This letter is partially in response to State Sen. John Braun’s commentary written in The Chronicle Nov. 26 titled “A state income tax is illegal, but don’t expect this to stop Democrats.”
I am writing this letter to talk about the different forms of taxes and why some are better than others for raising revenue for the state.
Sen. Braun is correct that Washington state Initiative I-2111 makes an income tax currently illegal. I want to discuss what would be best for the common people of Washington, not what is currently legal.
Washington mostly relies on sales taxes to raise revenue. Most states rely on income taxes to generate most of their revenue. Other forms of taxes include usage taxes, property taxes, capital gains taxes and wealth taxes. Each one hits harder on different groups of people than the others.
I will compare sales taxes to income taxes first. Critics of sales taxes point to the fact that it is a highly regressive tax. It taxes poor people at a higher rate than it taxes wealthy people. Poor people spend every cent they make, so every cent they make gets taxed. Rich people tend to put a high percentage of their income into investments such as buying stocks and bonds. This spending does not get taxed.
Income taxes are generally written so that they are progressive. The more money you make, the higher the rate you pay. This is offset by the multiple tax loopholes written into the laws. In general, people who are concerned about income inequality prefer income taxes over sales taxes so that richer people can be taxed at a higher rate than poor people.
Sen. Braun is rich. He doesn’t want income taxes.
One of the biggest disagreements people have over taxes is what role taxation should play in the distribution of income and wealth in our society. I think it should play a very large role.
According to an article in The Urban Institute in 2024, wealth inequality is higher in the U.S. than almost any other wealthy nation and it has risen for much of the past 60 years.
In other words, more and more of our country’s wealth keeps getting concentrated in fewer hands. I believe our tax system should change this trend.
Because of my belief that we should fix our tax system to tax rich people more and everybody else less, I have some recommendations.
We should have a wealth tax on the top 1% of taxpayers (maybe the top 5%). We should replace the sales tax with an income tax (while making sure there are no loopholes to avoid taxation). Capital gains should be taxed since it is the prime wealth builder of upper class individuals and poor people would not be affected.
If my recommendations were followed, I believe we could generate more money to help those who are struggling in our state and tax workers less.
Daniel Meekof
Packwood
