The state that produced the US’ richest man has never taken a cut of its residents’ income.
Microsoft co-founder Bill Gates and his father would like to change that.
They are among the wealthy residents of this west coast state who have joined labor unions and other traditional Democratic allies to support a tax-the-rich ballot measure that is dividing the state’s business leaders. Executives at Microsoft, Amazon and other technology companies have come out against it.
The initiative will test whether voters are willing to buck economic jitters and drain money from their rich neighbors at a time when national Democrats and Republicans have been waging an intense election-year battle over the merits of taxing the wealthy.
Washington’s measure, known as Initiative 1098, would institute a new state tax on the top 1 percent of incomes to pay for education and health programs, while trimming state property and business taxes. The campaign follows January’s overwhelming decision by Oregon voters to increase taxes for corporations and wealthier households.
While his famous son’s public support has so far been quiet, Bill Gates Sr, a prominent Seattle lawyer, helped to draft Washington’s income tax initiative and is the public face of the campaign.
In a recent TV ad, the elder Gates is knocked into a dunk tank by softball-tossing children — a playful approach to the idea that the measure will “soak the rich.”
Gates counters by highlighting the billions of US dollars the income tax would generate for education and healthcare programs.
“It’s really about doing something for the next generation,” Gates says before taking the plunge.
The initiative sets out two tax brackets. The first rate is 5 percent on the portion of adjusted gross income higher than US$400,000 for couples or US$200,000 for individuals.
For joint incomes above US$1 million, the tax would be US$30,000 plus 9 percent on earnings over the threshold. Single earners above US$500,000 would pay US$15,000 plus 9 percent of income above the threshold.
State officials say the tax initiative would raise more than US$2 billion annually from fewer than 40,000 households, or 1.2 percent of Washingtonians filing US federal returns. At present, Washington is one of seven states in the US without a personal income tax.
The US$4.3 million “yes” campaign is bankrolled largely by labor unions, particularly those representing government employees — more than US$1.7 million has come from various arms of the Service Employees International Union. Individual donors include Gates Sr, who has given US$500,000, and venture capitalist Nick Hanauer, who has donated US$250,000.
However, plenty of big-name business leaders are unhappy with the idea.
Amazon founder Jeff Bezos and Microsoft chief executive officer Steve Ballmer have each donated US$100,000 to the US$4 million opposition campaign, which also has drawn contributions from Russell Investments, Paccar, software billionaire Charles Simonyi and members of the Nordstrom family.
Opponents stress that state lawmakers could lower the income thresholds with a simple majority vote two years after the initiative is enacted and point out that state officials routinely raid “dedicated” spending accounts in lean years.
They also add that, in a time of terribly slow job growth, taking more money from entrepreneurs and businesspeople could seriously crimp the state’s economic rebound.
The privacy of tax returns makes it impossible to say how much the state’s marquee business names might pay under the initiative, but the tax would apply to personal earnings from partnerships, shares in small corporations, capital gains and other non-salary sources of income.
Right now, Washington’s lack of income tax can be a major recruitment point for businesses and talent looking to relocate, said Joe Barer, president of management consulting firm Lake Partners.
“I don’t think people come here just for the weather,” said Barer, who has donated to the opposition campaign. “I’ve personally recruited people and part of the pitch is, ‘Yes it’s a great place to live — and we have no income tax.’”
Hanauer, one of the earliest Amazon investors and founder of the online ad company aQuantive, sees the economics differently. In his judgment, the kind of wealth at stake in the initiative could do far more good for the economy by bankrolling public school teachers and other vital services.
“If you look at the money that somebody like me — or Jeff Bezos or Steve Ballmer — where our cash flow goes, it’s crazy to assert that the highest and best use is in our bank accounts or in the hedge funds that we’ve parked it in or as jet fuel in our private planes,” Hanauer said. “It’s just nuts.”
Liberals have been hoping the measure’s populist appeal would help drive friendly turnout in a political year that could be brutal for Democrats. However, voters do not appear wildly enthusiastic.
A recent survey by independent Seattle pollster Stuart Elway pegged support for the income tax initiative essentially tied with the opposition, 44 percent to 42 percent. The poll of 500 likely voters had a margin of sampling error of about 4.5 percent.
High-profile politicians also have been reluctant to participate in the debate, probably because the public appears so uncertain. For instance, the initiative has not been an issue in the state’s top election contest, a heated race between Democratic US Senator Patty Murray and Republican challenger Dino Rossi.
Income tax measures have been attempted over the years in Washington with little success.
Voters have defeated attempts to amend the state constitution for a state income tax, most recently in 1973, and the topic has often been considered a political loser since then.
‘IN A DIFFERENT PLACE’: The envoy first visited Shanghai, where he attended a Chinese basketball playoff match, and is to meet top officials in Beijing tomorrow US Secretary of State Antony Blinken yesterday arrived in China on his second visit in a year as the US ramps up pressure on its rival over its support for Russia while also seeking to manage tensions with Beijing. The US diplomat tomorrow is to meet China’s top brass in Beijing, where he is also expected to plead for restraint as Taiwan inaugurates president-elect William Lai (賴清德), and to raise US concerns on Chinese trade practices. However, Blinken is also seeking to stabilize ties, with tensions between the world’s two largest economies easing since his previous visit in June last year. At the
UNSETTLING IMAGES: The scene took place in front of TV crews covering the Trump trial, with a CNN anchor calling it an ‘emotional and unbelievably disturbing moment’ A man who doused himself in an accelerant and set himself on fire outside the courthouse where former US president Donald Trump is on trial has died, police said yesterday. The New York City Police Department (NYPD) said the man was declared dead by staff at an area hospital. The man was in Collect Pond Park at about 1:30pm on Friday when he took out pamphlets espousing conspiracy theories, tossed them around, then doused himself in an accelerant and set himself on fire, officials and witnesses said. A large number of police officers were nearby when it happened. Some officers and bystanders rushed
Beijing is continuing to commit genocide and crimes against humanity against Uyghurs and other Muslim minorities in its western Xinjiang province, U.S. Secretary of State Antony Blinken said in a report published on Monday, ahead of his planned visit to China this week. The State Department’s annual human rights report, which documents abuses recorded all over the world during the previous calendar year, repeated language from previous years on the treatment of Muslims in Xinjiang, but the publication raises the issue ahead of delicate talks, including on the war in Ukraine and global trade, between the top U.S. diplomat and Chinese
RIVER TRAGEDY: Local fishers and residents helped rescue people after the vessel capsized, while motorbike taxis evacuated some of the injured At least 58 people going to a funeral died after their overloaded river boat capsized in the Central African Republic’s (CAR) capital, Bangui, the head of civil protection said on Saturday. “We were able to extract 58 lifeless bodies,” Thomas Djimasse told Radio Guira. “We don’t know the total number of people who are underwater. According to witnesses and videos on social media, the wooden boat was carrying more than 300 people — some standing and others perched on wooden structures — when it sank on the Mpoko River on Friday. The vessel was heading to the funeral of a village chief in