Tuesday, March 09, 2010

Another Income Tax? Not so fast.

My state legislature is working on an income tax proposal to help offset the huge budget hole Olympia is in. Apparently over the years we just haven't paid them enough taxes to do everything they want to do so they're simply going to need more.

It's not as if there is no support for it in this state though. Like almost every state, citizens here walk the irrational tight-rope of wanting fewer taxes, more services, and more laws enforced.

Washington state currently operates with a state-wide sales tax (food is exempt), a handful of excise taxes and property taxes. Each apportioned equally and every citizen subjected to the tax pays the same. In the minds of most on the western part of the state this is considered a regressive tax as it impacts the poor more because they may pay a larger portion of their income. It's hard to know if this is correct or not as normally the poor do not subject themselves to the sales tax associated with big ticket items...but I'm sure there's a statistic for it somewhere.

The current solution in Olympia is to lower the state's portion of the sales tax to 5.5% (from 6.5%) and impose a 4% income tax on people who earn an income of $200,000 annually. This will be attractive if it goes to voters...nevermind that if it passed this $200,000 figure would slide its way down to impact anyone necessary to pay for the next budget hole that will inevitably occur.

There's one glitch though. The law of our state probably won't allow this. Our state's constitution is horribly old fashioned when it comes to taxes. Courts have repeatedly upheld that income is property. The state's constitution requires that all taxes on property be apportioned. To expect a segment of society to pay 4% on their property and others to pay nothing isn't going to work without an amendment...which in this state could happen. Likely what will happen is that any bill will be amended to include a modest income tax on everyone until the amendment is passed. The important part is to get the income tax on the books...after that it's simply a matter of parliamentary procedure in a one-party state.

But in the meantime, I'm thankful that I have lived (if even temporarily) in a state where all taxation was voluntary and that I could choose whether or not I wanted to subject myself to any tax.


Income Tax Services said...

I read about this on another blog, but didn't know about the glitch of the state's constitution. It makes it pretty interesting to see how it turns out.

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