Washington Initiative 1098 (2010), reports and analysis

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Main article: Washington Income Tax, Initiative 1098 (2010)
Below is a list of reports and analysis reports on Initiative 1098.

Reports and analysis

OFM impact report

In 2010 the Washington Office of Financial Management released fiscal impact statements for initiatives scheduled to appear on the 2010 ballot, including Initiative 1098. Below is an excerpt:

Beginning calendar year 2012, the income tax and tax relief are estimated to generate a net increase in state revenue of $11.16 billion over five calendar years to be used exclusively for education and health services. The 20 percent state property tax levy reduction will allow some local property tax districts to levy an increased amount; this revenue impact is expected to be minimal. State implementation costs are estimated at $39.3 million over five fiscal years; one-time computer programming costs are estimated at $50,000 for the state and each university and local government with employees subject to the income tax.
Read the full report here

Tax calculator

The Economic Opportunity Institute, a 501(c)3 nonprofit public policy center in Washington, launched a I-1098 calculator. "Over the past year, EOI has been taking the lead in crafting the policy and building the coalition behind Initiative 1098...," states the institute.[1] (The Executive Director of the EOI is John Burbank, who is also the chair of the "Yes on 1098" campaign.) The EOI calculator calculates and itemizes personal and business tax changes under the proposed initiative.[2]

The EOI calculator, enabling Washington citizens to compute their tax savings or increases under I-1098, can be found here.

Tax Table

Below is an example of income taxes that would be paid at different levels of income under I-1098 (click "show"):[2][3]

In favor of I-1098

In opposition of I-1098

Frequently Asked Questions

The Seattle Times compiled a list of questions and answers on I-1098 titled I-1098: Frequently Asked Questions.[9]

Tax system analysis

According to a November 2009 tax system analysis by the Institute on Taxation & Economic Policy, Washington is ranked last, 50th out of 50 states, in terms of tax fairness. ITEP is a non-profit, nonpartisan research organization that works on federal, state, and local tax policy issues.[10]

The 2009 report concludes that because of the way the tax system is structured, the poorest 20% of residents pay 17.3% of their income in sales and property taxes, while the wealthiest 1% pay less than 3% of their income. Additionally, Washington, one of the 10 most regressive states according to the study, relies "very heavily on regressive sales and excise taxes. [The state] derive[s] between half and two-thirds of their tax revenue from these taxes, compared to the national average of 35 percent."[10]

According to the report, the combination of flat (or non-existent) income taxes and high sales and excise taxes tends to make for a very regressive tax system. However, states with progressive income taxes and a lower reliance on sales and excise taxes tend to be less regressive tax states.[10]

The ITEP study itemizes the 17.3% of income devoted to taxes by the poorest 20% as follows: 4.2% property taxes + 13.1% in sales and excise taxes. The 13.1% sales/excise tax is further broken down as 4.4% general sales tax, 3.9% other sales and excise tax [e.g. gasoline, alcohol, and cigarettes], and 4.8% "Sales & Excise on Business" [e.g. the B&O Tax].[11][12]

The Washington State Revenue Department similarly estimates that families with incomes under $20,000 pay 14.2 percent of their incomes in major state and local taxes and that families with incomes more than $130,000 pay 3.9 percent.[12]

Response from Defeat 1098

In a blog post entitled "Is Our Tax System Regressive?", which was posted on Defeat 1098's website on September 22, 2010, the Defeat 1098 campaign wrote in part:[13]

The source for proponents’ data is a group called the Institute for Taxation and Economic Policy (ITEP). This is the research arm of a Washington, D.C. labor lobbying firm. They travel the country advocating for higher taxes by telling every state that their tax system is unfair. After Vermont’s nearly flat structure scored at the top of ITEP’s tax fairness study, here’s what ITEP told them last year: "Vermont has an unfair, regressive tax system."[14] According to proponents’ data, the lowest 20 percent of earners, who make $11,000 per year, spend 13 percent on sales & excise taxes and spend four percent on property taxes. Thirteen percent of $11,000 equals $1,430 spent on sales and excise taxes. Question: How much taxable stuff (remember that food, shelter and medical are not taxed) do you have to buy to spend $1,430 in sales and excise tax when our sales tax rate is about 9 percent? Answer: $15,888. That’s 44 percent more than they earn. How is that possible?[13]

The full blog post can be read here.

Washington Research Council response

In response to not only the tax system analysis by the Institute on Taxation & Economic Policy but also in response to various reports and documents regarding I-1098, the Washington Research Council released a report. In the report, the organization specifically argued that the ITEP study "fail[ed] to accurately measure the tax burden." According to the October 7, 2010 report, ITEP's "treatment of Washington’s major business tax, the B&O, is different from its treatment of the major business taxes of most other states, the personal and corporate income taxes. The comparison is also biased by the fact that ITEP examines tax burdens at a single point in time rather than over the full lifecycle of the taxpayer."[15] The full report can be read here.

Local Impacts

The Yes on 1098 campaign analyzed the impact that budget cuts have had on Washington's 10 major regions and determined what impact I-1098 would have on restoring cuts to education and healthcare.[16] You can find each report here: Bellingham, Bremerton, Everett, Olympia, Seattle, Spokane, Tacoma, Tri-Cities, Vancouver, and Yakima.

See also

References

  1. Economic Opportunity Institute,"A Closer Look: Initiative 1098," accessed September 29, 2010
  2. 2.0 2.1 Economic Opportunity Institute, "Initiative 1098 Calculator," accessed September 28, 2010
  3. "Section 501 of I-1098" retrieved October 2, 2010
  4. Economic Opportunity Institue, Why I-1098 Is Right For Washington retrieved October 2, 2010
  5. Sightline Institute, "Initiative 1098 and Income Taxes," accessed October 2, 2010
  6. Andy Nicholas, Washington State Budget & Policy Center, "2010 Initiatives Could Impact Public Services," accessed October 2, 2010
  7. Washington Research Council,"I-1098 Income Tax Proposal: Wrong Diagnosis, Wrong Prescription," accessed October 1, 2010
  8. Washington Policy Center,"Citizens' Guide to Initiative 1098" retrieved October 1, 2010
  9. The Seattle Times, "I-1098: Frequently Asked Questions," October 18, 2010
  10. 10.0 10.1 10.2 Institute on Taxation and Economic Policy,"A Distributional Analysis of the Tax Systems in All 50 States," November 2009
  11. Institute on Taxation and Economic Policy,"A Distributional Analysis of the Tax Systems in All 50 States," Page 110, November 2009
  12. 12.0 12.1 Seattle Post Intelligencer, "Washington taxes most unfair in U.S.? Maybe not, but they're close," September 16, 2010
  13. 13.0 13.1 Defeat 1098 campaign,"Is our tax system regressive?," September 22, 2010
  14. Denton Publications Inc.,"Vermont taxes: Fair or unfair burden?," November 2009
  15. Washington Research Council,"I-1098 Income Tax Proposal: wrong diagnosis, wrong prescription (Second edition)," October 7, 2010
  16. Yes on 1098, "Local impacts" retrieved October 14, 2010