On tax initiatives, keep your money and keep it away from lawmakers

Washington state voters in November will decide three initiatives regarding taxes. What they affect and whom they affect vary with the initiative, but all point to whether voters want more of their income to stay in their pockets or go to the state. In all three cases, especially as the effects of the recession of the past two years refuse to go away, we opt for the money staying in the taxpayers’ pockets.

Initiative 1053: Vote yes
You knew this was coming to the ballot as soon as the Democratic legislative majority pushed through an assortment of tax increases during the past session. This Tim Eyman-sponsored measure would require tax increases to win two-thirds legislative approval or majority voter approval. It also would require majority legislative approval for any new or increased fees.

This provision has been in effect off and on since the 1993 passage of Initiative 601, usually on after voter approval, then off after legislators employ their power to modify or suspend an initiative after two years.

This time, legislative Democrats really deserve this initiative. They have repeatedly ignored calls for reforming a broken fiscal system and instead have imposed a patchwork of budget cutbacks and tax increases.
Apparently, the voters need to push lawmakers along into finding long-term solutions. Consider this the push.

In the past, we have been at best lukewarm about Eyman initiatives, with one objection being the overreaching nature of his measures. That was our justification three years ago in opposing Initiative 960, which also included the two-thirds provision for taxes and majority approval for fees.

But it also required the state Office of Financial Management to determine the 10-year cost to taxpayers of any proposed tax or fee increase and publicize that cost, and required a nonbinding public vote if the Legislature didn’t submit tax increases to the voters. Neither of those are in this year’s initiative.

We remain leery of the fee portion, which could bog down lawmakers in minutiae. But the Legislature needs to hear and heed the message that passage of this would send. Send the message and vote yes.

Initiative 1098: Vote no
This is the high-profile income tax being pushed by Bill Gates Sr.; affected would be individuals making more than $200,000 and joint filers making more than $400,000. They would pay anywhere from 5 percent of annual income to 9 percent for the highest earners. That’s the stick.

The carrot would be a reduction in some business and occupation taxes, a cut in the state portion of property tax, and sending increased revenues to education and health programs.

We’ve all heard that past performance doesn’t guarantee future results, and that may be true. But the Democrat-controlled Legislature has done little to disprove the assertion that they could push an income tax floor down to engulf lower-income workers. At the very least, the tax would not be indexed to inflation; assuming an economic recovery arrives and worker incomes rise, more taxpayers would be affected.

Also, there is no guarantee that lawmakers won’t tap the "designated" education and health funds for general purposes. There is also no guarantee that it would stabilize this state’s financial wobbles; look at Oregon and California, both of which have an income tax and both of which have budget issues.

The state also would lose a major advantage in recruiting businesses to Washington.

One note of a constitutional nature: In 1932, the state’s voters approved a graduated income tax, but the state Supreme Court ruled it unconstitutional, saying income is property and property must be taxed uniformly. To get around the constitutional amendment requirement of two-thirds legislative approval to put it on the ballot, this year’s proposal refers to the levy as an excise tax, not income tax. It most certainly would be subject to litigation.

Excise or income, it’s a tax that’s not the way to go. Vote no.

Initiative 1107: Vote yes
Among the tax increases approved in the past session were an excise tax on soda, a sales tax on bottled water and candy, and an increased B&O tax on some food processors. This initiative would repeal them, and rightfully so.

Advocates say there is a three-year "sunset" provision in the taxes. But as we editorialized in July, lawmakers may be more tempted than a kid in a candy store to expand them to other edible items.

These taxes have raised issues that are stickier than spilled soda. First, there is a 2-cent-per-12-ounce tax on carbonated beverages; apparently, soda is now fair game for a "sin" tax. And take a candy provision that includes the following: "‘Candy’ means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. ‘Candy’ does not include any preparation containing flour and does not require refrigeration."

Amid immense retailer confusion, the state Department of Revenue later issued a list of 11,300 products that are taxable and 1,300 candies that are not. On the list: "Marshmallow pieces are taxable, but marshmallow cream is exempt."
And store owners and employees should be exempt from memorizing a list of 11,300 taxable candies. Vote yes and repeal these silly taxes.

Overall view
Last Sunday, we editorialized that the state budget model is broken and needs a serious overhaul. Such an overhaul will require creative yet critical thinking on the part of legislators. Voters can get that process going by approving Initiative 1053, rejecting Initiative 1098 and approving Initiative 1107.

• Members of the Yakima Herald-Republic editorial board are James E. Stickel, Bob Crider, Frank Purdy and Karen Troianello.