Senate Democrats introduce income tax bill

OLYMPIA — Senate Democrats introduced a bill today that would impose a 1 percent income tax on people making more than $500,000 a year.

The bill sponsored by Sen. Jeanne Kohl-Welles, D-Seattle, comes shortly after Senate Majority Leader Lisa Brown, D-Spokane, began pondering the possibility of a state income tax on her blog.

Tuesday, Brown noted New York is considering a similar measure. Brown wrote that New York's plan to increase existing state income-tax rates on top earners would be "a fair and stable way" of dealing with that state's declining revenue.

Brown's staff, however, said the timing of the bill and Brown's postings were just a coincidence.

Kohl-Welles in 2007 introduced a similar measure, which never gained traction. The bill would direct all money raised from the tax to an account that would be used for schools, colleges and universities.

Washington is one of only a handful of states without a state income tax.

In 1932, state voters approved an initiative establishing a personal income tax, but that was later struck down by the state Supreme Court. Since then voters have rejected similar proposals; the most recent one, in 1973, was defeated by 77 percent of voters.

Brown did not immediately return a phone call seeking comment, but Kohl-Welles said in an e-mail the bill "would not be a panacea."

She wrote that she believes major tax reform is needed in the state, but that not likely this year.

"But in the meantime we're crippling our public schools and colleges while having a very large number of millionaires in the state that would be paying an income tax if they lived in most any other state in the country," she said. "I think my proposal is very reasonable."

One of the bill's co-sponsors, Sen. Adam Kline, D-Seattle, said he thinks some form of income tax is "absolutely necessary." But he also characterized the new bill as a conversation starter.

"We're going to have some serious conversations about the role of government and the role of taxation," he said. "This is a bill to create a public dialogue about the role of taxation."

Sen. Margarita Prentice, a Renton Democrat who is chairwoman of the Senate Ways and Means Committee, said she was inclined to give the measure a public hearing.

"There's nothing wrong with having this kind of dialogue," she said.

Minority Republicans immediately criticized the measure, saying a "millionaire's tax" isn't the answer to the state's fiscal problems.

"These rich guys are the ones who put money back into our economy," said Senate Minority Leader Mike Hewitt, R-Walla Walla. "They reinvest back into our economy, which creates the jobs that give lower-income people the ability to work."

Lawmakers are trying to plug a projected $9 billion budget hole through mid-2011, and House and Senate Democrats introduced cut-heavy budget proposals earlier this week.

Kohl-Welles' proposal would apply a 1 percent tax on income for single people with incomes of more than $500,000, more than $750,000 for a head of household, and more than $1 million for married couples.

Under a voter-approved initiative, any taxes must be approved by two-thirds of the Legislature or go before voters.

Now that both chambers have unveiled their draft budgets, top lawmakers begin high-pressure negotiations to find common ground and adjourn by an April 26 deadline.

It's widely expected voters will be asked to raise their own taxes to help avoid the deepest state budget cuts, particularly in education and health care.

"This is somewhere between a gesture on one hand and a serious bill on the other," Kline said. "Sometimes you put things out there to check the response to determine whether it will remain a gesture, or whether by popular support it becomes something more."