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State Income Tax, Still On The Fence.

With the ballots going in the mail in just five days I am still on the fence when it comes to initiative 1098 which would institute an state income tax in washington state, which is something of course the state has not had.  As it is writing now is would only effect those making individually 200,00 or more a year and couples making 400,00 with a five percent income tax and individuals making 500,000 or more and couples making 1,000,000 or more a year with an nine percent income tax, of which the majority would go to public education and health care.  Both of which are wildly important services,  it would also reduce the state portion of property taxes by 20% exempt many small business and lower B&O taxes on business.  Both sides how ever seem to have good points, about why it should and should not be passed.

I know that my union supports it in part because of the funding for public health which would be beneficial to union members employed in that field that are currently suffering with the states continuing revenue shortfall off the back of the state sales tax.  Which is currently the main source of income for the state.  It would also be beneficial for state employees by helping to provide the fund to at least halt the lay offs and fellows that are causing them hardship, something that in the long run could help the economic recovery.  As well it would provide a much steadier way of funding the public education system as it would not be as directly tied to consumer spending at the sales tax inevitably is.

However this is also the fact that after two years the new law would be open to lawmakers to change, which could include not only changing what "pools" get the funding from the income tax, but also the rates and the income levels that the tax will apply to.  In effect it opens it up to being applied to ever resident of the state at every income level.  Something that could only be reversed threw an initiative.  Then there is the fact that up until this point the sales tax model seems to have worked pretty well for the state. Not only that but it seems risky to literally put the keys to the piggy bank containing the golden goose in the hands of Olympia, and then trust them to not use it to get at the golden goose and strangle every dime out of the goose that they can for ever increasing budgets.    As it is the law lacks language to not only insure that if the "income" for the new income tax where to exceed the budget that the extra would be placed into the states rainy day fund, Or that if it exceeds the budget by a certain present that the extra would be refunded to those that paid into the pot.  I would also like to see something also placing some form of limit on the amount the state budget can increase year over year, as to avoid the temptation for state legislatures to balloon the budget to mach the money that is coming in.  I think that such a rule should be based in part off of the pre recession state budget, as that would be a good look at when the state was quite fiscally healthy and able to set aside rainy day funds with only the sales tax alone.  I personally would also like to see language in the law that made it so that if over a certain percent of the population wound up being under the income tax that the state portion of the sales tax would be eliminated, as a tool to help keep the temptation to abuse the golden goose at bay.

As it stands part of me sees an income tax as the only really logical and fair way to fund the state services that we all need as it is a progressive tax that would and dose tax those on their ability to pay instead of the regressive taxes that are the sales tax which proportional takes more from those with the least, as well to some extent the state property tax which also proportional taxes less from those that are most able to afford it and more from those least able to.  How ever another part of me sees it as a ticking time bomb just waiting to be exploded on the ever resident of the state my self included and have the state dip its hands in my hard earned money in order to increasingly bloat its self.  It also worries me that the current law has no exemptions or deductions for income made interest on money in the bank or investments and retirement plans before they are being drawn from.  I think that these are key things that need to be considered and have not been.  Not only that but I also look around at some of the states with the worse budget problems and those are states that have both an income tax and a sales tax yet their budgets are in worse shape then that of WA.

I don't know how I am going to vote on this issue and the time is coming ever faster that I will need to make up my mind on it, and of all the issues that are on the ballot this year this one is by far the hardest to decide on and the only one that I am not sure how I am going to vote.


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