Do the wrong people pay too much?

$11 million is a lot of money

  • Monday, May 8, 2000 5:00am
  • News

“Anyway you look at it, $11 billion is a lot of money. Yet Washington State collects more than $11 billion in taxes each year through a tax system renowned for taxing the lowest incomes the hardest. Overwhelming voter approval of tax-cutting measures like Initiative 695 and outspoken criticism of such usually well supported things as school levies and public transit funding seem to indicate that people are tiring of taxes.What’s really the problem? Is it that taxes are just too high or is it that the wrong people are carrying the load? Is it that people object to how their tax money is spent or are they just frustrated because they don’t really know where it goes? Are taxes in Washington outrageous when compared to other states or are they pretty reasonable or even a bargain?To look at the complicated state tax system – with its claims on everything from hamburgers (but not hamburger) and soda pop (but not bottled ice tea) to boats (but not boats under 16-feet) and home building (but not haircuts) – it seems best to look at an average. A REGULAR GUYNorm Buckmaker is a fictitious character. A useful fabrication designed to make a point.Norm is an ordinary guy. He’s a cross section, a representative of the average, a norm if you will of a typical Island County taxpayer. As such, Norm plays a vital role in a state tax system that, at worst, unfairly takes his money and, at best, boggles his mind.Faced with what seems to be an ever-shrinking wallet and never-ending requests for more of his money – lately from schools, transportation agencies, government officials, utilities and the like – Norm’s fiscal frustration level has been on a steady increase.You may know Norm. You may be him.Norm is not an unreasonable man. He understands that U.S. citizens support the country through taxes. He knows that the roads he drives on, the schools his children attend and the pipes that bring water to his home are all bought with tax money. He enjoys parks, rides the bus on occasion and checks books out of the library.And he’s willing to pay for it – to a point.Norm works as a store manager and his wife Jane works part-time in retail. Together they earn about $44,000 per year which puts them in the median-income range. Before the year is out, though, the Buckmakers will use their $44,000 to pay out a total of nearly $15,000, in federal, state and local taxes.The taxes come from everywhere. Norm pays them when he fills his truck up with gas, buys a theater ticket or rents a car. There are taxes on his cigarettes (he’s trying to quit), his beer (he’s cutting back), his telephone (he’s thinking of changing long distance carriers). Even his garbage is taxed. Norm likes to point out that back in 1949 when he was born, people only paid 22 percent of their income on taxes. Now he and his wife fork over about 33.5 percent. Those figures come from the Tax Foundation, a national tax watchdog group that each year publishes Tax Freedom Day – the day at which you stop working to pay your taxes and start working for yourself. In 1949, Tax Freedom Day fell on March 22. This year, on average, American taxpayers worked until May 3 to pay off all their federal, state and local governments.Since they live in the state of Washington, the national leader in regressive taxes, the median-income Buckmakers pay out a higher percentage of their income than the average Microsoft millionaire. At the same time, they pay a lower percentage of their income than a family that makes half their annual earnings. According to a 1995 report released by another D.C.-based watchdog, Citizens for Tax Justice, the poorest 20 percent of Washington State’s population puts 17.1 percent of their income into state and local taxes. The middle 60 percent of citizens pay about 10.5 percent. By contrast, the richest 1 percent turn over only 3.9 percent of their income. Is this fair? Who thought up this system? Does our government really need all this money? And where is all of it going?GREED OR REAL NEED?It’s questions like these, and the apparent lack of good answers, that leave the Buckmakers seriously weighing their position on upcoming, taxing ballot measures for Oak Harbor schools and Island Transit in mid May, and for Whidbey General Hospital next September. The transit tax will boost local sales tax by 3 cents for every $10 purchase. The Oak Harbor school levy will add $1.47 per $1,000 of assessed value to property taxes within the district boundaries.The Buckmakers know that voting for the levy will add more than $200 per year to their property taxes for the next four years. That will bring their overall property tax bill to $1,659 per year on their $140,000 Oak Harbor home. That looks like a sizeable hike. But when compared to the statewide average of $13.56 per $1,000, Oak Harbor’s $11.85 per $1,000, even after passing the levy, looks better. If the Buckmakers’ home was in Seattle they would pay almost $2,000 per year in property tax. Plunk their home down in McMinnville, Ore., and it would cost them nearly $2,400.But wait, there’s more.To see if it’s really fair, you also have to look at wages. Islanders earn an average of $1,835 per month, according to the state’s Employment Security Department. That’s less than the typical King County wage earner. who makes $3,441 per month.Then again, housing costs less here. But then, food costs more. On the other hand, food is cheaper in Oak Harbor than it is in Langley, where voters just passed a school levy by 72 percent.Is it all making sense yet? Probably not. But the pluses and minuses of taxes are difficult to gage without looking at the whole picture. And the picture is blurry at best. It’s a big part of the frustration taxpayers seem to feel these days.The question now is whether the frustration level rather than the issue itself is driving the vote. I-695 and the like appear to be definite signs of taxpayer unrest. And there’s more on the way. At least 15 new tax-related initiatives are currently being circulated for enough signatures to get on next November’s ballot. But at the same time, 24 of the 27 school levies on the ballot across the state last week passed. Levies in the remaining three each received a majority of yes votes but failed to get the necessary 60 percent for passage. Such results might indicate the Norm’s of Washington aren’t quite ready for revolt. It’s the state’s sales tax, which pulls in one and a half times as much money as its property tax, that may need the biggest fix in coming years. While the economy is good and sales are brisk, sales tax is easily filling the state’s coffers and lawmakers are reluctant to make changes. But if the economy sours or the explosive growth of Internet commerce starts eating into local sales, state officials could find themselves having to face Washington’s tax system and taxpayers head on.”

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