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Posts tagged as “income tax”

First take/tax match

One of the routine bills at the Idaho Legislature every year - every year for decades at least - is the tax match bill.

Every year, the Internal Revenue Service changes the rules, in ways large or small, for federal income taxes. And each year, reliably, Idaho follows suit, for the same reason other states imposing income taxes do: If they did not, residents and organizations would have to cope with far more complicated bookkeeping, trying to deal with two different tax standards. Are taxes a hassle for you? Failing to keep state rules in step with the federal would double the hassle factor.

Sometimes those changes do result in revenue changes for the state, either up or down. This year, a newly-allowed federal deduction on equipment buys by small businesses apparently could cost the state $22 million next year. It's not a huge ding in the context of the state budget, but it was enough to get mentioned when the IRS compliance bill came before the House tax committee.

Three committee members voted against the bill because of the change allowing joint filing by same-sex married couples.

Actually, in the current environment there's a little surprise that this normally routine bill doesn't become a cause celebre, with protests and nullification and all. After all, this is an issue with "federal" and "tax" written all over it.

Maybe though some legislators reflected on just how difficult filing their own taxes could become if the state doesn't fall in line. - rs (image/efile)

Out of fuel, for now

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Lisa Brown

It was the probability that income taxes in Washington would get only so far before the plug was pulled, as it was today by the Senate Democrats. The income tax - even this version applying only to those with annual income of a quarter-million dollars or more - is just a tough sell in Washington, and doesn't have "the legislative support to move forward at this point."

The immediate news article notes that the proposal is "politically risky," which makes the sponsorship interesting. The key figure behind it, and publicly, is Senate Majority Leader Lisa Brown, D-Spokane, and at this point maybe the single most likely entrant into the 2012 gubernatorial race.

That suggests the issue won't go away, and Brown's comment on the subject from a couple of weeks ago suggests the form it might take.

Opponents to a modest income tax on the most affluent in our state have been vocal and vociferous. Because they can’t argue about what the proposal is, they focus on the specter of what it might become. In the past, this has been a prescription for the status quo, preserving a tax system that is more unstable and less fair than the people of Washington deserve.

Fortunately, there are also those rising to voice support. I have heard in recent days from religious leaders and representatives of higher education faculty as well as from individual citizens from all over the state, who are pleased that this conversation is taking place.

In the end, I predict that any proposal, whether this session or in the future, will go to voters. I hope and trust that with an open dialogue about the modest costs to those who can afford them and the tremendous benefits to everyone else, that common sense and the common good will prevail.

Will the income tax actually be a major piece of the debate in 2012?

How Washington is income tax-less

A good summation of Washington's troubled relationship with the income tax in today's Peter Callaghan column in the Tacoma News Tribune.

And why Washington still operates, essentially, on a tax system developed in the middle of the Great Depression.

The idea of a limited income tax - on only those with $500,000-a-year and up income - still seems to be gaining some traction this year. But the obstacles it faces turn up neatly in this anecdote from Callaghan:

"Take the case of Glenn Pascall, a very smart guy who was then-Gov. John Spellman’s Department of Revenue director. It was the first week of the 1982 session and the state was considering how to get out of yet-another deep budget hole. Pascall told a legislative committee that everything was on the table and that the income tax is no longer 'an idea which is doomed to fail. It is one unpopular option in a range of unpopular options.' The next day, Spellman convened a press conference:'I have not considered an income tax. We are not considering an income tax. And Mr. Pascall has resigned.'”

A non-starter, or a game-changer

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Jeanne Kohl-Welles

Everybody has their legislative non-starters - among those issues a lot of people talk about with some seriousness. In Oregon, the sale tax. In Washington, the income tax.

Or . . . suppose you structured the tax so it would apply only to a small minority, but still raise a bunch of money? Is there a calculus under which (especially in hard times) the unthinkable becomes thinkable?

So now, introduced as of today, we have in Washington a proposal for an income tax, usually considered a poisonous third-rail subject. Democrats are proposing Senate Bill 6147, and Republicans are going to pounce (actually, take the future tense out of that).

Here's the twist: It would only apply about 1% of Washingtonians (those earning a half-million dollars a year or more for individuals, with the bar higher in some other cases) and would be set at a relatively low level - 1%. Easy to grasp.

It has backing from majority Democrats; the key sponsor is Senator Jeanne Kohl-Welles, D-Seattle, along with six others. Majority leadership doesn't seem to be dousing the idea. It carries a trap door: Legislators wouldn't give themselves a final sayt; the idea would go to the voters for an up or down.

The specific statement of intent in the bill says, "It is the intent of the legislature in adopting this title to provide the necessary revenues for the support of vital state services on a more stable and equitable basis." But that's not its real political engine. What could make this possible is the specific populist environment of the moment: Go ahead and tax the rich. As matters sit, in this case, a number of Washingtonians usually unwilling to budge on the income tax might be tempted. Republicans will argue this is an entre to something larger, and they could be right. But for the moment, the ballot issue is what it is. (If it ultimately is.)

There's something much broader going on here than a typical question of tax policy. This will bear close watching.