Wash. Billionaires Split On State Income Tax

On Tuesday, Washington state will vote on a measure to tax the rich. The state's billionaires will split their votes.

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STEVE INSKEEP, host:

Here's one of many ballot measures that people will vote on across America tomorrow. Washington State voters decide if they want to tax the rich, and the state's billionaires are divided over whether it's a good idea.

From Seattle, NPR's Wendy Kaufman reports.

WENDY KAUFMAN: Washington is one of only a handful of states that doesn't have an income tax. This initiative would impose one on the state's wealthiest residents. For individuals, the tax would kick in above $200,000 - twice that amount for couples. The measure's chief proponent is William Gates - not that Bill Gates, but the Microsoft founder's dad. The prominent lawyer and elder statesman feels so strongly about the money it would create for education and health care, that he's climbed atop a carnival-style dunk tank for this TV ad.

(Soundbite of TV advertisement)

Mr. WILLIAM GATES (Attorney): Some people say Initiative 1098 is about soaking the rich, but it's really about doing something for the next generation.

(Soundbite of splash)

(Soundbite of children shouting, laughter)

Mr. GATES: Vote yes on 1098.

KAUFMAN: Another tax supporter is venture capitalist Nick Hanauer. He calls this a moral issue.

Mr. NICK HANAUER (Venture Capitalist): In Washington State, we have the most unfair tax system in the country. Middle-class and working-class people pay a huge proportion of their earnings towards supporting the state, but if you're somebody like me, you pay almost nothing.

KAUFMAN: But initiative opponents, including billionaires from software, cell phones and online shopping counter that this measure is bad public policy, and they're appealing to less well-off by saying an income tax on the rich now will mean a tax on everyone else in the future.

Even if the tax isn't extended, Venture capitalist Matt McIlwain says the proposed tax would make it much harder to attract and keep the best and the brightest in business.

Mr. MATT MCILWAIN (Venture capitalist): The lack of a state income tax is a very compelling competitive advantage for us.

KAUFMAN: He says Texas, which does not have a state income tax, is already trying to lure Washington companies there, should the measure pass.

Mr. MCILWAIN: States that don't have an income tax are the ones that are creating economic growth, and there's a long track record of that.

KAUFMAN: Not a single income tax-free state has adopted the tax since the early 1990s.

Wendy Kaufman, NPR News, Seattle.

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