Pivoting to local issues - Why Levi opposes I-1098.

In Washington State we have an initiative this election cycle called I-1098.  This initiative would impose an income tax in the state, while at the same time reducing the state property and B&O tax.  In a move that has put me in the minority with my more liberal friends, I personally oppose this.  This is not to say I don't agree with the general point that Washington's tax structure is regressive and that it does not serve the needs of a state to have a reliable means of income.

Washington State is primarily funded by property and sales taxes with some money being provided by a B&O tax.  With this structure it is very difficult for the state to accurately anticipate tax revenues and budget accordingly.  The result is that during good times, we have a surplus (and as a result start hearing from republican politicians that we need a tax cut), and and bad times we have a deficit.  What compounds the problem is that we do all of our budgeting on projections.  When this is based on sales tax, that creates a major problem.  It's much easier for a consumer to get spooked and stop spending, which drives down sales tax revenues, than it is for them to stop working.  Certainly, when the economic situation gets bad enough you'll have job losses, but it's not the same kind of volatility you get with sales tax revenues.

Additionally, when I was unemployed for a period of time last year, I took the initiative to try to start my own business.  Imagine my surprise when I learned that not only do I have pay state B&O taxes on my profit, no, I have to pay them on everything!  It was frightening and confusing and stopped me from trying to expand my business.  The B&O tax is a major hurdle to building a business in Washington State and must be replaced.

That said, I am completely opposed to I-1098.  First and foremost, it's unfair.  If you are going to levy an income tax, something that I support for a variety of reasons, you do so across the board, not just on the rich.   AND more importantly you remove other taxation.  All 1098 does is reduce other taxation, it reduces B&O but does not eliminate.  It reduces the state portion of the property tax but does nothing for the local portion.  It reduces the state sales tax but does not remove.  So now we have 4 different tax schemes as opposed to 3 and due to the idiotic targeting, we encourage higher income earners to leave the state.  Washington has to do something with it's regressive tax structure that doesn't allow the state to adequately predict income... but this... isn't it... and this is from a liberal!