from the middle class and from future generations to the rich folks today.

The Reagan and Bush tax cuts transferred hundreds of billions of dollars to the super-rich. On federal tax returns investment income is taxed at a lower rate than earned income. Only the first $106,800 of earned income is subject to social security taxes; this greatly favors the rich.

Nationwide tax rates are lower than they've been in decades. Nevertheless, the Republicans are basing their campaign strategy on supposed voter anger at government waste, spending, and taxation. This is disingenuous given that (1) the Republicans are the ones largely responsible for deficits and the recession, which were caused by Republicans' reckless deregulation, tax cuts for the rich, corruption, and war-mongering; (2) tax rates are lower than they've been in decades; and (3) stimulus spending was necessary for recovering from the recession.

Stimulus spending, as well as the Wall Street bailouts, were started by President Bush. President Obama continued both. Of course, the Republicans sweep the truth under the rug and complain loudly about out-of-control Democratic spending.

Given President Obama's meek leadership style, his forgiving and compromising attitude towards Republicans, his continuation of many Bush policies, and his decision to surround himself with Bush-era economic, legal, and military advisers, it will be difficult to convince the American people that the Republicans are the ones to blame. Also, the GOP has control of Fox News and has ample funding from corporations and donors like the Koch brothers. The Supreme Court's decision to treat corporations as people has opened the floodgates for even more propaganda.

Conservatives are drooling over the chance to destroy government. Their diabolical plan to drown government in a bathtub is coming to fruition. Cut taxes for the rich, deregulate widely, privatize and corrupt the government, rouse peoples' anger at the elite liberals, provoke a crisis, cause a recession, start a phony war, use the chaos to dismantle the New Deal and turn America into Somalia.

Additional references.

Wealth, Income, and Power

Bring on the Reagan Counterrevolution

Government is like a computer's operating system: a response to libertarians

Yes on I-1098: Voters should pass tax reform proposal

Yes on 1098

Top Economists Urge Lawmakers to Shun Deficit-slashing Policies

Authors Website: http://waliberals.org

Authors Bio:

Democratic Precinct Committee Officer, activist, writer, and programmer. My op-ed pieces have appeared in the Seattle Times, the Seattle Post-Intelligencer, and elsewhere. See http://WALiberals.org and http://ProgressiveMemes.org for my writing, meme images, musical creations, and animations.