State income tax would fix school funding and much more

[eridani]

http://www.eoionline.org/blog/state-income-tax-would-fix-school-funding-and-much-more/

Legislative leaders turn a blind eye to the wealthy when considering how to fund McCleary. As a result, the Legislature violates the state’s paramount constitutional duty. These leaders are afraid of even mentioning a tax on income, yet that is the only solution for full funding of McCleary and for putting a brake on the accelerating accumulation of outsized income at the very top.

How much revenue would a progressive income tax provide for public services? First exempt $50,000 of income. Then put in place effective tax rates of 2 percent for a $100,000 household, 3.5 percent for a $200,000 household, 5 percent for a $500,000 household, 6.25 percent for a million dollar household, and 8.125 percent for a $2 million household. That would raise $7.5 billion.

Now let’s do the math:

$7.5 billion in new revenue,

Minus $3 billion for K-12 education,

Minus $1.5 billion for higher education tuition,

Minus $500 million for early childhood education.

That leaves $2.5 billion on the table. With that, we could take a bite out of our regressive tax system by dropping the sales tax by 1.5 cents. That would cost about $1.5 billion. And that leaves $1 billion a year for other public services and a reserve.

The expenditures for McCleary are certain and definitive. You can’t get around them. So let’s not try. Instead, it is time for a progressive income tax. We can’t afford to wait.

[HeiressofBickworth]

1. The only way I would agree to a state income tax

is if they completely rescind the state/local sales tax.

I've seen proposals in the past where they "assured" the voters that the percentage of income for a state income tax would be low or the sales tax would be reduced. If you believe that, I've got a bridge over Lake Washington to sell you. In fact, the rate would be increased faster than you could scream STOP and we would be paying double the taxes we pay now. There have been four failures to introduce a state tax in Washington in the last 70 years; the voters just don't like the idea. We all know that any promise to have a state income tax on only upper incomes would soon change and we would ALL be required to pay more taxes.

So I say NO STATE INCOME TAX!!!!!

[eridani]

2. I really don't get that at all. A tax base funded by more sources does NOT mean higher total taxes!

More stable revenue in fact means lower total taxation. You are not always having to slash funding during economic hiccups and then spend far more than you otherwise would have spent to do a repair job on the massive damage resulting.

A three legged stool is stable--one with one or two legs is not. Any measure to introduce an income tax would have to include specific numbers about eliminating property taxes that go to the state, and locking in specific lower sales taxes.

A huge political problem is that our lower income voters really love being nickled and dimed to death. Buy a bottle of hair conditioner for $2.50, and pay $2.69 t the counter. This seems insignificant, and no one gives a rat's ass that it adds up to a 17% tax rate. If they were to see a once a year total amount for half that, they'd hate it just because they see only the lump sum.

When I was campaigning for the 2014 King County transportation levy, I did a calculation about how much extra people would have to pay for gas with just an extra 10 minutes a day of idling and stop and go driving. It was $80 a year--which people obviously preferred to the $40/year levy hit. They would not even believe that the $20/year they were already paying was going to expire by law.

All this is an unfortunate part of the human psychology behind items costing $9.99 instead of $10.

[HeiressofBickworth]

3. Tax rates would have to be stated in the act

and the rate should only be changed by vote of the people. We've seen in the past how the Legislature operates: The majority of voters in King County voted AGAINST yet another stadium in Seattle. The Legislature said thanks for your opinion but we're going to do it anyway. This sets up distrust of the process.

All of your calculations aside, it seems to me that if state income tax is adopted and the Lege can set the income tax rate and the rate of the sales tax, it will be all too easy to increase the rates over time to where we would be paying double what we pay in sales tax now.

And just as a side thought, since food purchased in a store is exempt from sales tax, there are other things that could be exempt which would help lower income people -- like medications, for example. Eliminating property taxes only benefits those with property. I doubt landlords would lower rents if property taxes are lowered -- they will not extend the savings to tenants.

While I grant that your argument is well stated, I am and shall remain against a state income tax.

[eridani]

4. How would the tax rate double if the expense of public infrastructure did not double?

That stadium vote pissed me off too--it's one reason why it's so damned hard to sell the idea of public goods these days.

[Wounded Bear]

5. I'm seeing a lot of RW/LIbertarian thinking in your posts.

Just saying. You sound like an Eyman voter. Rhetoric, not a lot of reality based thinking.

[HeiressofBickworth]

6. Thank you for noticing me and your analysis of my posts

I'm surprised to see that you have concluded I have RW/Libertarian tendencies. I've always considered myself somewhere left of left. But thanks for your attention anyway.