To a very regrettable extent, the debate over Initiative 1098 has centered on the fortunes of high-income and wealthy families. (Would 1098’s income tax push them out of state? Would it impact business owners?) Now those are fine conversations as far as they go, but we’re losing sight of some important basic facts about the state’s economy:
More than 800,000 people in Washington live in poverty. It’s a figure that appears to have been growing steadily since the economic downturn in 2008, adding over 73,000 people in the most recent year of reported data. (These are 2009 figures; many analysts expect 2010 numbers to be even worse.)
How poor is someone in poverty? A single adult was not classified as poor unless he earned less than $11,161 dollars during all of 2009. A family of four had to earn less than $21,954 that year to be counted among those in poverty. Yet those grim economic conditions are reality for about one in eight people in Washington. And in fact the poverty rate is even higher among families, and it’s higher yet among children.
By contrast, only about 1 in 100 Washington residents make enough money to be eligible to pay any income tax at all under I-1098. But it’s these people who have dominated the public debate.
The state’s median household income was $56,548 as of 2009. In other words, half of all households in Washington earned less and half earned more. In 2009, the median declined by 1.7 percent from 2008 levels, and many analysts believe that 2010 figures will reveal a further decline.
A fully-employed full-time adult worker in Washington earned less than $46,000 in 2009, on average—though the average was actually a bit more than $47,000 in metropolitan areas.
Contrast these numbers to the income levels that would be tapped under 1098: no one would pay a dime in state income taxes if she made less than $400,000 per year as part of a joint-filing household (or less than $200,000 as a single person). And while it’s becoming clear in the 1098 debate that there’s economic anxiety even at those stratospheric income levels, it’s simply not comparable to the strain faced every day by ordinary people. It’s not even close.
So those are the facts. And now, a little editorializing: for the overwhelmingly vast majority of Washington’s residents, 1098 is an economic boon. It would provide modest reductions in property and business taxes, and it would dedicate funding to health care and education. That’s bread and butter stuff for working families.
Kirk Richards
Poor people don’t own property or businesses. The only tax they pay is “sin tax” on tobacco and alcohol, and they pay a lot of it. 1098 would do nothing to help them and it would drive wealth and business out of the state.
Eric de Place
Kirk,It’s simply not true that it won’t help poor people. Renters do, in fact, pay for property taxes(though it’s indirect via their landlord’s rental charge). Poor people also rely on public education and on subsidized health care, both of which get strengthened with 1098’s revenue.There’s been enough discussion—on this blog and elsewhere—about the welfare of the rich. I’m sure we’ll return to that soon enough since that seems to be the only salient issue for opponents of the measure.
Monique
The tax breaks don’t help the poor (unless you believe in trickle down), but the health and education definitely help the poor. The middle class are aided by the tax breaks. And the wealthy are paying to have an educated, healthy workforce and cutstomer base.
Eric de Place
Monique,The property tax reductions really do help the poor. For an explanation of why—and how it works—please see Clark’s post on the subject: http://www.sightline.org/daily_score/archive/2010/09/14/spokesman-review-flunks-economics.
Sarajane Siegfriedt
Eric, of course the income tax would directly help the poor. It will generate $2 billion a year 70% of it for education and 30% of health care, in trust funds with public oversight. Did you see today that the state has been forced to cut thousands of poor children off of Apple Health? We also have 40,000 people on the waiting list for Basic Health, for people who can’t afford insurance. Next year’s budget puts the remaining 60,000 at risk of being cut. Our public hospitals and ERs will be overwhelmed as a result, and kids will come to school sicker, hungrier and less ready t learn. There will be ferwer day care resources, classroom aides and larger class sizes. All of these affect poor people directly.
Michael McNutt
Eric, it seems to me many people’s objection is to the vaguaries surrounding only needing a simple majority of the legislature to lower the $200K/$400K threshhold . Any idea if the initiative that would require an approval by the legislature of 66 2/3% in order to change/approve any tax increases would apply to the provisions of 1098?
Eric de Place
Michael,Here’s the deal: two years after a ballot initiative becomes law, it can be ammended or repealed by a simple majority of the state legislature. It’s a power that’s vested in the legislature by the state constitution. As for how 1053 would interact with 1098 (which is what I think you’re refering to), it would prevent the legislature from increasing tax revenue by altering the income tax thresholds, unless by 2/3 vote. That said, as I just noted, two years after a ballot initiative becomes law, it can be ammended or repealed by a simple majority of the state legislature. So, in theory, the legislature could ammend both 1053 and 1098. Yet I fundamentally don’t understand this line of objection. The legislature is a lawmaking body. That’s what it does. And as long as it serves the democratic function of the legislative branch of government, it will retain the ability to make, repeal, or change laws. That’s hardly a scary prospect.Indeed, what’s really scary is that somehow it could be forced to becomne an undemocratic and unrepresentative institution where a small minority of legislators (33 percent plus 1 in either house) can impeded majority will. That’s what 1053 seeks to accomplish.