Tim Eyman’s latest Initiative 1366 may offer Washington a helpful step forward in strengthening the fairness and economic robustness of Washington State’s tax system. Instead of sending an initiative to voters for a taxing supermajority or fighting this initiative in court, it’s time for the Legislature to reduce the sales tax from 6.5% to 5.5%.

But Jeff, what are you saying!? According to the state, “Through 2021, Washington’s treasury would be deprived of approximately $8 billion in funding for vital public services like schools and universities.” I know — that would be terrible.

However, Washington State has the worst tax system in the country for two reasons. First, it overly relies on sales tax making it the most regressive tax system in the country. And, tax systems that rely on spending by residents are highly impacted by recessions — when consumer spending drops, so does tax revenue.

Washington State Regressive Taxes

The poor pay nearly 17% of their income in sales tax

Washington’s needed to reform it’s B&O tax system for decades. It needs to eliminate its hundreds of corporate tax breaks and rewrite them for the 21st century. It should add an income tax of some kind, perhaps one just for high earners, that provides an additional dimension of robustness to our revenue generation, one less subject to recession.

Think it would be hard to raise $8 billion from cutting taxes? Microsoft’s saved that much over a decade when the Legislator reduced the B&O Royalties tax by 2/3, never pursued them for profit from Washington accounted for in Nevada and then when it allowed former Rep. Hunter to rewrite the tax to legally allow it to do so. If Bill Gates really cares about education, isn’t it time we ask him to pay his fair share for it?

Worried that the Legislature wouldn’t pass new taxes to make up for the lost $8 billion? The Supreme Court is overseeing them to ensure that education is properly funded.

Shifting revenue generation from sales taxes to other forms of taxes that don’t affect lower income people as harshly tax would create a fairer, stronger system for all Washingtonians.

Tim Eyman may have accidentally done us all a favor.

Legislators, please listen to the voters on I-1366. It’s time to cut the state’s sales tax and collect revenue more evenly from corporations, property owners and residents. Progressives, drop the lawsuit against I1366 — it’s time to challenge Olympia to represent residents and stop subsidizing corporate shareholder profits.

 

 

Posted by Jeff Reifman

Jeff is a technology consultant based in the Pacific Northwest. Try scheduling a meeting with his new startup Meeting Planner (https://meetingplanner.io), simpler, faster scheduling for work or play and read his series about building it). Follow @reifman on Twitter.