Washington State Sales Tax Debate

To close a $1.5-billion funding gap, Gov. Chris Gregoire and legislators have proposed adding a half-cent to the state sales tax, bringing the already almost usurious sales tax to 7 percent, or 10 percent in the city of Seattle. One half of one percent certainly sounds innocent enough.

For higher-income people, it would represent no burden. And higher-income people probably would rather pay a sales tax than a state income tax, which would require them to pay their fair share for all the services the state provides. In contrast, the sales tax is regressive: People earning six figures pay far less, as a percentage of income, than those struggling to get by.

Looking ahead, what would happen if the sales tax were put on the ballot and failed to pass? The state, having lost all reasonable options, would have to carry out all of the proposed cuts and program reductions. Any minuscule savings realized by winning concessions from the state worker unions would be a drop in the bucket in comparison.

If the sales tax should pass, and that is a huge if, people will be forced to economize further and delay buying big-ticket items like electronics, cars, and computers as well as necessities like shoes for children and warm clothing. And if people don’t buy, more clerks, builders, and car dealers will be forced to close up shop, putting more families on the unemployment rolls.

In 2010, voters rejected an attempt to institute a state income tax on residents making more than $200,000 a year. However, I would caution against reading too much into that. It is difficult to pass anything when the governor ran for reelection promising there would be no income tax as long as she was in office.

Politics is an interesting game. With all her opposition to an income tax, Gregoire barely got a mandate in an election where the alternative was far worse.

A state income tax proposal must include safeguards. There has to be a high enough threshold below which taxpayers’ income is exempt. Additionally, there has to be a reduction in state property and non-levy taxes.

This time the people need to be united in their working for a state income tax. We must not allow smear tactics to ruin the only fair form of taxation available to our state.

We must not fall for false advertising. We must not let the banks and developers dictate how we finance education, health care, and the protection of our environment. The Costco executives don’t pay a state income tax; neither do the Amazon executives or the Starbucks owners.

Another benefit of the income tax is that it is not as susceptible to changes in the economy. Even if sales tax revenue falls and home prices and the taxes associated with home sales decline, the income tax will remain relatively stable—thus avoiding the need to cut education, health and the environment.