Think Bill Gates Sr.'s Income Tax Initiative Is Going to Cost YOU Money? Let's Do the Numbers.

Comments

1
The income tax part is a red herring.

It's a 20 percent property tax cut for the super elites.

2
@1, you're a stone-cold moron. The super elites will pay less in property tax, yes, but they will pay more in income tax.

Here's an even easier calculation: if you make less than $400,000 -- FOUR HUNDRED THOUSAND DOLLARS -- your tax will go down.
3
#2.

Income at the top can be hidden.

Whereas assets such as property are what should be taxed.

So, a person who for the first time in his life makes $300,000 dollars gets hit.

But a super elite who's sitting on thousands of acres, gets a tax cut.

What this country needs is an Asset Tax on all assets, including property and intellectual property.
4
How the hell can you even dress yourself, Bailo? Seriously, what the fuck? Are you just mad because you won't save any tax because you rent a shitty one-bedroom in fucking Kent?
5
He Bill Gates Jr., he.
6
Obviously the only thing that ever makes a change in tax code a bad idea is if it raises your taxes instead of someone else's. Thank goodness for the handy calculator.
7

Is there a calculator showing how much revenue the state will lose due to the property tax cuts for the super elites.
8
I know it will cost me tons of money, cause I'm thinking about starting a plumbing business and hiring lots of workers while I get by on ramen and rice.

Seriously, only people who make a ton of cash will be affected. And if they don't have a mortgage deduction or a good tax accountant and tax lawyer, they deserve to pay it.
9
@1 and @3 are technically correct.

But tax-exempt foundations are ... tax-exempt. And that ain't gonna change any time soon.

Face it, the only people against this are the rich, the ultra-rich - and the stupid gullible working poor who fail to understand this will mean less taxes for them cause they buy the fake arguments of the GOP.
10
@7, there is, I have it here. Let me look that up for you. The answer is: one billion dollar GAIN for the state budget. GAIN. GAIN.

No loss, dear.
11
If I was a super-rich elite, I'd be looking into buying a house in Texas and declaring that as my primary residence, while continuing to live in Washington most of the time. How does that affect the income projections for WA?
12
No outmigration of the big rich in the states with the highest income tax rates on them - NJ, CA and HI. It's been studied, no worries.
13
@7, adding to @10, less than 1/3 of property tax collected in Seattle goes to the state. All of the income tax goes to the state.

Just play with some big numbers in the calculator and you will see. For example, $1.2M joint income, $50K property taxes ends up with $48K more to income tax, but only just over $2K less in property taxes.

In a closer to "average" case of $125K joint income, $6K in property taxes results in NO income tax (no change) and $268 less in property tax.
14
Florida is better.

Then you can get bailouts from the working poor in Blue states for your multi-million dollar seaside property you built in a hurricane zone.

And pay no state income tax.

Talk about screwing the poor to subsidize the rich.
15
anyway, it says I will save $200. Cool.
16
I don't think it's that opponents not making large incomes don't understand the proposal... It's that a number of proponents think that implementing this tax will eventually lead to an income scale covering more and more state residents. Which won't require a public vote.
17
No, the actual initiative requires a public vote for any such changes.

You know, like the public vote we had to pay for the Billionaires Tunnel we don't want and can't afford.

Oh ... wait ...
18
@11 - believe it or not, Texas might not be the best choice. According to this article the average Texas property owner pays 1.76% of home value vs 0.87% in WA. But the median home price is less than half what it is in WA.
19
Using Calculator:

Income: $50,000
Prop Tax: $1,000,000

(Single, King County)

Result:

Dear Mr. Super Elite,

UNDER I-1098, YOU WILL PAY $44,600.00 LESS.

Case Closed.
20
@19
Not a very realistic scenario. I wonder how many people can report only $50K income, but own $115M in property?

($115M comes from calculating out $1M taxes where prop tax is .84% of value).
21
@19, that guy doesn't exist. Nobody pays a million bucks in property tax. Bill Gates doesn't pay that much on his gigantic estate, which is surely the most valuable personal real estate parcel in King County. And his income is vastly larger than $50k. He will pay a great deal more under the new law.

You don't know what you're talking about.
22
Here's even more damning evidence for the Regressive nature of this tax cut for the elites.

Put in $0 income.

Then increment the property value in powers of ten.

Value of property -> Tax Cut

$1000 -> $44.60 less
$10000 -> $446.00 less
$100,000 -> $4,460 less
$100,000 -> $44,600 less!
$10,000,000 -> $446,000 less!!
23
@22: "Regressive nature of this tax cut for the elites."

that is some weasel-word ass framing right there, c'mon.
24
$446,000 less -- on $10M in property tax? That would be 1.15 BILLION worth of property. Now that deserves some exclamation points!!!

The lowering of property taxes and elimination of the regressive B&O tax is more than offset by the increased revenue from the income tax on the highest income levels. This can be accurately estimated and the increase in revenue would be about $2B from the income tax. Total state revenue from property taxes is $7.35B. 20% reduction means $1.47B less revenue from property taxes.

I can say this for sure: I own property, but don't make $400K (joint filer). I would pay less tax.
25
I'm confused by the calculator's wording. It says "personal property," which is a different thing than "real property." The former is cars, jewelry, furniture, paintings, ermine robes, etc.; the latter is your saggy-foundationed, leaky-roofed abode. Which one is the initiative addressing?
26
See this document from the WA Office of Fiscal Management for numbers more complete and accurate than my back of the napkin math.
27
@22, your IQ is what, about 75?
28
Eli's post presents EOI as a neutral source - which it is not.

EOI is a major proponent of I-1098 (and more power to 'em, but let's not misidentify them as anything but).
29
Comedy gold.
30
Am I misunderstanding the changes, or is it really the case that someone who owns a multi-million-dollar home and makes $399,999 a year is going to get a substantial tax break? Because that doesn't exactly seem right.
31
I love the lack of perspective of people in this country. Here you are with internet access, a computer, almost certainly plenty to eat, leisure time, a roof over your head. The indulgences that are regularly discussed on this blog include 4 dollar cupcakes, 5 dollar coffee drinks, high end bars, nice restaurants, to name just a few. But....... when taxes are discussed you really want to make sure that it is the "rich" who are getting nailed. We have a major financial crisis in our country and virtually everyone in this argument (including me) should be paying HIGHER taxes not triple checking to make sure yours are going down while those nasty rich people pay more. With just a teensy bit of global perspective you'd realize that you are all rich.
32
@30, no, such a person would pay more. Not hugely more, but more, depending on the assessed value. Use your figures in the calculator linked in the post to check it out for yourself, but DON'T make Supreme Ruler Bailo's mistake above - it's not asking for the home value, it wants the property tax paid last year. So for a wildly expensive home, say, $6 million, assume $50K in annual taxes or so.
33
Homesick, I don't think it's a case of seeing wealthy people as nasty. Instead, it's the philosophy that they are better able to bear higher taxes. Even a flat tax rate is progressive taxation -- the more you earn, the more you pay -- and the philosophy underpinning that is that the more you earn, the more you should pay.

34
One thing that's a little mysterious about Bailo's OMG is how he thinks people who have no income but owe a million bucks a year in property tax pay it at all. The answer, of course, is they have income.
35
Homesick @ 31 FTW.

Because of a one-year windfall, the tax calculator shows that I'd pay $3,750 more in taxes, and, y'know, that's awesome. I'm happy to contribute and I agree that we should be paying more.

I don't think that Homesick's point is that the rich are nasty (@33), it's that WE are the rich.
36
You got it avatar.
Sorry, Roma my unnecessary aside about "nasty" rich was just a little frustration with the demonization of wealth in a country awash with luxury.
I have two points.
One, is we are all rich.
Two, is in the middle of a major government budget shortfall it is sad that you have use "see, your taxes will be the same or even lower!" to get people to vote for changes in taxes. And when these are people who don't think our services should be reduced, it is even more frustrating.
And when it comes to how progressive our tax system should be all I hear from the right is that taxes should always be lowered and we'll be rich from trickle down crap, but all I hear from the left is that the well off should pay "more" without ever addressing how much "more" would be fair. Just always "more". It is a stupid tug of war where each side just wants to gain as much ground as possible at all times.
37
avatar, I understood Homesick's point. I was just making one of my own: that proposals (like I-1098) to tax wealthier people more don't stem from hatred of wealthier people.

Homesick, yes we are all rich compared to the entire population of the planet. And yes, more of us could afford to pay more in taxes, not just the wealthiest among us.

But the case that Bill Gates Sr. and other proponents of I-1098 are making is that this isn't a "soak-the-rich" initiative. Rather, it will make an unfair system more fair. In an article in the Puget Sound Business Journal, Gates, venture capitalist Gerald Grinstein and local businessman Michael DeBell write:

Middle-class families pay more than 11 percent of their income in state and local taxes, and poor families pay 17 percent. Meanwhile the state’s wealthiest residents — like us — pay just 2.6 percent of their income in state and local taxes. That disparity is clearly unfair.

Now, we could address that disparity if we had an income tax that would apply to everyone, including people who buy $4 cupcakes. This is something that people have argued in favor of for years - saying it would make our regressive tax structure progressive -- but the legislature has never acted on it and there's never been a successful initiative. (And if I-1098 passes, that may still happen; my understanding is that after two years, the law allows the legislature, by simple majority, to extend the tax to nearly everyone.) So this looks like an opportunity to address that disparity.

And when it comes to how progressive our tax system should be all I hear from the right is that taxes should always be lowered and we'll be rich from trickle down crap, but all I hear from the left is that the well off should pay "more" without ever addressing how much "more" would be fair. Just always "more".

One thing I think almost everyone is in agreement on is progressive taxation. Proponents of a flat tax rate don't think of it that way, but it's still progressive taxation: the more you earn, the more you pay. I think the goal of the tax-cutters is pretty clear; they'd ideally like a flat tax rate. Among those who feel that we should have progressive tax rates, the goal is less clear. How much "more" would be fair is a very difficult question to answer.
38
I think viewing state taxes alone is a bit disingenuous. My points were about the overall attitude towards changes in tax codes as reflected by this 'handy calculator'. Those percentages don't look at all that way if you view them on total taxes paid. Also, percentage of income paid in taxes by people making 300k a year working for someone else vs someone worth hundreds of millions and not collecting a traditional paycheck don't have anything to do with each other so lumping them together is just dumb.
In terms of the attitude towards the well off on this blog, I guarantee you if you just open your eyes to it you'll see it pretty easily. The most glaring example that comes to mind is when the children in a well to do burb of Philadelphia were being spied on by through their school issued laptops Grant Brissey's post was about the fact that since their parents have money they deserve things like this to be done to them. I don't know any other way you can interpret that.
39
This is making me miss Joe the Plumber. At least he had a second grader's grasp of how taxes work.
40
Yup. The same grasp most of the people here have. They don't like paying them. Only big difference was he didn't get as giddy at the thought of other people paying them. Well, that and he's a huge douche while I imagine most the people here truly do mean well.
41
Rather than helping people figure out weather they like the initiative based on "will it screw me or not", I'm hoping this calculator will simply enlighten people to the lies political opponents to the change have put forth. The truth will set you free.
42
@41 nailed it.

If the goal is to make people "pay what they can afford," then almost everyone would be paying more, so using that as a justification to soak the rich is pointless. Run the numbers for a couple permutations and see what you get. I just got "UNDER I-1098, YOU WILL PAY $1,050.00 MORE," so at least I know where I stand.

It made me realize how much this rewards property ownership relative to the current tax structure. Independent of progressive/regressive or low/high taxes, that's a questionable position for reasons on and linked to at http://www.calculatedriskblog.com/2010/0…
43
The only people that will pay more tax under this are, to be precise, rich or super-rich.

Period.
44
#31 If only what you say is the case. Skipping meals is not fun when one needs the car or roof fixed. The computer is used and the wireless shared by many. Some of us are helping out jobless relatives and siblings who cannot afford their kid's tuition bills. It would be nice to buy expensive cocktails on a regular basis along with cupcakes. So some people pay "too much" for cupcakes instead of paying more taxes. Well the people working in bars and making cupcakes need to make a living. So do the local businesses that at least one of the cupcake makers in town supports. We have more concentrated wealth than we did in the Reagan era but the upper class is not paying enough in taxes in proportion to the wage gap that many of them have gotten so rich off of. The upper class needs to take a pay cut and pay workers more or pay a lot more in taxes. For the middle class to make up for the disparity takes too much away from damaged local economies. The middle class should not pay for more welfare, war or subsidies for the rich, many of whom do not even live in the US, they should spend their money on people who are working.