The Real News about the new State income tax

October 8th, 2010 by Ken

While our TV sets have been bombarding us  with Bill Gates Senior pushing a new state income tax, here’s The Real News about any new state income tax.

Gates says the new tax (a word he never uses) would raise $2 billion for education.  The real fact is only about half that amount will go for that use.  Some $800 million will go into the state general fund.  Another 30 percent will go into a health services account to provide for medical care.  So about $900 million will go to education , not $2 billion.

The initiative does provide some property tax relief.  It lowers the state property tax by 20 percent.  But, since most property tax is local property tax for schools, fire, port and library services, the actual reduction in property taxes is about 4 percent.

It does provide some B&O tax credits of about 10 percent.  But, the new tax encompasses S corporations, LLC’s and of course one-0wner businesses, so in actually, businesses will pay far more than the 10 percent B&O tax reduction.

If approved by the voters, Initiative 1098 will create the Fourth Highest State Income Tax Rate in the country.  Coupled with the Fourth Highest Sales Tax in the country, Washington residents will be one of the highest taxed states behind only New York, Connecticut and California.

While the tax currently targets those making more than $200,000 a year, the state legislature can extend the tax to anyone and everyone after only two years.  Despite language to the contrary in the initiative, legal scholars say that all citizen initiatives can be changed by a simple majority vote after two years.

While most legal scholars think a new state income tax can’t be created by a citizen’s initiative, the liberal Washington State Supreme Court might have other ideas.  Don’t think the courts will overturn the initiative if approved by the voters.

Posted in Business, Government, History, Informational, The Real News

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