This week’s Q&A is with Janetta Taylor with the Department of Revenue. I was interested in finding out how the department is dealing with nearly 70 changes to the tax code worth $800 million that go into effect on a handful of different dates — including tomorrow, when cigarettes will cost $1 more per pack.

Taylor told me about some big changes to the tax code that could help local businesses, what it would take to implement an income tax, and much more.

Q: How many changes did the Legislature make, and what does the DOR have to do to implement those changes?

Taylor: With this session we have 68 changes that came through, which is quite a few. It will be a challenge for the department to make sure that we contact all the businesses that are affected. That really is our focus: educate, educate, educate.

We have a wide variety of mechanisms to do that. In Washington, most businesses and household are connected to the Web. The first thing we did is post the information on our Web page. There’s a link to all the information with the write-ups. Of course, also some of Mike’s (Mike Gowrylow, communications director at DOR) media releases. And we also try to target mailings to the specific businesses that are impacted. We have about 450,000 registered businesses. Not all of these changes affect all businesses. We look at businesses by their activity and we tailor specific mailings to them and try to get them all the information they need.

We also have special things going on with electronic filing. A large number of our tax payers actually file electronically so we can send them e-mails or send them alerts in the system.

Q: The $1 per pack addition to the cigarette tax goes into effect tomorrow (May 1). What did you have to do to implement something like that?

Taylor: The ones that start tomorrow were quite challenging because we did have a short time frame. We actually started planning before the bill was signed. (more…)

Tags: Department of Revenue, income tax, Legislature, taxes

Here’s the initiative and here’s a Seattle Times story. And the word from this morning’s press conference is, it’s a go. That means sponsors will now collect signatures in hopes of making the November ballot.

Gates said in the news conference that the tax would hit the top 3 percent of earners and raise $1 billion while lowering the state portion of property taxes by about 20 percent.

Tags: income tax

At 10 a.m. today, Bill Gates Sr. and a group in favor of an income tax will announce (at Soho Coffee on Yesler Way in Seattle) whether they’ll pursue an initiative to create an income tax for high-earners here. Here’s a Seattle Times story on the plan.

The tax would apply to singles making $200,000 or more or married couples who make $400,000 or more. Supporters say the new tax would raise $1 billion a year and lower other taxes, like the Business and Occupation tax.

To get the tax to voters, supporters will need to get the signatures of 241,153 registered Washington voters before July 2.

Check back soon for more information on the 10 o’clock announcement.

Tags: income tax

Sen. Lisa Brown just held a TV media availability in her office. Here’s what she had to say:

Tags: income tax

Sen. Rosa Franklin was the first to testify to the Ways and Means Committee on the bill to create a high-earners income tax.  “I worry a lot about the future of our state. Will we be the state of progress and leave it a little better than we found it?” She said this plan would “give the public the ultimate say,” because “taxpayers get to choose the tax option they feel makes sense for the citizens of this great state of Washington.”

She said the bill is a start, but not a magic bullet.

Sen. Joe Zarelli said California has a sales tax and an income tax. “Do you believe that the current state of things is more reflective of the economy and spending decisions” or the tax structure?

Franklin said budgets are built not just on spending. “Someone always brings up the state of California — they have got both but yet they have a deficit. That is true. As I said, this is not a magic bullet.” But, she said, it’s a beginning toward reforming the tax system.

He asked if that meant she wanted a statewide income tax. She said she wants to let the people decide.

Sen. Ed Murray said $16 trillion disappeared from the world economy during the recession, and that’s the reason for the budget crisis. “Our sales tax is the most regressive in the country. We tax the poor … while the wealthiest people in this state pay less than people who make very little. As Bill Gates, Sr. has said several times, he wants to be taxed, he wants to pay his fair share.”

Sen. Mike Carrell said the state Constitution requires uniform taxing. Franklin said the bill would likely require a Constitutional amendment.

Tags: income tax

“Best of all, it allows us to make the tough decisions we need to make in Olympia right now while allowing voters to decide whether to fundamentally change our tax system,” Sen. Margarita Prentice said, opening up the hearing. She said sometimes a crisis presents an opportunity.

Sen. Cheryl Pflug quoted an editorial by Gov. Chris Gregoire in which she said “now’s not the time” to create an income tax.

Prentice replied, “I think we’re all conscious of the separation of powers … and that she isn’t our boss.”

Here’s how this would all work: The Legislature would vote to immediately implement a three-year sales tax increase of three-tenths of a cent. In the next election, voters would choose whether they wanted to roll back the sales tax to 5.5 percent and implement a 4.5 percent high-earner income tax.

The tax would apply to:

- Single people on every dollar over $200,000

- Heads of household on every dollar over $300,000

- Married, dual earners on every dollar over $400,000

If the voters passed the referendum, the sales tax would drop once the temporary sales tax increase expires.

Tags: income tax

Today at 4:30, the Senate Ways & Means Committee is holding a hearing on this bill, to institute an income tax.

The bill would require voters to approve the income tax in the November elections.

I’ll be liveblogging the committee and, depending on House floor action, it will/could also be live on TVW. Of course, everything is live at TVW.org.

Update: Sen. Lisa Brown just wrote a post on her blog about a plan to put the sales tax increase to voters and let them decide whether to lower the sales tax by half a percent but create a high-earners income tax — or stick with the 3 cent increase.

Here’s a snippet:

“1. The Legislature passes the temporary sales tax increase, which would go into effect immediately to help alleviate our state’s looming cash-flow problem.

2.  It would also pass a referendum to the people, giving them the opportunity in November to repeal not just that three-tenths-of-a-cent increase, but an additional half-cent off the state sales tax – taking the state rate down to 6 cents, a level not seen in thirty years.

3. In its place would go a high earners’ income tax of 4.5 percent on all income over $200,000 for individuals, $300,000 for heads of households, and $400,000 for married couples.”

Tags: income tax

Sen. Lisa Brown said the idea behind the income tax “isn’t to fool anybody,” she said. She said the idea isn’t to start out for high-earners and then move down to middle- and low-income families.

She said middle class and low-income families already pay their share of taxes and that the budget cuts and existing sales tax over the next two years would mean that those residents would be disproportionately negatively affected.

Sen. Jeanne Kohl-Welles said she’s introducing a bill today or tomorrow to add a sales tax to candy and gum. The money would go toward children’s healthcare and immunizations.

She told reporters to keep in mind that any bills introduced this session are alive next session. She said she didn’t expect her bill to have any success this year.

Tags: Budget, income tax, tax

On the budget, Sen. Lisa Brown said the agreement reached last night is “responsible” and uses the money the state plans to get in the next biennium responsibly.

“It’s seen, as itself, the best budget that we could put forward at this point in time,” Brown said.

On questions about the House’s efforts to pass a sales tax increase, Brown said she’s not sure if it will pass the House and not sure that it would get a vote in the Senate if it did.

Tags: Budget, income tax

“Even if an income tax brings in a net same amount of money, it’s a more progressive tax base,” Sen. Joe McDermott said.

“An income tax is not a panacea,” he said, citing the 47 states around the country that have shortfalls this year.

Sen. Lisa Brown said there’s a “big diversity of opinion” in the caucus. “By putting forward a proposal of a high-earners or sometimes called a ‘millionaires tax,’ our goal is not to single out or target our more affluent citizens,” she said, but to give them “a chance to not send all their tax dollars to Washington, D.C.”

Tags: income tax