Candidate’s tax proposal met with skepticism

Gubernatorial candidate Ron Sims rode what some people believe is the third rail of Washington state politics into Spokane Tuesday. He talked about a state income tax with a group of business leaders and lived to tell about it.

It’s not income tax in a vacuum, Sims was quick to point out, but an income tax coupled with a lower state property tax and sales tax and a possible elimination of the business and occupation tax.

“We can’t remain stuck where we are today,” Sims said. “We need a tax system for the 21st century.”

Sims, currently the King County executive, is staking his run for governor on the public’s willingness to talk about tax reform and tax fairness. It will spur business growth and provide funding for expanded education, he contends.

By early August, he said he will unveil a detailed plan that includes a graduated income tax – that’s one that has higher rates on upper income brackets – along with dropping the state’s 6.5-cent sales tax to at least 1 cent and exempting the first $100,000 of real estate property valuation from the state’s property tax. And he’d eliminate the state business and occupation tax, which charges different industries different rates based on their gross sales.

Right now, he’s just painting tax reform with broad brush strokes.

Businessmen who gathered for a breakfast with the candidate in the Davenport Hotel were sympathetic to the concept, but skeptical about the chances. Any tax reform that sweeping would have to be approved by voters who have repeatedly said no, they noted.

“How do you get it done?” asked Lewis Rumpler of INTEC.

By being a leader willing to talk to the public about changing a system they know isn’t fair, Sims said.

“An effective governor, going all around the state, talking about the benefits and the safeties built in,” he added. “The business community has to decide whether it wants to stay with the business and occupation tax.”

But Dan Evans, a popular three-term governor, did that in the 1960s and couldn’t change people’s minds, said Patrick Jones of Eastern Washington University’s Institute for Public Policy and Economic Analysis. Had Sims talked with Evans, Jones wondered.

He had at a recent meeting, Sims said. And Evans’ comments? “He said, ‘Good luck, Ron.’ ”

Randy Baucus of Avista said he supported many of the things Sims was talking about. “But my feeling is, this dog don’t hunt.”

Replied Sims: “I think you’d be surprised. People have a low expectation of the performance of the voters. But this dog hunts in a lot of places because there are a lot of people out there who want this discussion.”

Perhaps, said former City Councilman Steve Corker. But voters are skeptical about any politician who talks about tax reform.

“There’s just a huge fear that tax reform is adding a tax, giving the government more money to spend,” Corker said.

But people inherently know the tax system is unfair, Sims said. That’s why proposals like Initiative 695, which removed the motor vehicle excise tax and replaced it with a $30 fee, are so popular.

When Sims first started talking about tax reform several months ago, “everybody said we’d be cooked politically,” he said. That hasn’t happened, and he believes he’s gaining ground on Democratic front-runner Christine Gregoire, the sitting attorney general Sims faces in the Sept. 14 primary.

Gregoire supports revising the many exemptions of the B&O tax but is not calling for a complete tax system overhaul. Republican candidate Dino Rossi has come out against a state income tax, and called for regulatory reform to improve the business economy.

Sims said he plans to hold town hall meetings on the tax plan in August, after it has been reviewed by economists.