NCPA - National Center for Policy Analysis

Don't Calitaxicate Washington

August 12, 2010

Bill Gates Sr. -- father of the famous one -- recently dropped $400,000 into the campaign to convince Washington voters to saddle themselves with a state income tax.  On Aug. 3, the Service Employees International Union (SEIN) in Washington, D.C., put $200,000 into the same effort to change Washington law.  The total raised by Initiative 1098 (I-1098) approaches $2 million, says the Seattle Times.

The cash being poured into the pro-1098 campaign aims to convince voters that if they earn less than $200,000, they will not pay the tax.  They may not, in the first years.  But the tax will be expanded.  Taxes always are.  And even before this happens, they will feel it, because it will sap income, investment, jobs and pay all across the state, says the Times.

  • Washington is one of nine states with no tax on wages and salaries; this is a big advantage in recruiting people to work there, and in keeping people from leaving there.
  • When Gov. Chris Gregoire went to the Paris Air Show in her first term to recruit aerospace companies to Washington, the first item of her sales pitch was: no state income tax.

It's a selling point.  An asset.  And more than that: It's a bonus for living in the Evergreen State, says the Times:

  • The new tax created by I-1098 would top out at 9 percent of adjusted gross income, with no deductions.
  • That's not quite the highest rate in the country: Oregon's, at 11 percent, is at the top; but Oregon has zero sales tax.
  • Washington would have high rates of sales and income taxes, which would be putting up a sign saying: Don't invest here and don't create jobs here.

California did that.  Its state income tax on high earners is 10.8 percent, and its sales tax mostly ranges from 8.75 percent to 9.75 percent.  Such high levels of tax have not brought wealth and balanced budgets to California.  Skilled people are leaving, says the Times.

If Bill Gates Sr. and the SEIU push I-1098 past the voters, they will succeed only in bringing California's luck here.  And that would be a sad day, says the Times.

What Washington needs is investment in new ideas and new work -- and a tax system that smiles upon it, says the Times.

Source: Editorial, "Don't Calitaxicate Washington," Seattle Times, August 11, 2010.

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