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Washington State's 'Robin Hood' tax

In an electoral development that must have Ayn Rand rolling in her grave, voters in Washington State will decide next Tuesday on I-1098, a.k.a. the "Robin Hood Initiative." With no state income tax, Washingtonians currently suffer under what the Seattle Post-Intelligencer calls "the least fair tax code in America," a schedule that sees the poorest 20 percent of Washington families pay 17.3 percent of their income in state taxes. Washington's wealthiest 1 percent enjoy a rate of 2.5 percent, while the richest 0.1 percent, according to I-1098 supporter Nick Hanauer, pay "something like three-tenths of one percent." The ballot measure would reform this regressive tax structure.

Hanauer, a Seattle venture capitalist who is actually a part of that richest 0.1 percent, sees Washington's system, and the trickle-down, Reaganomic wisdom behind it, as "hogwash.... Where rich people don't pay their share," as he said in a conference call on Tuesday. "It's a hellhole." Arithmetically, he says, a tax code like Washington's is ultimately unable to sustain a capitalist democracy.

For Hanauer, an original investor in amazon.com, I-1098 is about fairness and prosperity. "As a society," he asks rhetorically, "do we want to live up to our obligations and put our money where our mouth is? Investing in public infrastructure" -- through taxes -- "makes prosperity possible." Hanauer admits that he's frightened for the future of his state and his country. When the private sector shirks symbiosis with the public sector and instead opts for a more parasitic relationship, it's a recipe for disaster.

Bill Gates, Sr., father of the Microsoft co-founder, sees I-1098 as a way to rescue the state's public school system. Washington state ranks 47th out of the fifty states in terms of monetary support for the public school system, a situation that he says is "completely inconsistent with urges and dreams of Washingtonians. We want a great education system; that's what this initiative is about." Washington's state constitution charges the legislature with the "paramount duty" to "make ample provision for education of all children," a stipulation, Gates points out, that leaves the current system of public education in contempt of the highest law in the land. If passed, I-1098 would generate several billions of dollars annually for the state's starving schools.

If the "Libertarian fantasy" of Reaganomics worked, says Hanauer, "there would be a place with no taxes, no rules, and where everyone is a king. And if that place exists, it's where the Easter Bunny lives."

By Katrina vanden Heuvel  | October 29, 2010; 1:27 PM ET
Categories:  vanden Heuvel  | Tags:  Katrina vanden Heuvel  
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Comments

Perhaps Ms. vanden Heuvel would do well to educate herself a bit about Washington state and its politics before she blindly regurgitates the propaganda of I 1098 supporters. State government has grown exponentially during the past several years, and public sector unions are out of control. The Democratic governor and legislature failed to make needed spending cuts in rational ways but chose instead to cut programs across the board, hoping to point to all those "needed services" that were cut and gain sympathy. Washington State provides untold millions of dollars in services to illegal aliens; if those costs were eliminated schools would have more than enough money. We are going broke trying to educate and provide health care for third world masses and Mr Gates, et al, want us to pay income taxes to compensate for these costs. Good luck with that!

Posted by: stonecarver | October 29, 2010 2:08 PM | Report abuse

My wife and I just voted down I-1098. I think it is a good idea but the left/left couldn't leave well enough alone and made it so that in two years the state legislature can make the income tax apply to everyone. Talk about foolish. I voted for democrats in the national elections so am not a raving rightist. However, I as well as most Washingtonian's, have a brain. I lived in Virginia for 15 years. An income tax does not result in a lower sales tax (@ 9% in Washington). Our state legislature is overwhelmingly democratic so it is easy to see what will happen to Joe or Sally average citizen in two years. Even the poor will be taxed on their income. It's the same as with health care. Obama, who I voted for, made it too expensive to small business. Why can't we just all be like most Americans -- pass what we can afford and go for universal coverage when it doesn't mess up the economy? Will the democratic party ever learn?

Posted by: Fergie303 | October 29, 2010 2:11 PM | Report abuse

Please tell us how many millions or billions these two gave to the state? Nothing is stopping them from paying "their fair share".

Posted by: kitchendragon50 | October 29, 2010 2:17 PM | Report abuse

I question the very possibility of ANYONE paying 17 % of their income in state taxes in a state that has no income tax, much less the bottom 20 % paying that percentage.
How does the state extract that 17 % ? The 9% sales tax does not apply to all purchases.
So where does the State get the money from the bottom 20 %

Posted by: tjmacdonald | October 29, 2010 2:33 PM | Report abuse

As usual, Ms. Vanden Huevel just vomits up the pro-1098 party line with no understanding of the facts out here in Washington State where the state constitution bars an income tax unless approved by the voters. Proposition 1098 is a dishonest proposition originally camouflaged as a measure to support education and provide tax relief. The proponents didn't even call it an "income tax" - when initially filed its official description was "Initiative Measure No. 1077 concerns taxation.". They were subsequently required by court order to change the name and number because the court ruled that it was, in fact an income tax and that the original title was "vague and misleading".


The real goal of 1098 is to bring an income tax to EVERYONE in Washington not just high earners - and, were it to pass nothing will be able to stop the legislature from raising tax rates and lowering tax brackets. The initial high threshold $200K/$400K individual/couple limits are just the thin entering wedge. The promised property tax cuts and business tax cuts are token amounts - chump change. While some rich supporters such as Gates Sr. are well intentioned, the same cannot be said of the proposition's union backers like SEIU and other public employee unions who have invested millions to get it passed because they want to give their shills in the state legislature a shiny new ATM card with billions of new taxpayer dollars.

Should 1098 pass, for the first time in history every citizen of Washington with earned income (not just those who will initially have to pay the tax) will have to file a state income tax return. This will allow the construction of the income tax processing infrastructure and then, after a mere two years, a simple majority of the legislature will be able to initiate the inevitable downward tax bracket creep to extend the income tax to all Washington wage earners. And of course, by then any promises of tax relief and education funding will be conveniently forgotten and Washington will end up just like any other state with a nice new income tax but still with the high sales and property taxes.

Look at the state budget spending increases produced over the last six years:

2005: $25.6 billion
2006: $26.1 billion
2007: $28.5 billion
2008: $30.5 billion
2009: $32.8 billion
2010: $35.2 billion
2011: $37.1 billion (proposed)

Good times or bad, the spending just keeps going up and up and up - exceeding inflation and population growth; it's just never enough. The spending beast in this state is insatiable and the proposed income tax would be a huge new buffet. The only chance Washington wage earners have to prevent this travesty is to VOTE IT DOWN NOW, before it gets started, starve the spending beast and force better choices in how the tons of money already collected gets spent.

Posted by: aaronburr | October 29, 2010 2:36 PM | Report abuse

Damn the RICH and Greedy doing everything they can to prevent paying taxes..

then getting all their acolytes to Fall LockStep in LINE..
ISA

Posted by: vettesport | October 29, 2010 2:39 PM | Report abuse

Perhaps when Mr. "stonecarver" says:

"Mr Gates, et al, want us to pay income taxes to compensate for these costs."

he should acknowledge his agenda. If I 1098 is gonna make him pay more taxes, then his earnings (in accordance with the legislation) exceed either "$400,000 a year per couple, or $200,000 for an individual."

In other words, the reason he objects to the tax is that he doesn't want to contribute any of his income to help improve the living standards of his fellow citizens.

And Mr/s. "kitchendragon50" who says:

"Please tell us how many millions or billions these two gave to the state? Nothing is stopping them from paying 'their fair share'."

apparently argues that we shouldn't impose a tax that makes Bill Gates and Nick Hanauer pay a greater share of their income to taxes because Bill Gates and Nick Hanauer aren't paying their fair share now.

Uhhhh.... I don't know what to say to someone who has that much trouble figuring stuff out.

Posted by: mmyotis | October 29, 2010 7:53 PM | Report abuse

Perhaps Ms. vanden Heuvel would do well to educate herself a bit about Washington state and its politics before she blindly regurgitates the propaganda of I 1098 supporters. State government has grown exponentially during the past several years, and public sector unions are out of control. The Democratic governor and legislature failed to make needed spending cuts in rational ways but chose instead to cut programs across the board, hoping to point to all those "needed services" that were cut and gain sympathy. Washington State provides untold millions of dollars in services to illegal aliens; if those costs were eliminated schools would have more than enough money. We are going broke trying to educate and provide health care for third world masses and Mr Gates, et al, want us to pay income taxes to compensate for these costs. Good luck with that!

Posted by: stonecarver | October 29, 2010 9:11 PM | Report abuse

The USA used to be a place where there was no income tax, no sales tax, no estate tax, very few rules and gold was money. This was a land where immigrants came from all over the world in huge numbers, without visas, and had no qualms or difficulties becoming Americans so they could enjoy the benefits of the rights to life, liberty and the pursuit of happiness. Secure in their right to the property they earned, they encouraged their fellow countrymen to join them here. We are the world’s third most populated country. We are very popular.

Posted by: jackdoitcrawford | October 30, 2010 7:45 AM | Report abuse

PAY IT YOURSELF


Hey TRUST-FUNDER -- why don't you give the IRS your $2+ MILLION trust fund? And the Kennedys and their $3 BILLION trust fund? And show us they way? We'll be right behind you.

Posted by: russpoter | October 30, 2010 8:13 AM | Report abuse

Um, so they're 47th in spending for education. You don't give the stat that is important - like where are they ranked in terms of EDUCATION.
I mean, here in GA we're typically 49th in EDUCATION. We probably are something like 30 or 20th in spending. Gets us crap education, still, in any event.

Just wow. You just pick and choose the stats you want, huh?

Posted by: atlmom1234 | October 30, 2010 9:33 AM | Report abuse

Katrina is always advocating for taxes on other people's income. Tell everyone, Katrina, how you went all the way to the Supreme Court to avoid paying any estate tax on your huge inheritance. Tell the nice people what a hypocrite you are Katrina. Like Leona Helmsley said, " taxes are for little people".

Posted by: kshannon27 | November 3, 2010 6:13 PM | Report abuse

"
Hey TRUST-FUNDER -- why don't you give the IRS your $2+ MILLION trust fund? And the Kennedys and their $3 BILLION trust fund? And show us they way? We'll be right behind you."

russpoter- her inheritance is in the hundreds of millions! And she paid NO estate tax!!! Taxes are for little people!

Posted by: kshannon27 | November 3, 2010 6:51 PM | Report abuse

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