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Deciding the fate of taxes

By Kay Bell · Bankrate.com
Tuesday, November 2, 2010
Posted: 2 pm ET

As millions of us head to the polls today, we'll decide not only which individuals will represent us in Washington, D.C., but also, in many cases what our state taxes will look like.

Ballot initiatives are a popular way to change local laws. Regular readers know that I'm not a big fan of this process, but, as my grandmother always said, it is what it is.

One of the key tax ballot questions today is in Washington state, where Evergreen State voters will decide if they want to enact their first-ever state income tax.

As crazy as that might sound to anti-tax folks, this measure has a decent chance of passing. Why? Because it won't affect every Washington state taxpayer.

Ballot initiative 1098 essentially would create a millionaires' tax.  If approved, Washington State would assess a new 5 percent tax on single taxpayers with income of more than $200,000 or $400,000 for a couple filing jointly. 

It doesn't end there. Evergreen State residents who make more than $500,000 as a single filer or $1 million as a jointly filing couple would face a state income tax rate of 9 percent.

Pretty sneaky of the ballot question creators to frame the question so that most voters can choose to inflict the tax pain on someone else.

Of course, this being America, what happens at the election booth won't stop there. If initiative 1098 wins, expect to see the new tax challenged in court.

But the fact that an income tax question even made it on the Washington state ballot is significant. It's a definite indicator that times are tough for that state.

Even more telling, it's the complete opposite of the positions that Colorado voters are being asked to take today. Centennial State voters are being asked to lower various Colorado tax rates, which means in most cases residents will face service cuts.

Regardless of what happens with the tax questions in Colorado and Washington state, citizens and lawmakers there, as well as in many other similarly cash-strapped states, will face some hard postelection decisions.

Are you willing to accept new taxes to help your state pay its bills? Would you prefer to pay sales tax increase or an income tax, and yes, for this hypothetical question, you have to choose one!

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1 Comment
BusinessTaxPro
November 03, 2010 at 4:19 pm

So what will we do now? The Republicans will now rule Congress and will try everything possible to stop the President's plans to help the country. I think the only reason people went out to vote for these Republicans is to Stop OBAMA. Why are people so concerned about stopping the healthcare bill? Why aren't they as concerned about stopping Google for avoiding $3.1billion in U.S. taxes!www.small-business-tax-info.com