State income tax could replace our regressive, volatile sales tax

I have submitted letters to The Herald more than once criticizing the ideas in columns by John Burbank. This submittal is to support his column on June 17, “We must back taxes if we want smaller classes,” that discusses our state taxation system.

As Mr. Burbank points out, there are two main problems with our tax system, which relies heavily on the sales tax. First, revenues fluctuate wildly depending on where we are in the business cycle. Second, the sales tax is regressive, with low-income people paying a much higher percentage of their income than high-income people.

With fluctuating revenues budgeting is difficult. When the economy is good and revenues exceed expenditures, conservatives want to cut taxes and liberals want to increase spending. This can be somewhat mitigated by establishing a “rainy day fund,” but this is problematic because it is impossible to accurately predict the depth and length of the next dip in the business cycle. Usually insufficient funds are held back, so that during downturns wrenching decisions to cut programs or increase taxes must be made. Either choice is bad. Programs are cut when they are needed most, and increasing taxes can deepen the recession.

This situation was exacerbated by the implementation of Initiative 695 by the Legislature. Loss of revenues from the vehicle excise tax, the only quasi-progressive tax that we ever had, caused the differential between revenues and expenditures to increase substantially. This forced special state and local elections for taxes to pay for things that were previously adequately funded. It also forced the adoption of fees for such things as park usage and increase in other fees such as tuition. Those who voted for I-695 apparently thought that a watch salesman who is too cowardly to run for office had a better idea about how to run our state than our elected officials. We are now suffering the consequences.

We Washingtonians should be ashamed and embarrassed that we have the most regressive tax system in the nation. Instead, we continue to rebuff any attempt to correct this. Meaningful tax reform requires replacing regressive taxes with progressive taxes. Implementing a graduated income tax and eliminating or at least reducing the sales tax is the most obvious solution. This would solve both problems discussed above.

It is true that Initiatve 1098, the income tax initiative of 2010 lost by a wide margin. However, just a few weeks before the election polls indicated that it might pass. What turned the tide was a barrage of negative and misleading ads paid for by rich people including Jeff Bezos, Paul Allen and Steve Ballmer. So now poor people continue to pay much higher tax rates to support the state than these fat cats, who can spend their extra billions on things like sports teams.

In my opinion, there was a fundamental flaw in the initiative because it reduced the property tax instead of the sales tax. It might have had a much broader appeal had it directly reduced taxes on the majority of people by reducing the sales tax rate instead of reducing property taxes.

Kudos to James McIntire, our state treasurer, for starting the conversation to reform our tax system. We Washingtonians need to overcome our irrational and emotional opposition to an income tax and adopt some form of it. This would go a long way to reduce the inequality between our low-income and high-income citizens.

Jerry Fraser is a Lynnwood resident.