An Immodest Proposal: the Education Income Tax

One of my biggest complaints with Washington legislators, even those who have long recognized the need for substantial tax restructuring, is their general lack of creativity in approaching the issue, both on the political level of how one might pass an income tax, and on the practical level of what form an income tax might take.

That’s one of the reasons I so quickly latched on to the notion of a high-earners income tax. It’s an imperfect idea that displaces only a small segment of our highly regressive tax structure, but it’s a savvy proposal, politically and rhetorically well suited to our times: an unprecedented budget crisis induced by an economic downturn for which much of the blame can reasonably be laid at the feet of some of our nation’s wealthiest and most powerful corporations and individuals.

Rightly or wrongly, there isn’t much sympathy for the rich these days, a sentiment which the high-earner’s income tax proposal effectively exploits. I’m not being cynical here, simply politically adroit; Washington’s tax structure is bizarrely and cruelly regressive, and if our current crisis presents an opportunity to address this inequity even just a little, progressives would be stupid not to take advantage of it.

All that said, I would of course prefer a somewhat broader income tax that did more to address the inherent regressivity of our current system, while providing a more adequate and reliable revenue stream for the future (i.e., one which grows state revenues largely in pace with growth in the state economy). And in that spirit I’d like to take a moment to briefly introduce an immodest proposal of my own, something I call the Education Income Tax.

The proposal is simple. An income tax would be levied, dedicated solely to funding K-12 education (you know, our state’s “paramount duty”), and that income tax would be the only source of state funding for K-12 education.

The Education Income Tax essentially takes K-12 spending out of the general fund and into its own budget, with it’s own dedicated revenue stream. It also forces legislators and the governor to balance a popular public service against a generally unpopular tax. And by walling off both K-12 spending and the income tax that supports it from the rest of the budget, it eliminates the possibility of budgetary tricks through the usual fungibility of funds.

From a tax fairness perspective, the Education Income Tax would represent a huge step in the right direction by supplanting about 40 percent of the revenue that currently comprises the general fund. The state portion of the property tax, ostensibly a school levy, could be eliminated entirely, while a substantial cut in sales and other taxes would also be possible. I would expect the Education Income Tax to raise more money for K-12 education than we currently spend, yet the majority of households would still pay less in state taxes than they spend now, as the entire system is somewhat flattened.

But most importantly, by locking an income tax to education funding and vice versa, this proposal could help many voters overcome their inherent suspicion of any income tax proposal. And any income tax proposal will ultimately have to be approved by voters.

Yes, there are downsides to such a proposal. Dedicated taxes violate basic principles of sound taxation, and income tax revenue tends to be more volatile than other taxes, but the responsible use of rainy day funds can provide an effective buffer against the normal economic cycle, and besides, there’s nothing wrong with forcing elected officials to do their jobs… you know, making tough decisions. If the Legislature is faced with the choice of slashing K-12 education, or raising income tax rates during an economic downturn, so be it.

Ideally, proposals like this wouldn’t be necessary, and Washington would have followed the recommendations of the Gates Commission report years ago. But politically, we have to find some way to make an income tax more palatable to a majority of voters. Perhaps the Education Income Tax isn’t the way to go. Perhaps a high-earners income tax isn’t either. But if we want to maintain the same level of public investment and quality of life Washingtonians have grown accustomed to — and which have contributed greatly to our state’s prosperity over recent decades — then at some point an income tax becomes necessary.

And it may take some very creative thinking to get us past that point.

Comments

  1. 1

    Roger Rabbit spews:

    It’s an interesting idea, but unfortunately suffers from the same flaw underlying our existing tax system: It’s just another patch on a creaky, leaky, thrown-together, chewing-gum and baling-wire tax system which, taken as a whole, is irrational. As such, it’s no substitute for comprehensive tax reform, which very plainly is what Washington needs.

  2. 2

    Mark1 spews:

    ‘That’s one of the reasons I so quickly latched on to the notion of a high-earners income tax.’

    C’mon Goldy, at least be honest. The real reason is that since you are still chronically unemployed and earn nothing, socking to those who are successful is an easy concept for you. Shocking, I know. But that is the mantra of the “entitlement” and “gimme! gimme! gimme!” crowd like yourself. Get over it already.

  3. 3

    Roger Rabbit spews:

    “bizarrely and cruelly regressive”

    One of the more bizarre and cruel things Gregoire has done as governor is aggressively pursue the sales tax on out-of-state internet sales to Washington residents.

    For most Washingtonians, buying sales-tax-free goods from online vendors in other states provides very minor but welcome tax relief.

    For Gregoire to go after these purchases as a new source of sales tax revenue merely makes our state tax system even more regressive than it already is while doing nothing to solve our long-term revenue problems.

    Coming from a Democratic governor who has adamantly refused to even discuss meaningful tax reform, it sticks in my craw.

  4. 4

    Roger Rabbit spews:

    @2 Another explanation for Goldy’s position might go something like this:

    When state revenues drop off a cliff, imperiling vital public services (e.g., education), the logical place to look for new revenues is those sectors which are lightly taxed and not paying their fair share.

    In Washington, those sectors are big business and the top quintile of households.

  5. 5

    Roger Rabbit spews:

    This isn’t a soak-the-rich tax scheme, Mark. It’s a stop-soaking-the-poor tax proposal. Affluent houeholds are hardly overtaxed in Washington. Nationwide, the average state/local tax burden is about 8% to 10%, but in Washington the wealthy are paying only 3% while the poor pay 17%. It takes a real selfish bastard to defend a tax system like that.

  6. 6

    Daddy Love spews:

    I would be warmer to such an idea if strict rules were also put in place to assure absolutely equitable distribution of such funds. No more “rich schools” and “poor schools.”

  7. 7

    Marvin Stamn spews:

    3. Roger Rabbit spews:
    For most Washingtonians, buying sales-tax-free goods from online vendors in other states provides very minor but welcome tax relief.

     
    Doesn’t a “welcome tax relief” mean that taxes are already too high?

  8. 8

    Marvin Stamn spews:

    6. Daddy Love spews:
    INo more “rich schools” and “poor schools.”

     
    That has nothing to do with an income tax or “not enough money.”
     
    Most likely, that is because of a decision by someone that voted for oba-mao.

  9. 9

    Dutch spews:

    of course, in good old Goldstein tradition, he proposes a tax (money from the people )…instead of even remotely addressing the underlying issues.
    Why is our education system so fucked up ? Because there is very little accountability by anyone. Why are we dealing with school boards who create havoc rather than fix the system, why are we pandering to the unions rather than fixing the teacher education and employement system, why are we funding each district differently with levies instead of a more unified system, etc etc. Just throwing money at it won’t help.
    Why are schools where teachers, students and parents all work together (despite the school board, the district, etc) so much more successful than the rest ? Because they show accountability.

  10. 10

    Roger Rabbit spews:

    @7 “Doesn’t a ‘welcome tax relief’ mean that taxes are already too high?”

    Where have you been? I’ve been saying all along that taxes on the low-income households impacted the most by sales taxes are too high, and the tax burden should be redistributed to high-income households that aren’t paying their fair share of the state’s legitimate and necessary revenue needs.

  11. 11

    Roger Rabbit spews:

    @9 yada, yada … it takes money to run schools, and hot air isn’t a substitute for money, balloon boy.

  12. 12

    Proud To Be An Ass spews:

    @9: I agree, we need to address the underlying issues. They are largely class based, and begin with the fact that the very wealthy have basically used the power of the state to expropriate wealth from the actual productive economy (the rest of us).

    A progressive income tax merely retakes what was rightfully ours to begin with.

  13. 14

    maureeno spews:

    regarding sympathy for the rich: few of those at the ‘beggars banquet’ pity those with ‘wealth and taste’

  14. 16

    Marvin Stamn spews:

    10. Roger Rabbit spews:
    @7 “Doesn’t a ‘welcome tax relief’ mean that taxes are already too high?”

    Where have you been? I’ve been saying all along that taxes on the low-income households

     
    Are most Washingtonians poor?
     
    The reason I ask, I replied to your comment about-

    3. Roger Rabbit spews:
    For most Washingtonians, buying sales-tax-free goods from online vendors in other states provides very minor but welcome tax relief.

    And now you are talking about poor people.

  15. 17

    Marvin Stamn spews:

    12. Proud To Be An Ass spews:
    @9: I agree, we need to address the underlying issues. They are largely class based, and begin with the fact that the very wealthy have basically used the power of the state to expropriate wealth from the actual productive economy (the rest of us).

     
    Considering the connection between the democrat party and NEA/school unions, don’t expect a democrat to do anything to fix the underlying problems.

  16. 18

    Dutch spews:

    11: ah yes, it takes money…so let’s waste some more instead of making some smart changes. The inflexibility you show is just amazing. But no…let’s just keep everything status quo and just add money. It’s like your plumbing…it doesn’t work…so instead of fixing it…you throw more money down the drain.

  17. 19

    Daddy Love spews:

    @8 MS

    That has nothing to do with an income tax or “not enough money.”

    Most likely, that is because of a decision by someone that voted for oba-mao.

    You are more than usually obture here. My comment had to do with school funding, which, if you were reading for comprehension, was the subject of the post. Property tax school funding favors rich schools in rich communities and disproportionately disfavors poor schools in poor communities. Public schooling should not be structured this way.

    See Vermont for an example of a staste that completely leveled its school funding and whihc consistently ranks in the top ten of America’s states in school quality.

  18. 20

    Daddy Love spews:

    17 MS

    Considering the connection between the democrat party and NEA/school unions…

    That’s Democratic party, pard. And what does your comment have to do with school funding? Nothing.

  19. 21

    spews:

    Call it the ‘Defense Against Terrorism’ income tax.

    We could even tap Mr. Cynical’s phone calls and emails to make sure he’s not an al Qaida sympathizer — which I suspect he is.

  20. 22

    spews:

    re 18: Forgive me if I don’t endorse your ‘smart changes’, as I doubt that you could state what they were beyond ‘charter schools’.

    Yeah. A charter to rip off the public till.

  21. 23

    Marvin Stamn spews:

    20. Daddy Love spews:
    17 MS
    Considering the connection between the democrat party and NEA/school unions…

    That’s Democratic party, pard. And what does your comment have to do with school funding? Nothing.

     
    It has to do with the underlying issues.
     
    Why are people that vote and contribute to democrats not being “fair” with schools when it comes to funding them.
     
    Why do you think that is.

  22. 24

    Marvin Stamn spews:

    21. Three-Fiddy!!! spews:
    Call it the ‘Defense Against Terrorism’ income tax.

     
    What number sockpuppet is this for you headless?
     
    Why do you feel the need to hide behind sockpuppets?

  23. 25

    Smartypants spews:

    I’d be willing to consider a dedicated income tax that is extended to public higher ed including community colleges and universities.

    It is in keeping with the Article IX of the state constitution that says, “It is the paramount duty of the state to make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex.”

    Any income tax would also have to be accompanied by reductions to both the sales and property taxes.

  24. 26

    rhp6033 spews:

    I’d go along with it. Some tax reform is better than no tax reform.

    But, as they say, the devil is in the details. The current wingnut plan is to starve the public schools of funding, then point out that they aren’t doing a perfect job in an under-funded environment, and argue to eliminate them in place of private schools. Of course, private schools have the inherent advantage of being able to charge tuition at whatever level they think best, and pick and choose their students – advantages not shared by the public schools.

    So what we would have to watch is Eyman-types happily taking the reductions in sales & property taxes, and then pushing to further reduce the income tax so that the public schools continue to be starved of revenue. As for their own kids, they would keep some sort of levy system in effect (either local levys, or PTSA fundraisers), to make sure their own kids have advantages over the other public school kids.

  25. 28

    Mr. Cynical spews:

    Class Warfare—the old Leftist motis operendii

    Never any undesirable consequences.
    All these so-called “rich people” will just open up their wallets…like Oprah in California. Oops, Oprah has her handlers logging in and managing her number of days in California at her Mansion so she can AVOID the taxes. Not EVADE because what she is doing is perfectly legal.
    AVOIDING taxes is LEGAL.
    Herein lies the problem.
    I can guarantee you there will be plenty of fallout…with people shifting income out of the state …..legally.
    More jobs will be lost…except the additional State Government jobs created to manage this monstrosity.

    Goldy…where is your common sense?
    I notice that you are able to skate on this tax..even though you have a daughter in Public Schools. Sweet!

    I also laughed my ass off when you decided to pull Education out of the barrel for the Income Tax. Why not put in discretionary things like the Governor’s own monstrous, overpaid staff?
    Why not put 15% of State Salaries & 20% of Benefits to be funded by the Income Tax??

    Typical, tug-at-the-heartstrings governing that will not work once publicly vetted and will not pass.

    I like your dogged determination though Goldy.
    Increase taxes in a recession WHILE GREGOIRE APPROVES $83 MILLION in raises????????
    Good luck.
    We need to reform and shrink the size of government. We needed to do it 4 years ago. We have to do it now.
    The well is dry in Rich Guy camp.

    Ask Gates to donate his fortune so Gregoire can hand out $83 MILLION in raises.
    Ask him Goldy.

    It’s always the shell-game.
    Where is the pea??
    Let’s pull out Education “for the Children” and old people dying and starving…out of the bloated government dungheap.
    Bad Try===No Sale

  26. 30

    spews:

    TAX BAAAAAAAAAAAAAAD!!!!!!!!

    NO TAX GOOOOOOOOOOOOD!!!!!!!!!

    Question to wingnuts: How come none of Milton Friedman’s books are textbooks?

    Answer: Because they are for simpleton’s and the sharpies who want to fool simpletons.

  27. 31

    spews:

    re 28: I did note your clever distinction of avoiding and evading. Is Oprah avoiding/evading ALL of the income taxes or just some.

    – Do her ‘handlers’ (now there’s an evocative word) cost more than the taxes she’s NOT evading but AVOIDING (perfectly legal, of course)?

    – Does she go to a state where there is no income tax to do her perfectly legal avoiding behavior?

    – You seem to savor the supposed irony of liberal heroine (female hero — not a drug)being advised by her handlers to cheese-it at the CA mansion before she has to pay taxes. I can see in my minds eye the regal, though zaftig, Oprah ruefully exiting her mansion to avoid taxes while a bevy of nervous handlers hurry her toward the waiting black helicopter.

    You are nuts, Cynical, but you do provide a laugh or two.

  28. 32

    Mr. Cynical spews:

    Bonehead @ 30–
    No Tax??
    Hardly.
    Typical over-exaggeration.
    We all currently pay more than enough taxes.
    It is killing small & medium businesses and the business model for investing in jobs.

    This Washington State Government is now in freefall..caused by overspending and an unsustainable Budget the past 4 years.

    It’s overspending that has created this monster.
    Even Gary Locke and Locke’s Budget Director chastised Gregoire for doing “nothing substantive”. And she still hasn’t.
    Beholding to the Unions and her own 39 years at the Public Trough.

    OINK OINK!

  29. 33

    lebowski spews:

    Goldy,
    Do you do anything more with your time other than trying to come up with ways to tax people more? Why dont you spend that energy coming up with with ways that our govt can spend less?

    Seems to me that would be a much more productive avenue…

  30. 34

    Mr. Cynical spews:

    Boneheadless lucy @ 31–
    That is precisely what Oprah did. You’ve got it! Her handlers have warned her about the huge consequences and she chose to AVOID THE TAXES……for many years.
    Now that Oprah is shutting it down, she will have less income.
    Now she is moving.
    Coincidence??? Meknows not.

    KLOWNS–
    Rich people have tax attorneys & CPA’s up the ass. If you think Oprah isn’t tax conscience, you are naive, stupid or both. Same with Gates and lots of rich folks.
    Gates takes a relatively small salary in Washington. His wealth is tied up in many assets…including stock which can be borrowed on. Cash flow with no tax consequences.

    Not one of you has a lick of Tax Planning Experience. As usual, you pull these ideas outta yer ass and have no experience or training to evaluate the consequences.
    Dumbasses.

  31. 35

    Mr. Cynical spews:

    33. lebowski spews:

    Goldy,
    Do you do anything more with your time other than trying to come up with ways to tax people more?

    Answer=NO.
    This is better than working and having to pay taxes.

  32. 36

    Mr. Cynical spews:

    Todd Rundgren had Goldy and all the douchebag bottom-feeders @ HA in mind when he wrote:


    I don’t want to work
    I want to bang on these drums all day
    I don’t want to play
    I just want to bang on these drums all day

    Ever since I was a tiny boy
    I don’t want no candy, I don’t need no toy
    I took a stick and an old coffee can
    I bang on that thing ’til I got blisters on my hand because

  33. 37

    spews:

    I like Goldy’s idea, it should be part of the 2011 session. In the 2010 short session cut levy equalization so the poor folks in red LD’s figure out that the base level funding for K-12 is shallow, and collected from “property rich” counties that include actually poor folk.
    There are plenty of poor folks in the counties giving the poor county district.

    A little motivation for a year.

  34. 39

    provacateur spews:

    well Goldy, go ahead, write it up and get this constitutional amendment passed.

    there is nothing stopping you.

  35. 40

    jon spews:

    @35

    In fact, Goldy seems to talk about NOTHING else (see the latest post!), despite the fact we have a raging health care debate, an economy in tatters, a war being escalated at the expense of our blood and treasure (while our “allies” dither) and, last but not least, a party not one year in office but already in the dumps:

    Americans Souring on Democrats, WSJ/NBC News Poll Finds

    http://online.wsj.com/article/.....malertNEWS

    Are you stuck in repeat mode, Goldy, or just in shock?

  36. 42

    Michael spews:

    The Education Income Tax essentially takes K-12 spending out of the general fund and into its own budget, with it’s own dedicated revenue stream.

    We need this very badly for education and a dedicated account for state parks as well.

  37. 43

    rhp6033 spews:

    platypusrex256 @ #27 said:

    “income tax is immoral and illegal.
    also, i never liked public school.”

    Nope. A tax is a process of collecting revenue to fund a government’s operations. It is not immoral – it’s just a tax. You may not like paying it, or you may prefer that it be calculated in a different manner, but it has no inherent virtue nor culpability. Remember: “Render unto Ceaser….”

    Secondly, an income tax IS legal. Numerous U.S. Supreme Court decisions by both liberal AND conservative justices say so. If you want to argue the point, just stop filing tax returns and instead send in a letter explaining why you don’t think it’s legal for them to require one. You will soon find out for yourself how the judges feel about such spurious claims.

    Finally, I’m not surprised you don’t care for public schools. Your lack of punctuation at the beginning of each sentence indicates that you could have used a little more education, either public or private.

  38. 44

    lebowski spews:

    still have yet to hear why we just cant have a flat fed and a flat state tax ONLY.

    No other taxes of any other type – ever.

    Everyone pays the same percentage off of their income. One vote, one tax rate. period.

    THAT is equal representation through taxation.

    ALL the other stuff is BULLSHIT being bantered about because of jealousy and envy.

  39. 45

    spews:

    re 32: “Typical over-exaggeration”

    Is there normal-size exaggeration? For someone like yourself who is so accustomed to lying at every opportunity there is the normal everyday exaggeration (lying) and OVER exaggeration (big lies) — which only are good when your side is doing the over exageration.

    At least you can tell when you are being savagely mocked. You really get stirred up — especially if you don’t have a valid response — or one that you can convince yopurself of.

  40. 46

    spews:

    re 44: You haven’t heard because you have not listened (conservative head up your ass syndrome).

    Anyway. You are never going to get the rich to agree to be taxed at the rate everyone else is — and failing that, there is not enough money to run the country.

  41. 47

    palamedes spews:

    @46: Actually, we did equalize net tax brackets for Federal taxation under President Clinton.

    It forced the richest third to pay, on average, three additional percentage points to be paying at the approximate average tax rate of the other two thirds.

    Three lousy percentage points.

    He was never forgiven for that.

    Remember what was one of the first things the Bush Administration did once in office?

  42. 49

    Lola spews:

    I note that the “regressivity” index did not account for transfer payments to the poor. The poor may indeed pay 17% of their income in [mostly sales]taxes.

    But the poor also receive a disproportionately high share of taxpayer-funded benefits such as 1) Basic Health or Medicaid 2) Early learning subsidies 3)in home care subsidies for the elderly 4)dental, podiatric or eye care 5)mental health services for the poor 6) GAU payments 7) Higher education need-based grants 8) Food stamps 9) Apple Health, a.k.a. cover all kids healthcare up to 300% of the poverty level. 10) Unemployment insurance.

    There are other transfer payments they receive, of course. I just named a few that occurred to me off the top of my head. I would be curious to see how the percentages would change when direct transfer payments were accounted for. Rich people, in general, do not claim any of the direct benefits named above. And the most expensive benefit of all, public education, is not generally claimed by the rich either.

  43. 50

    spews:

    @46

    i can defeat your arguments without using capital letters. i’m punk rock like that.

    ‘render unto ceaser what belongs to ceaser’ does not apply here because america has no ceaser. money that i earn by my labour belongs to me, not ceaser. ergo, no rendering.

    also, i don’t like jesus.