Here’s how state income taxes are applied in some of Washington’s peer states:
It’s just a little context for evaluating certain claims that Initiative 1098 would send the super wealthy fleeing. Even for the tiny percentage of single earners pulling down $300,000 annually ($600,000 for couples), Washington’s income taxes would be very, very low compared to its neighbors.
Aaron Keating
Another way to look at it is to compare I-1098′s effective tax rate for a particular percentage of income earners across all states that have an income tax. In other words, under I-1098, how would Washington’s effective tax rate for the top 1% of income earners compare to other states with an income tax? Since the income range for the top 1% in Washington State is over $537,000, they’ll all be paying something—but perhaps not as much as one might think. It turns out that the effective income tax rate for the top 1% of incomes would rank Washington at just 27th out of the 45 states that tax income. The effective income tax rate for the 4% of “next wealthiest” people would be the 2nd lowest in the nation; Washington would rank 44th out of 45. What accounts for these low percentages? One reason is that I-1098′s tax rates are quite low. Another is that I-1098 exempts individual income up to $200,000 or joint income up to $400,000. According to the IRS, roughly 85% of income tax returns with an adjusted gross income over $200,000 are joint returns—so under I-1098, those households would only pay tax on their joint income over $400,000.The Economic Opportunity Institute has a couple of graphs posted here that illustrate this comparison to other states.~Aaron KeatingCommunications DirectorEconomic Opportunity Institute