I’ve been wondering for a while about the balance of I-1098’s income tax provisions with respect to geography. So I crunched the numbers, and it turns out that it will likely have a vastly disproportionate impact on King County. Take a look:
King County only holds about 28 percent of the state’s total households. Yet it is home to a whopping 57 percent of the state’s households bringing home more than $200,000 per year. By contrast, every other county in the state is under-represented in high-earning households. And the biggest under-representations seem to be in rural counties, particularly in eastern Washington. In fact, all the counties east of the Cascade crest combined account for 21 percent of the states’ households, but only 11 percent of Washington’s high-earning households. (Note that the figures in the charts are rounded, which is why they don’t add up to exactly 100 percent.)
As a reminder, Initiative 1098 would levy an income tax on single-filer households earning more than $200,000 per year and on joint-filer households earning more than $400,000 per year. My analysis here, which is based on recent data from the Census’ American Community Survey, isn’t a perfect match for understanding the initiative for several reasons. My figures lump all households together whether they are composed of single or joint tax filers, and they rely on a slightly different definition of income than 1098 employs. Still, as a rough proxy, I think the depiction is basically solid.
Aja
So… What you’re saying is that people in the rural areas have the most to gain from I-1098 and they will pay the least into it. This amuses me because I would assume that these people are also the most likely to vote against it because they see it as a tax instead of what it really is, a progressive reform. They say that people vote with their wallets but that’s only true if they’re smart enough to do the math 😉
Sera
AJA, You’re so right. Call it a tax and the rural “conservatives” won’t vote for it, whether or not they will benefit. They don’t think about these things at all. It’s sad that a few wealthy conservatives can manipulate so many people based on, well, falsifications.
Dan
To be fair, voting against self-interest—as we assume the red-tinted, more-anti-tax rural counties are likely to do—could be described as putting their values first. Since they oppose more taxation, it would be hypocritical indeed of them to support this initiative simply because others would bear the brunt of it. So I don’t think we should slam them for opposing it. If they mistakenly complain about the impact it will have on their communities, though, we should feel free to use this helpful info to correct them.
Anna
YES! tell people in Eastern Washington! They should vote for 1098 so they can soak those wealthy liberal elites in King County.
Aja
Hi Dan, I realize you are probably just playing devil’s advocate, but I-1098 can not be described as just a tax break or a tax hike, it is a tax break for one group and a tax hike for another. The repubs should be able to vote for I-1098 while remaining true to their value of low taxesand hatred of wall street, big corporations etc. Unfortunately, some repubs cannot be satisfied by low taxes, The real reason they object to I-1098 because the money goes to services for poor people whom they view as undeserving. Ironic in my opinion because many will end up utilizing the services themselves while still publicly denouncing them. “they” is not all repubs, only a general trend that I have noticed.
Terry Nelson
This is truly stunning. I am a conservative, live in eastern Washington, relatively poor, and offended.I am not stupid, as AJA states. In fact, AJA’s statements illustrate clearly why I have an emotional negative reaction to anything coming from the ‘liberals’. To suggest that I’m incapable of ‘doing the math’, and therefore voting ‘wrong’, demonstrates an elitist attitude more clearly than I could ever explain.This ‘factual analysis’ of where the wealthy reside is misleading, because it does not also examine where the current property tax payers live. It does not analyze the net effect of the change. The truth is I-1098 is a middle class tax cut, and doesn’t really benefit the poor at all. If you’d like to prove this to yourself, I have a real life example for you. My son makes $28,000 per year, and lives in a $36,000 house. The calculator tells me he will save $15.50 a year.I am intelligent enough to realize our current tax system is unfair. Changing from taxing wealth (property) to income does not change this, since this dumb east sider can figure out that people that make $200,000 a year probably live in an expensive home. Can AJA figure this out?Until we eliminate the taxes on gasoline and alcohol, we can not achieve any kind of tax parity across income groups. Well, that’s not completely true, we could dramatically raise the tax on wealth (property tax).I’m voting no, just because AJA says that my simple mind is incapable of acting in my own best interest.Thank you Dan, I appreciate your attempt to inject some civility and rationality. I really don’t see how we can collectively solve problems with people like AJA included in the discussion.
Mike
I wanted to respond to Terry’s comment on gasoline and alcohol taxes…just that I agree these taxes disproportionately impact folks living in poverty. I think the property tax issue is more complicated. There are a lot of struggling people or people that are not wealthy that own homes too. The big problem is that we need to generate revenue somehow and we can’t just keep adding sales taxes on. This is why an income tax on those making over $250k makes sense to me.
AJA
I agree that I-1098 will not be a huge savings for everyone, 15.50 is not a lot but it is still a decrease, not an increase. I’m not a wealthy, King county resident myself, I live in rural Thurston County outside of a town with only 3 to 5,000 residents. You are right, the benefits for the poor will not be instantaneous monetary transfers, they come in the form of education and health benefits that help everyone. I don’t know how you can say that my support for a measure that taxes only the wealthiest in our state and gives the money to education and healthcare is elitist and uncaring of the poor. I make less money than Terry Nelson’s son and I-1098 would surely benefit me. My mom paid 200,000 for our house but it is currently valued at over 500,000 dollars. She makes 45,000 a year and currently pays 5,000 a year in property taxes. She is essentially being punished for getting a good deal on a house that we could never have afforded to buy at the current value and because of the recession there is no way we would be able to sell the house for that amount. I-1098 would not create an income tax on everyone, only those who make more than 200,000 a year. I agree with Terry that property takes should be cut… That is what I-1098 does. Terry proves my point by saying that he thinks property taxes should be cut and yet he says he will not vote for the initiative that will cut them because he disagrees with me personally!If it was up to me I would eliminate regressive taxes (sales, gasoline, and property) and simplify it to just an income tax. Terry is right, Rich people do live in expensive homes, but he is wrong that switching to an income tax makes no impact because not everyone who lives in a nice home is rich. I-1098 will help people that want to own their own homes (and who doesn’t?) but are not wealthy. The housing bubble improperly inflated house values, why should we be paying taxes on inflated prices that we can never hope to recover?
Brian A Evans
The reason to vote no on I-1098 is because it allows an income tax in our state. If this happens, it will only be amatter of time before all Washingtonians are subject to income tax. the current promise of taxing only a certain income bracket will be broken and eventually all of us will pay. Why doesn’t anybody in this state ever talk about reducing the size of the government as a solution to their problem of income?
Terry Nelson
Wow.AJA, please quote from my comment where I stated that switching to an income tax will have no impact. Please quote from my comment where I said that property taxes should be cut.Also, I did not say that your support for this measure is elitist. You said “So… What you’re saying is that people in the rural areas have the most to gain from I-1098 and they will pay the least into it. This amuses me because I would assume that these people are also the most likely to vote against it because they see it as a tax instead of what it really is, a progressive reform. They say that people vote with their wallets but that’s only true if they’re smart enough to do the math ;)”and”Unfortunately, some repubs cannot be satisfied by low taxes, The real reason they object to I-1098 because the money goes to services for poor people whom they view as undeserving. Ironic in my opinion because many will end up utilizing the services themselves while still publicly denouncing them. “they” is not all repubs, only a general trend that I have noticed.”Your attitude towards us lowbrow eastern Washington conservatives IS elitist.Your comments about the assessed value of your mother’s home are irrelevant. Take this up with your Assessor, or your County Commissioners. If the home is assessed improperly, changing the tax rate does not fix the problem. Your comments about the housing bubble are equally irrelevant. These comments also effectively defeat the claim that I-1098 provides education a ‘stable’ funding source, since clearly assessed value is more stable than income.And your attitude towards the poor is also elitist. Apparently in your mind it’s OK to give a tax break to middle class people and businesses, but the poor only get to see the money in the form of State-delivered ‘services’.The purported benefits to education will benefit everyone, but education is already available to everyone. If you are suggesting that these purported benefits will benefit the poor disproportionately, you need to examine academic performance broken down by family income. Increased education funding will probably benefit white, middle class students most.I have watched the greedy pigs in Olympia devour tax money intended for education by claiming that the money from some other source contributes to education so they can cut the portion coming from the General Fund. Promise me that won’t happen again.And whether I disagree with you personally is irrelevant. What I said is I find you personally disagreeable, because you have stated that the conservatives in rural Washington are incapable of ‘doing the math’ and ironically using the services while denouncing them. Are you suggesting that the poor keep their kids home from school if they vote ‘no’, and somehow it’s ‘funny’ if they do otherwise?Your statement that I-1098 will tax the wealthiest in our State has no basis in fact. You are equating wealth and income. There are many very wealthy people in Washington who have little income, certainly less than $400,000 a year.My point is, the argument in favor of this additional tax is that the current system taxes the poor disproportionately. My rebuttal is I-1098 does not fix this.
Clark Williams-Derry
Just to chime in with some numbers. Property taxes are regressive. According to ITEP, families in Washington’s poorest quintile pay about 4.2 percent of their income income in property taxes, while folks in the top 1% pay just 1.1 percent of their income in property taxes.So cutting property taxes DOES turn out to be a way to reduce the tax burden on the poor.I only mention this because some comments above seem to imply that property taxes are only relevant to people who own property—homeowners in particular. Not so. Renters pay property taxes on behalf of landlords, in the form of higher rents. Consumers pay property taxes for the owners of commercial properties, in the form of higher prices for goods and services. And so forth. In all, Washington’s poor pay more than their share of property tax, even though many of them own no property.I agree that I-1098 doesn’t fully fix the regressivity problems with Washington’s existing tax system. Not by a longshot. But it does make them better—and I’m all for anything that makes our tax system fairer and more equitable.
AJA
I think we agree way more than we disagree. I-1098 does not solve tax fairness but it is a step in the right direction and it helps, not hurts poor people. The fact that I support I-1098 does not mean that I am against all the other things you have mentioned. I am against any regressive taxation and I would support repeals of gas taxes, sales taxes, and property taxes. I have no reason to disparage poor people. I am one. My earlier remarks may have been inappropriate just as your assertion that all liberals are elitist would be a gross misrepresentation. There is no need for antagonism, we seem to be saying the same thing yet somehow speaking past each other. You said that “I am intelligent enough to realize our current tax system is unfair. Changing from taxing wealth (property) to income does not change this” From that I deduced that you thought switching from property to income tax would have no impact. Also, property taxes are not a more stable form of taxation than income taxes. Property is re-assesed every year. The value of my mother’s home went from 300,000 to 500,000 in 7 years. My Grandparent’s bought their home for 40,000 dollars when they moved 30 years later it was worth over 1 million. Property values have historically gone up way faster than wages. Therefore my comment about the housing bubble IS relevant. Wealthy people may have small wages, but they usually do have a lot of taxable income, like stock returns, that is covered by I-1098.
Francys
I was thinking, all the Microsoft millionaires in King County were made possible because of, among other things, the 520 bridge and Washington’s public education system. Both of which are falling apart because of lack of public investment.
Jon Morgan
Property taxes aren’t nearly as regressive as sales taxes. Smoking is a choice, so paying cigarette taxes is optional, like alcohol taxes. And there are many strong policy reasons to have high cigarette taxes. Similarly, those of us who don’t drive subsidize all non-federal roads for those who do, and Washington’s gas tax still isn’t high enough to fund road construction and maintenance exclusively with fees paid by drivers. Those are not the unfair taxes.The sales tax, which charges the top fifth of Washingtonians 4% of their income per year, and the bottom fifth of Washingtonians (me) 17% a year, is the unfair one. People don’t notice it as much because they pay it daily or more in small pieces. But if you added it up over a year, it’s worse than property or other taxes. And if you want to help businesses sell things and effectively increase consumer demand—especially for businesses near the OR border—you lower or eliminate sales tax. I buy more when I go to Portland than I do in Seattle because I save 10% if the price is the same. Moreover, for the 1/3 of Washingtonians who rent their homes, reducing property taxes on landlords will do nothing in the short run. It will take years for the tax cut to trickle down to renters rather than being absorbed by landlords.(Take 2)
Monique
Someone expressed concern that I-1098 would lead to an income tax for everyone in the state. I-1098 and its accompanying income tax is something that we the people are voting on, not something that is being done to us. The only reason to fear the income tax being spread to include everyone (the poorer half) in the state is the fear that we will vote for it ourselves. “They” won’t do it to us. I live in Eastern Washington. (I’ve an engineering degree so I’m pretty good at math too.) And the schools here are awful. I know several mothers of young children and witness frequently the difficulties they have finding adequate education, balancing the benefits of home schooling with its drawbacks, finding good schools, and suffering the accompany stresses of this. I hear stories of 4th graders making out in hallways. I witness the clothing young girls wear to school, listen daily to the attitudes many of the parents of local children have toward education in general and their feelings of its worthlessness. Better than 60% of the students who test into the local community college here cannot write or read at the 12th grade level. Over 60%! The classrooms are large, the teachers are unsupported, and the cycle doesn’t stop with one generation of poorly educated students. I hope very much that something can be done to help it. I don’t think it will be easy or simple, and I’m willing to listen to any reasonable proposition that guarantees schools some support.