Would the I-1077 tax on high earners apply to capital gains as well? If not, I am beginning to understand why Mr. Gates, Sr. would support such a tax - most of his family's wealth is tied up in stock.

1. Income tax on high earners is the foot in the door. Very quickly, the tax would be shifted to all earners.

2. State portion of property tax is small. A 20% tax cut sounds good, but it represents only a few percent of the total property tax bill.

3. Income tax might be justified if the state sales tax was simultaneously abolished. The last effort for an income tax with only a reduction of the sales tax was recognized by voters as transparent gimmickry by the state.

4. If the state considers our earned cash to be "property", how soon will it be before we have to pay property tax on our bank account?

A graduated state income tax might be a good thing if it was introduced as a part of a complete tax reform. I do not trust our one party state to make changes in our tax structure.

Well I can tell you that I-1077 does not apply to income earned by Trusts. Those are the tax havens of the rich.

Besides none of these articles mention the cost of collecting a new tax. The new bureaucrats necessary to validate that indeed you make less than the minimum. The last time around some smart folks at the Seattle PI ran the numbers and it came out that if you only tax the rich then it was a wash.

In other states, the general application is enter the amount of income that you are reporting on your federal tax form. multiply by N% pay the state. So if you like the loop holes in the Federal tax system, you'll love the state system.

Washington voters are smarter than this. They will recognize that this is simply another attempt to increase taxes for all, without fixing the structural problems in state government that led to the rampant spending we currently have.

Face it, people --- the legislators cannot be trusted to look out for ordinary people. This is not even a serious attempt to do so --- any such serious attempt would including meaningful limitations on the ability to re-raise property taxes, raise sales taxes or expand the proposed income tax to more and more people.

This has none of that. Instead, the proposed income tax would lead Washington farther down the road toward a fiscal situation akin to those of California, New York and New Jersey. Happy days?

I applaud Gates Senior's effort to create a rational tax structure. He appears to assume that a rational proposal producing a clear social benefit will naturally elicit a rational response from both the voters and the state Supreme Court. Therein lies the problem.

The tea bagger mentality is that all efforts to increase (or even redistribute at a constant level) government revenues are satanic in origin. Arguments that we are simply trying to create a more balanced and equitable system will fall on deaf ears. For the apocalyptic mindset there can be no compromise with Evil, no matter how enticing its apparent benefits. In fact, the very rationality of the proposal will be cited as incontrovertible proof of its sinister character.

It's not absolutely clear that the Supremes would be more receptive. One can assume that Richard Sanders and Jim Johnson would find the initiative unconstitutional no matter how it was framed. And as judicial elections become increasingly politicized, judges start behaving more like ordinary politicians. So Solomonic devotion to an impartial legal analysis cannot be assumed. But if the initiative actually passed, that fact presumably would embolden the centrist court majority.

The Gates initiative is certainly worth a try. What's there to lose? If the initiative fails, we are no worse off than before. And it is possible, but not likely, that a majority of Washington voters might see past the shrill right-wing blather and make a sensible decision. If nothing else the vote would give us a reading on the present ability of the local wing-nut fringe to frame the debate and stampede the marginally attentive masses.

In his press conference, Mr. Gates senior suggested that one major reason we need an income tax is to better fund education. We need more money for education because, despite the the state's constitutional duty to amply fund the enterprise, for the last 15 years the legislature and governor spent most of the state's new money elsewhere.

So, instead of funding education first and all other priorities after the state meets its primary duty, Mr. Gates and his supporters want us to tax the guy behind the tree to give the state more unrestricted money. And he wants the courts to approve the tax - which can then be extended without a vote of the people down the income ladder.

With the possible exception of lawyers and politicians, most folk know that when it comes to new taxes, they don't stop with the guy behind the tree. Not historically. Not ever.

I sent the following questions to the campaign this morning:

I am wondering if you're going to post the actual initiative so people can read it online?

Also, how is "income" defined? Which line from the IRS form 1040 are we talking about?

Are the dollar amounts indexed for inflation?

Your web site says the dollar and rates could only be changed by a vote of the people, is that from now to forever, or just for the first two years?

How much would it cost to collect and administer the tax?

Do you have historical data showing how much would have really been collected over the past 10 years? eg, how did you calculate the estimated level of income coming into the state from the high earner tax?

How steady is income? It seems like in California, the high earner income has largely been due to stock compensation. The wild swings in the stock market has led to wild swings in revenue to the state. I am wondering if the same thing would happen here.

Would any money go to higher ed? or to long term care? One of the pdfs mentions these are big problems, which I agree with, but I don't see how this tax would help pay for those items.

The full text of Initiative 1077 is available at http://www.sos.wa.gov/elections/initiatives/text/i1077.pdf.

(All this year's proposed initiatives to the people can be found at http://www.sos.wa.gov/elections/initiatives/people.aspx. Incidentally, this includes I-1069: "This measure would require the Seal of the State of Washington to be changed to depict a vignette of a tapeworm dressed in a three piece suit attached to the lower intestine of a taxpayer shown as the central figure. The seal would be required to be encircled with the following words: 'Committed to sucking the life blood out of each and every tax payer.'" Well, there's at least one "no" vote!)

We have very little to lose on this initiative compared to our current system, and potentially a lot to gain. Education needs to be well funded to keep our state competitive in the business arena- not to mention we're talking about funding the most important aspect of a functioning society. It would be advantageous to find better sources of income for our schools; Using DNR funds to supplement education through logging isn't a particularly sustainable model.

Many will claim our state doesn't need more money, it just needs to make cuts and reign in spending wherever possible. As someone who had the "privilege" of experiencing this mentality in action in Colorado, which has the dubious privilege of being the 50th worst funded state in the US this year for education, I can say with assurance that simply cutting won't solve budget woes, and it will lead to a steady degradation of the services we hold dear in Washington.

As crankyoldlady noted, despite a constitutional mandate to fund it appropriately, education could do with a bit more love. But we're talking about politicians here- they have to respond to the population screaming about poor road conditions, gaps in public transportation, or any other massively visible issue. Education will often fall to the way-side because when everything boils down, businesses and local interest groups are often much louder about their problems they would prefer to see addressed, and those issues can lose someone an election if carefully politicized.

If we want to see our state continue to provide a reasonable level of service to our least fortunate, if we want to continue to push for greater public transit and renewable energy, and if we want to continue to train a new generation of responsible leaders in our schools, we need to fund things appropriately, and we need to fund them in a responsible way. Regressive taxation through increasingly high sales taxes is not a responsible way to fix our budget crisis- it's time to introduce a state income tax as proposed, and if that has to expand in the distant future to folks with slightly lower incomes than currently proposed, it's a small price to pay to keep our communities livable.

Please recall that the state lottery was sold to the people as a way to raise revenue for schools. Yet every penny goes into the general fund. An income tax will just be one more tax to be raised along with all the rest. Let's talk about eliminating some taxes in the process. I nominate the sales, property and B&O; taxes. Replace them with a flat rate income tax that everyone pays.

This "shaft the rich" mentality is getting tiresome. And don't think that the Legislature's concept of what constitutes "rich" won't soon be whittled down well into five figures. In this state, it's inevitable. After this last session, how can any sane person trust our money-hungry solons in Olympia?

Potential problems I see include:

1. In order to show the state that you don't earn at least $200k a year you would have to file with them. Even if you just send them a copy of your 1040 the state will now have a record of every citizen's income and will at later dates adjust the tax to include more payers. I'm not against this necessarily, I just think the high-income threshold is cynical and untrustworthy.

2. If Spitzer (who wrote the damned thing) really cared about the regressive nature of the State's tax policies, he would have reduced the State portion of the sales tax which is far more regressive than property taxes. I don't see a reduction in property taxes leading to big gains for low and middle income taxpayers. Also property taxes are stable revenue sources for the State, more stable than income taxes will be. They should concentrate on ending the 1% growth cap instead and tie property tax growth to inflation.

3. A rationale for the B&O; tax credit is unclear to me. Since the income tax would be at an individual level I'm assuming they designed the B&O; credit for smaller single-owner firms to get a business tax credit, because their income will now be taxed by the 1077 tax. Otherwise I don't understand throwing a bone to the business community who will not directly be affected by an income tax.

I'll have to investigate further to see if these concerns aren't warranted, but as it stands now I'm inclined to not support 1077.

When was the last time Washington citizens voted on an income tax?

Thanks for all the information with minimal name calling!
One question:
"Don't have any thing to lose" that means signing it, with or without disclosure of signatures; putting it before the voters; or what?

Their's would be the biggest gain of all. The property tax is regressive because it's based on the assumption that just because you own a house, you have the affluence to buy it again. That's simply not true for most low and middle income people. These folks spend most of their life paying for a home, only to discover that once it's paid for they have no more security than a renter, because the state holds a perpetual tax lien on their residence. I personally know retired couples who have had to sell their homes of decades because they could no longer afford the taxes. That the state can hold such power over people is barbaric. If any tax deserves to go, it's the property tax. It punishes good planning and frugality on the part of the middle class.

The issue with property taxes being regressive is hardly touched at all in this initiative. Most of my property tax is not going to the state but to my local city.

This initiative is going nowhere. And now that I realize that it won't amend the state's constitution, its probably not legal either.

So why is this a bad deal? Well first we pay to have to vote on it, second we'll pay to see whether it's legal. My guess is that it loses at the voter box. There is no way that this feels like a populist cause. It looks like a "camel's nose under the tent" tax and most of us in Washington State don't like those.

if Mr Gates wants to understand the why no one trusts the state, we have only to look at the two large sports stadiums in Seattle to realize that the priorities of the state haven't been education. While I like watching sports, these are private enterprises.

The gain for renters is going to be minimal: it all depends on the willingness of the landlord to pass along the tax savings, a point made in the Yes web site. My guess is for many apartments the property tax reduction would be $50 to 75 per year.

Senior citizens do have the opportunity now to file for a property tax waiver if their income is below a certain level. King County Assessor Lloyd Hara made better communication about this a part of his campaign platform.

Dbreneman mentions above the case of families who have to sell because they could not afford the property tax. I did read the link given to the actual initiative text, thank to the post above with that.

The actual definition of income is "Adjusted Gross Income." This is your income that includes capital gains and dividends. A couple who has a cap gain of more than $400 K on their property would end up paying 5% on the amount over that amount. What would be more common is for a surviving spouse to have to pay tax on the cap gain over $200K.

There will probably be a lot of people in that situation, it would be interesting to know just how many of the "3% high earners" are actually people who have a one-time windfall capital gain. The initiative language though does talk about a surviving spouse and how they are taxed at the couple's rate. I am guessing this is just for the tax year in which the person dies, not for future years. So if one spouse passes away in Aug and the sale of the house goes through in Dec, the tax would only be above $400K, but if the sale doesn't close til Jan it would be taxed above $200K.

Speaking of dividends, they are taxed at a different rate in the US federal tax code. This rate is changing, but 5% or 9% is a pretty hefty increase as a percentage of the federal rates, both now and the future rates.

Looking at the comments on the web site it seems that this initiative is going nowhere. Two interesting observations:

1. Very few of the commenters trust the income tax to stay a "high earner's" income tax. I find this interesting. How many new taxes or expanded taxes has the State of Washington implemented in the ten years before the (rather silly) tax increases of this year? Is it a lot, or little? Revenue certainly increased, but was that a function of the real estate bubble? I really don't know - if anyone has a link to a good source of information on this I would appreciate it.

2. People discount how unfair the current tax system is in Washington. We tax the heck out of the bottom 40 percent of wage earners in Washington. People earning under $20,000 are taxed at 17.3% and people earning between $20k and $37k are taxed at 12.7% of their income. People earning over $200k are taxed at 4.7% of their income, and people earning over $500k are taxed at 2.6% of their income. These figures are from the Institute on Taxation and Economic Policy. I think they only figure State - as opposed to local - taxes, but I could be wrong.

So what should be done about our state tax system? I think that it's wrong that our current system so heavily taxes the poorest citizens. Making the system more equitable seems less like a "soak the rich" scheme than a "stop soaking the poor" scheme. I'm not saying this initiative is the answer, but it does seem like there is a problem with our system beyond the level of spending in Olympia.

I don't think the climate has changed, although the appeal of taxing somebody else always has appeal to a majority of voters (see Oregon's recent passage of a high-earners tax). In WA, the wealthy, who would pay more-a.k.a. their share-under the discussed income tax scenarios, have successfully fear-mongered people away from an income tax, no matter what the merits might be, and there are many. The only valid criticism in my mind is that if this was passed, politicians wouldn't be able to resist extend the taxes to other income classes, and they've proven this session that they can circumvent initiatives where "need" be. I-1077 isn't my preference, but it is moving there. I'd much rather see a tax system that distinguishes more between state and local services. Under my system, state income taxes would fund state services, as those taxes are primarily paid by residents. Sales taxes would be limited to local (county, city) purposes that are approved by the voters of that jurisdiction, e.g transit, health services, stadiums. This would make King County's rate at 3.0%, attractive to residents, both brick-and-mortar and online shoppers, and tourists (including Idaho and B.C. residents) alike.