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Can WA's Wealthy Help Solve State Budget Crisis?

July 2, 2010

OLYMPIA, Wash. - It looks like I-1098 will make it onto the November ballot in Washington. Petitions turned in on Thursday to the Secretary of State's office contain an estimated 360,000 signatures, well over the required number.
It's the initiative for an income tax on the state's highest earners.

Such a tax would affect less than three percent of Washingtonians, those who make more than $200,000 a year, with the money going specifically to fund education and health care. Opponents point out that taxing people in this income bracket could mean they'll decide to leave the state, but Bill Gates, Sr. disagrees.

"Well, we've had experience with that sort of thing. The public here in this state did that wonderful thing of approving and keeping in place our estate tax - and I don't think the border crossings increased one bit."

At the same time, the initiative would cut property taxes for most home and business owners, and exempt about 80 percent of companies from the Business and Occupation Tax they now pay. That's good news for Jon Deleeuw, who owns a card and gift shop in Seattle's Wallingford neighborhood, although he expects some larger companies to put up a fight.

"There's going to be a lot of opposition. They're going to cloak and disguise themselves, but they're essentially going to be big business - trying to say, 'Oh, we speak for all the businesses and this is going to hurt all of the businesses here.' I don't believe that at all. Small businesses will benefit from this tremendously."

If the measure passes in November, it would be the first-ever income tax in Washington. Some are concerned that it could eventually be expanded to include more people, but Gates says there are protections in place to prevent that.

"The element of it which I think many people would take comfort from is the fact that, if anybody wanted to change the brackets or the rates or that sort of thing, there's going to be another vote of the people before that would happen."

Opponents also say income of wealthy individuals is often from investments, which are volatile and won't guarantee the state enough money from the new tax. Backers of I-1098 estimate it will raise about $1 billion of new revenue for the state. The budget hole is closer to $3 billion, but they say it's a start.

Chris Thomas, Public News Service - WA