April 23, 2009 in Business, City

Income tax plan dead

By The Spokesman-Review
 

Senate Majority Leader Lisa Brown, D-Spokane, who had earlier proposed a state income tax on high-earners, now says that changing the state’s tax system is still the right thing to do, but that this is not the year to do it.

“Many members of the Senate Democratic caucus — but certainly not all — still believe that changing our tax system is the right thing to do,” Brown told reporters at a crowded press conference in the capitol. “However, we’ve concluded that this is not the right time to do it…It’s clear we don’t have the legislative support to move forward at this point.”

“Statewide, I understand there’s quite a bit of antipathy toward this, as if a state income tax was a new invention that 41 other states didn’t already have,” said Sen. Adam Kline, D-Seattle.

Brown also said it’s unlikely that lawmakers will approve a proposed bond issue to spur jobs by spending hundreds of millions of dollars fixing up schools and other public buildings.

“I don’t believe the bond measure is moving in either chamber,” she said.

And a proposed increase in the state sales tax?

Senate Democrats like the fact that the regressive increase would be offset by state rebates to low-income families, Brown said. But she added that it’s not clear that the bill will make it through either House. Even if the House approves it, she wouldn’t commit to holding a vote in the Senate.

“We’ll consider the bill when it comes over,” she said.

Brown, Kline and other Senate Democrats said they’re committed to continuing a public dialogue over a state income tax and other structural tax reforms.

“This really is becoming more urgent every year,” said Sen. Jeanne Kohl-Welles, D-Seattle. “Our tax system is really not only unfair, but it’s also out of kilter. She said she’ll introduce a bill in a day or two for a sales tax on gum and candy, with the money going to children’s health care. (Maybe it would restore state cuts to vaccinations, she suggested.) But she also said that the bill is unlikely to go anywhere in the legislative session’s final few days. Lawmakers are slated to adjourn on Sunday. The bill will remain alive for next year’s session.

“The point is: we cann’t stop discussing this,” said Kohl-Welles, who has repeatedly introduced bills to launch a state income tax.

“We have an unsustainable shifting of our tax burden to the shoulders of working people,” said Kline.

Brown said she knew it would be a tough year for an income tax debate, but that lawmakers need to do something about an unfair state tax system. That’s particularly true, she said, in the face of the state’s $9 billion budget shortfall and federal discussion of having people earning $250,000 or more pay more in taxes.

Brown also points out that under federal tax law, state income tax payers can deduct that from their federal taxes.

“The goal is not to single out or target our more-affluent citizens, but to give them the opportunity to not send all their tax dollars to Washington, D.C.,” she said. Instead, she said, those dollars could go to local schools and other needs.

And she denied that the high-earners approach is a trojan horse to launch a broader, deeper state income tax in the future.

“The idea really is to introduce fairness, and the middle class pays enough already,” she said. “…There’s no intention to fool anybody, or to start high and then move down.”

Voters are clearly skeptical about tax reforms, she said.

“In general, voters are more comfortable with the devil they know than the devil they don’t,” she said, referring to the sales- and income tax plans. “There’s always an element of uncertainty.”

Any major changes would be possible only with a broad public dialogue and public support, she said.

“That’s how we do things in Washington,” she said.

For more on this developing story, please see our state political blog: www.eyeonolympia.com.


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