Washington Voters to Decide on State Income Tax in November

ALAMEDA, Calif. — A measure to impose a state income tax in Washington has qualified for the November ballot, according to the secretary of state’s office.

Washington has no personal or corporate income taxes.

I-1098, backed by longtime tax-reform advocate William Gates Sr., would create what supporters call a “high earners income tax.” Gates’ son is Bill Gates, co-founder of Redmond, Wash.-based ­Microsoft.

Tax would be paid on income above $200,000 for individuals, or $400,000 for couples. The tax would have two tiers — 5% to start, and 9% for individual income over $500,000, with $1 million for couples.

“That would in our view enhance the value of Washington municipals, because you would then have a captive audience of buyers that does not exist [currently],” said Michael Pietronico, chief executive of Miller Tabak Asset Management. “Should it go through, you would expect to see municipals in Washington trade marginally stronger.”

Revenue from the income tax would be dedicated to health care and education programs, while funding offsetting tax cuts designed to make the state tax system less regressive.

The measure would cut the state property tax 20%, and raise the threshold for paying the state’s Business and Occupation tax, exempting the smallest 80% of businesses, according to the I-1098 campaign.

In all, the measure is expected to net the state general fund about $1 billion annually — not enough on its own to solve the $3 billion shortfall projected in the state’s next two-year general fund budget cycle.

The secretary of state’s office certified the ballot measure despite accusations of fraud by one of the campaign’s signature gatherers. The fraud investigation involves about 350 signatures on 20 petition sheets, Dave Ammons, spokesman for Secretary of State Sam Reed, said in an e-mail to reporters. “The division is continuing a probe of the apparent fraud, and on Thursday requested the Washington State Patrol to investigate as well, and to turn over the case to local authorities as warranted,” he said.

Despite that investigation, election officials determined that the measure had qualified after a random check of the signatures submitted.

The campaign turned in about 385,000 signatures and 11,786 were reviewed, with 10,090 found to be valid, according to Ammons. The error rate for the signature check was 18.1%, about the same as the historical average, Ammons said.

It takes 241,153 valid signatures of registered Washington voters to qualify a ballot measure.

Washington voters are expected to decide nine state ballot measures in ­November.

They include another measure from perennial tax-limit proponent Tim Eyman. His measure, I-1053, is next in line for signature verification. He submitted about 338,000 signatures for I-1053, which would restate the existing statutory requirement that tax increases must be approved by a two-thirds vote in both houses of the legislature or approved by a majority of voters in a referendum.

Washington voters approved an income tax measure by a wide margin in 1932, only to have it thrown out the following year by the state Supreme Court. Since then, they have turned down four different income tax measures, most recently in 1975, according to the secretary of state’s office.

They have also turned down two corporate income tax measures.

For reprint and licensing requests for this article, click here.
Washington
MORE FROM BOND BUYER