State Income Tax?

By Josh Feit April 1, 2009

I guess a $9 billion deficit will make you do all sorts of things. Taboo things. 

State Senate Majority Leader, Sen. Lisa Brown (D-3, Spokane) wrote a post on the Senate Democrats blog yesterday that floats the idea of an income tax—and specifically, she gives a shout out to the New York legislature for proposing a tax on the highest income earners.

She also cites  a study done by the Washington Budget & Policy Center, who argue that the only way to fix the state's deficit problem is to find new sources of revenue because our current sales tax system is inequitable and regressive . 

Brown (jokingly know as "Sandinista Lisa" years back—or at least that's how she was first described to me) writes: 

The Washington Budget & Policy Center argues that we need new revenue to address this budget crisis and many legislators agree with them.

There’s been a lot of talk in Olympia recently about a sales tax increase, but we need a revenue proposal that makes things better and fairer for regular families in our state -- not worse.

We need to keep in mind that, in Washington, individuals in the lowest 20 percent of the tax bracket pay 17 percent of their annual income in state taxes, and individuals in the top 20 percent of the tax bracket pay less than 3 percent.  For a sales tax to be fair, any increase would have to include a full working families tax credit to offset the unfair impact on those who are hardest hit by our tax structure.

I also worry that a sales tax increase would make us even more dependent on an extremely volatile revenue stream. Consider recent evidence: state revenue, more than half of which comes from the sales tax, has taken a nosedive in the current recession. The total downward adjustment of state revenues since the last legislative session is $4.9 billion – $2.3 billion in the past two months alone.

The New York Legislature is considering what I think is a fair and stable way of addressing their revenue challenges.

Should we do something similar in Washington?

"Sandinista Lisa" indeed. 

The idea was also raised in a press release by the Children's Alliance earlier this week.
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