For Washingtonians who don't want an income tax, Bill Gates Sr. has a few numbers for you:
The poorest 20 percent of non-elderly people in the state, those who make less than $20,000, pay 17.3 percent of their income in state and local taxes. The middle 20 percent pay 10.8 percent of their income.
And the top 1 percent pay just 2.6 percent of their income in taxes.
The numbers come from the Institute on Taxation and Economic Policy, which says Washington has the most regressive tax system in the country. Gates cited them Thursday in making a pitch for voters to approve an income tax on high earners.
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Gates, small-business owners, purple-clad state employee union members and other supporters dropped off petitions for Initiative 1098 at the secretary of state’s office today. They say there are more than 360,000 signatures, 50 percent more than the number of valid names required to get on the November ballot. If it passes, larger businesses and the rich will pay more and the money will go to education and health care.
Opponents note that much of the regressive nature of the tax code is due to high sales taxes, which would be unchanged by I-1098. But the institute’s brief shows it’s also because of the state’s business-and-occupation tax, which companies pass along to their customers, and property taxes. Both would drop if I-1098 is approved.
The campaign says by raising the B&O tax exemption from $420 to $4,800, 81 percent of businesses in the state would be exempt.
Opponents say the measure will send entrepreneurs heading for the exits. The lack of an income tax gives Washington an advantage over other states in attracting business, they say.