SEATTLE — As you watch TV, you may start to notice the Initiative 645 campaign ads.
Initiative 645 aims to repeal the state’s “millionaires tax” before a single penny is actually taken out of it.
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The millionaires tax applies to any person or household earning more than $1 million each year; the first $1 million in earnings is tax-free, but any dollars earned above that threshold will be subject to a 9.9% income tax in 2029, if it survives the challenges.
A “no” vote on I-645 means you want the tax to remain intact. Here’s what the portion of a “no” campaign ad currently airing says:
“645 gives millionaires and billionaires a $13 billion tax break…”
Even though less than 1 percent of Washingtonians will pay into this tax, it would bring the state about $3.5 billion each year, helping to keep the state budget well-funded as Washington faces significant cash shortages.
“Ultimately, if Initiative 645 passes, there will be $13 billion in cuts to K-12 education, child care and health care in this state,” said Rian Watt, who is part of the No campaign. “Washington has one of the most topsy-turvy tax codes in the country, where the rich pay a much smaller share of their income in taxes than the rest of us. Now is not the time to give tax breaks to millionaires and cut K-12 education.”
“They say if we repeal it in the next five weeks it will lose them money,” said Jaime Herrera Beutler, a former lawmaker and spokesperson for the “yes” campaign. This is not true. The tax is not expected to be collected for another two years. »
The new law does not specifically allocate the amount of money that would be spent on K-12 education or health care. The first line of the law, however, says “an act relating to investing in Washington families and businesses to fund K-12 education, health care, and higher education.”
The same ad also highlights what some call the state’s regressive tax system, in which Washington’s lowest earners pay a higher share of their income in taxes.
“If you’re in the bottom 20 percent of people in Washington, you pay about 14 percent of your income in taxes; that’s mostly sales taxes. If you’re in the top 1 percent of people, you pay about 4 percent of your income in taxes,” Watt said. “That’s because if you have a lot more money, then the sales tax on a cup of coffee, or whatever it is, is a much smaller share of your income.”
“If we want to achieve a fairer or more just tax system, I’m more than willing to have that debate,” Beutler said. “And let’s do it in the light of day, in full view of the public. Let’s not pretend and tax (everyone) when they’re not looking.”
A “yes” vote on I-645 means you want the tax repealed. The “yes” camp maintains that the income tax will eventually apply to all Washingtonians.
“Voters deserve the truth. This is an income tax, and it was designed to extend to every Washingtonian,” Beutler said. “Whether you’re a truck driver, a hairdresser or a plumber. It’s designed to extend to your income.”
The law provides no protection against expansion. State leaders have said they have no plans to ever raise the tax.
“Don’t trust what they say. Trust what they did,” Beutler said.
“99% of us will not pay this tax,” Watt said. “And the fact is, voters will always have the final say on any effort to lower that threshold.”
On the “yes” side, an ad targets another part of the law: “Washington State made a promise: Give us your career and your pension will be tax-free. This year, Olympia failed to deliver on that promise,” the ad reads in part.
Most retirees will not have to worry about their pension being taxed as usual pension levels will fall below the taxable threshold under the new regime. However, the law removes long-standing tax protections: “…does not exempt any pension or other benefit received under this chapter…” the law reads.
“Why would you do that? No teacher or firefighter makes a million dollars. That’s the problem,” Beutler said. “They set up a whole chess game with the intention of expanding it to tax the income of every Washingtonian.”
“In an environment where people are struggling to get by, we can’t afford to give millionaires a tax cut at the expense of the rest of us,” Watt said.
The election will take place on November 3. Ballots will be mailed on October 16.
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