New talk about a state income tax

Taxes are best spread like peanut butter, wide and thin, across the economy.

The wide part argues for a state income tax, which theoretically would allow for reductions in Washington’s sales, property and business taxes. It’s obviously not a good idea to penalize shopping, job creation or home-ownership by making them excessively expensive.

It’s the thin part that has always gotten income tax proposals in trouble in this state. Historically, Washingtonians simply don’t trust lawmakers to ratchet down other taxes to the extent that they ratchet up taxes on income. Initiative 1077, which would package an income tax as a squeeze-the-rich plan, is already running afoul of this ingrained suspicion.

Bill Gates Sr. – patriarch of a notably comfortable family – is championing the initiative campaign on a sort of Nixon-to-China basis. He’s a poster child of the upper-income brackets I-1077 would target: The measure would impose a 5 percent tax on individuals earning between $200,000 and $500,000 a year, and 9 percent on income above that.

For a much broader class of Washingtonians, there’s a sweetener: a 20 percent rollback in the state’s share of the property tax.

But the initiative also comes festooned with a pre-painted bull’s eye, which opponents are already zeroing in on. No initiative can amend the Washington Constitution; I-1077 can only create statute. A statute can be changed down the road at the whim of the Legislature.

In some years – this one’s a good example – the Legislature comes under intense fiscal and political pressure to raise taxes. Just this month, lawmakers barely staved off a ferocious effort to impose a statewide increase in the sales tax, opting instead for a bundle of niche taxes to help fill Grand Canyon-sized hole in the state budget.

No legal firewall would prevent an income tax that begins at $200,000 from creeping down eventually to $180,000, then maybe $150,000, as the Legislature faced future fiscal crises. There’s also the fact that many Americans of middling income don’t envy wealth so much as they aspire to it.

A constitutional amendment would be a far better guarantee of a wide-and-thin tax structure. Conceivably, such an amendment could freeze the scope of an income tax, indexing it to keep middle-class families exempted.

There’s also that question of reducing other taxes commensurately. Given Washington’s libertarian-leaning, tax-leery political culture, a measure that doesn’t insist on revenue neutrality comes to the plate with two strikes against it.

Still, Gates’ initiative is welcome, because it promises to get Washingtonians talking again about the state’s tax structure, which is far from ideal. Wide could be better than what we got, if only the thin came with it.