Clear Fog Blog

Political musings from Warren E. Peterson

State Income Tax, Maybe, If…

Posted by Warren Peterson on April 24, 2010

Defeated in court once (1933) and five times resoundingly at the polls, Initiative 1077 proposes another try for a state income tax. Unlike some previous proposals, this one is not revenue neutral but would raise $1 billion a year for schools and health care.

All campaigns to add an income tax claim that a three-leg stool of property, sales and income taxes is fairer for the citizen and more stable for the state. This is a strong argument if voters could be assured the Legislature would be fiscally responsible and not raise one leg one year and another the next year and so on. In the mid 1970s, a bi-partisan group of state legislators offered a referendum to add an income tax with the following restrictions: 1) property, sales and income tax rates would be in the State Constitution 2) any rate changes would have to affect all three taxes proportionally 3) any rate changes would require a vote of the people. To no ones surprise, the referendum never saw the light of day. The fear then and the fear now are once the income tax was authorized, constitutional restrictions or not, some way, some how, rates would go up. History cannot be denied.

California, Illinois, New Jersey, New York and most other states have all three tax legs but are all in some level of budget crisis. An income tax is not the budget panacea supporters’ claim. The problem is government desire for spending the people’s money is insatiable. This cuts across party lines. Republicans push to spend lavishly on security and public safety and Democrats promote no end of social programs. Even the voters get in the act. “Three Strikes You’re Out” and lower class size initiatives are not free.

We simply do not have agreement on the roles and mission of government. Until we do, tax and spend limits imposed by Tim Eyman’s initiatives and tsunami elections like 1980 and 1994 will only slow the decay.

cross posted on Sound Politics

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