Another way

In the aftermath of the unpopular decision by the Washington state Supreme Court to overturn Initiative 747 on a technicality, it looks like the state Legislature, at the urging of the governor, will wind up codifying the 1 percent cap on property tax collections that was approved by voters in 2001.

The uproar is similar to the one that occurred when the court tossed Initiative 695 ($30 car tabs). We were not in favor of I-747, in part because it ignored inflation’s effects on government budgets, but we understand that it would be political suicide for legislators and the governor to ignore the expressed wishes of the voters.

However, it would be irresponsible and strategically unwise to merely re-install the cap and be done with it. Doing so would not end the resentment over the rise in property taxes, a frustration that had boiled over before the tax cap was thrown out. Plus, it would keep initiative peddler Tim Eyman in the catbird seat.

Lawmakers should take this opportunity to undercut Eyman by reducing taxes on most homeowners and renters by slightly raising the property tax rates on those who aren’t struggling to pay. Lawmakers could do this and still stay within the overall 1 percent cap.

Currently, property taxes consume about 6 percent of household income for the 40 percent of households in low- to middle-income categories. Those at the top of the income ladder pay about 3 percent of their income on such taxes.

By installing a progressive “circuit breaker,” lawmakers could ease the burden for those being squeezed from their homes because of rising values. The state would look at income figures for households and apply the circuit breaker on a sliding scale. Eighteen other states have such tax relief.

According to research conducted by the Washington State Budget and Policy Center, a slight increase in property tax rates ($0.18 per $1,000 of property value) coupled with a progressive circuit breaker could yield a 2 percent bump on the richest 40 percent of households and a 14 percent reduction for the poorest 20 percent of households, a 12 percent cut for the next 20 percent and a 2 percent cut for those in the middle-income group.

Overall tax collections need not go up or down in making such a change.

Such reform is a politically promising way to address the ugly nature of Washington state’s tax system, which is the nation’s most burdensome for low-income people. An income tax would also help, but that isn’t popular with voters or lawmakers. However, voters have shown they are concerned with property taxes.

If the Legislature could cut property taxes for most households, it would undermine the populist appeal of constant tax-slashing initiatives. Eyman would then be put in the position of decrying tax cuts for people who aren’t having difficulty paying them. Plus, a large number of voters would be less inclined to take out their frustrations on school districts’ bond and levy issues.

If lawmakers play it smart, they can reinstall the Eyman-inspired property tax cap and steal his thunder at the same time.