Income tax is more about ideology than revenue stability

June 18, 9:33 AMSeattle Public Policy ExaminerJohn Barnes

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State Sen. Rosa Franklin is at it again.  She certainly deserves an "A" for effort because she's been bringing up the idea of a state income tax for years now.  Today she has an op-ed in The Seattle Times insisting that an income tax is inevitable.  I'm not so sure about that, but that's a point for another time.

Sen. Franklin relies on the shopworn rhetoric that an income tax (or a combination of sales/income) is a more stable source of revenue.  The facts belie her argument, and you need look no further than California to see how.  California taxes income, property, and sales, and their revenues can't keep pace with how much lawmakers there want to spend.

A Wall Street Journal article today talks about how state income tax revenues around the country are sinking, which is bad news for states that rely on that revenue stream but it offers a warning to states like Washington:  an income tax is not the solution to the budget rollercoaster.  The reality is that there's no such thing as a recession-proof tax structure.

A better option is to restrain spending (i.e., keep it on an even pace with inflation + population growth) with a constitutional spending limit and build up our protected "rainy day" fund for the down times.  One of the biggest factors in our state's current budget mess is that lawmakers cranked up state spending by 33% between 2004 and 2008 when money was pouring into state coffers.

Proponents of a state income tax frequently cite the sales tax's regressive nature as a reason for needing a progressive income tax.  If lawmakers want to use state fiscal policy to redistribute wealth, then that's an ideological discussion they can certainly have (and frequently do).  But they shouldn't hide behind the false notion that an income tax will bring revenue stability.