The MVET hits poor and middle-class families harder than the rich. It's one piece of a system that gives Washington the most regressive state tax structure in the country, according to a 1996 national study done by Citizens for Tax Justice. By relying on sales taxes, property taxes, and excise taxes (like car tabs), we end up forcing the poorest 20% of Washingtonians -- those with incomes under $28,000 -- to pay 17.1% of their total income in taxes. Most people (the middle 60%) pay 10.5% of their income in taxes. But the richest 1%, with average incomes of more than $310,000 a year, end up getting away with paying a paltry 3.9%. We need to fix this system.
But Eyman's initiative, far from fixing the problem, compounds it. In fact, it's plain evil.
Here's the score: 695 is a baited hook. The bait is a reduction in car tab costs. Under 695, each of us, no matter what we drive, would pay $30 for our tabs (plus a couple bucks in fees), saving the average person nearly $142 a year. Sounds pretty good, right? I mean, who couldn't use 142 bucks?
Well, first of all, remember that's the average. If you drive a luxury car -- for example, an Infinity QX4 -- you're paying $727.35; whereas if you drive a 1987 Honda Civic Coupe, your tax is only a measly $47.35. Under 695, tabs for either car would cost $33.00. This reduces the total tax hit everybody takes, but is primarily a tax cut for the wealthy.
Worse yet, 695 would both slash the state budget and hamstring local government. Since government programs in general still benefit the middle class and poor more than the wealthy, this kind of an assault on government is profoundly regressive in and of itself. Consider: Even at an average of only $142 a person, the 695 tax cut will blow a hole in the state's two-year budget of over $1.2 billion. Most of that money currently pays to fix roads and run ferries, but $356 million goes to local governments to help pay for things like transit, fire departments, health care, and environmental protection. 695 would run through local government programs like the dengue fever.
And 695 would also have a recurrent herpes-like effect. For in the fine print lurks the real hook: Local governments would have to hold a public vote to raise any tax or fee, by any amount. Say the local library wants to raise its charge for photocopies from 10 cents to 15 -- better schedule an election. This provision would pretty much single-handedly bring the business of local government to a groaning halt; so much so that even Big Business has come out against 695, realizing that a state full of decaying roads, broken schools, and sick people is not a good place to try and make widgets.
While rich Seattleites can afford to lose some state money, especially when they're getting more back in a tax cut than they're losing, the rest of us -- who live in cities or in older suburbs, who are less than rich, who depend on public schools and rely on publicly supported hospitals and take the bus to work -- get to pick up the real tab here.
Eyman's right, our tax code stinks. But 695 is like trying to cure an anemic with leeches. If we want fairer state government, it's time to look at truly progressive taxes, like an income tax, or "green" taxes which shift the tax burden to polluting industries. In the meantime, 695 deserves not our votes, but our contempt.
