Saturday, August 23, 2008

A State Income Tax

I think it is about time for Washington State to adopt a state income tax. I know the thought of paying "more taxes" always makes people hit the panic button and freak out. I think that if people would sit down and really think about it they would see that it could be a good thing for both them and the state if handled properly.

First lets consider a few things:

1) Right now most of the state income comes from the 6.5% sales tax (plus most cities have their own sales tax).
2) Sales tax is an inherently regressive tax.
3) Although food is exempt from sales tax other necesseties like clothing are not.
4) The gas tax weighs heavily on the less wealthy because they cannot afford to live close to their jobs as rents push them away from city centers. I'm not saying that we should reduce the gas tax but reducing other tax burdens would help the poor deal with this.

Now I'm not for doing away with the sales tax and replacing it with a state income tax but I think we should be able to reduce the sales tax and replace the lost revenue with an income tax that is more progressive. The state income tax should probably have the first say $20,000 for a single adult $28,000 for a couple and x% more for each kid would be tax exempt and then a small income tax would kick in above that level. I'm just pulling those numbers out with a SWAG but they could be adjusted based on the state poverty level somehow to make sure the poor aren't burdened more then they are now.

King County Executive Ron Sims had a plan to introduce a state income tax back in 2004 when he was running in the primary for Governor but his plan would have abolished the state sales tax all together and replaced it with a graduated income tax that would have been the highest in the country.

I thinks a combined approach of the sales tax and a small income tax focussed mainly on the upper middle and upper class would be the best way to go.

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