Come November, Washington state voters will see Initiative 1098 on their ballot, a measure targeting the state’s most productive residents and small businesses with the state’s first ever income tax.
This morning, Americans for Tax Reform sent a letter to Washington pledge signers, urging them to publicly oppose I-1098 if they have not already done so.
I-1098, if approved, would impose a 5 percent income tax on individual and small business earnings of $200,000 or more per year.
Here are the facts:
– What seems to be an income tax on the wealthy, in fact, squarely hits small business. Sixty-eight percent of those earning more than $200,000 are small business owners. I-1098 targets 60% of small business income. Raising taxes on these small businesses will impede job creation and wage growth.
– The Initiative attempts to lure in voters with a misrepresented B&O tax credit and a 20 percent property tax reduction; however, the average taxpayer would experience only a four percent reduction as local property taxes would not be reduced.
– Private venture investors must have at least $200K income or $1 million in assets to invest, precisely the target of I-1098.
– I-1098 will not solve the budget problem. A “high earner” income tax fails to stabilize revenue, and in fact would increase volatility. It’s the most volatile tax in the country, according to Joe Barer, the founder and president of Lake Partners Strategy Consultants, which published ‘A Case Against I-1098’
– Historically, new taxes start low and climb high. Such would likely be the case with the income tax imposed by I-1098. In two years the WA legislature would be permitted to expand the income tax to all Washingtonians.
– Although voters may vote upon a tax in which revenue goes to education and health care, legislators are not bound to abide by their original initiatives.
Washington is one of just seven states without a state income tax. This contributes in large part to the fact that Washington, D.C.-based Tax Foundation ranks this state ninth in its 2010 State Business Tax Climate Index, meaning that Washington is one of the most attractive states to invest and start a business. Recently, Washington invested in a colorful multi-page ad in Fortune magazine, boasting the absence of an income tax in an attempt to lure business. In I-1098 is voted through, this advantage would be relinquished.
For more information on how I-1098 will hurt the Washington economy, see the Evergreen Freedom Foundation’s ‘Washington State Income Tax: Don’t Get Fooled Again’