Bill Gates Sr., Nick Hanauer held a conference call today, and I was invited to participate. It was in regard to Washington state's Yes on 1098 initiative.
Per an e-mail:
Bill Gates Sr. and Nick Hanauer will be discussing Washington State's I-1098 - a sort of Robin Hood initiative because it taxes the rich while cutting taxes for the poor and middle-class. As tax fairness falters on the national stage, some of Washington State's best known civic leaders like Bill Gates Sr. -- father of America's wealthiest man -- have stepped up to fix the problem in their state, only to face entrenched opposition from corporate titans.
"Only in places where the wealthy pay their fair share is there economic vitality." - Nick Hanauer, entrepreneur, venture capitalist, and leading 1098 supporter.
According to SeattlePI, “Washington has one of the least fair tax systems in the country… The poorest 20 percent of Washington families currently pay 17.3 percent of their income in state taxes. The highest-earning one percent of families in the state have a "burden" of just 2.6 percent.”
Yes on I-1098 is a growing coalition of respected business, labor, and civic leaders who support a careful, balanced reform of our state’s tax system intended to cut taxes for the middle class and small businesses, while creating a limited tax on the wealthy to provide a stable, dedicated funding source for education and health care.
William Gates Sr., prominent Seattle attorney and father of Bill Gates, cofounder of Microsoft
Nick Hanauer, founder of aQuantive and Partner at Second Avenue Partners
My favorite quote from the call:
There's a difference between a happy story that they're telling, and a true story, which we're telling. If a place exists where nobody paid taxes, and everyone lived like a king, it would be in tooth fairy land. It doesn't exist.
Fairness and prosperity are both important to the community. Income tax is a moral issue of fairness, and an economic issue of prosperity.
Since the Reagan Revolution, top 1% has increased 220%. Wealth in bottom 50% declined a third, to about 12%. So, services are under a lot of pressure.
In WA, we have a state tax system that is the most unfair of any state... if you're working class, you pay 17%, middle class 12%, 2 1/2% if you're in the top 1%.
Those who benefited most abundantly pay essentially nothing. And they keep coming up with excuses to defend this. I am in the top top 1/10th of 1%.
Trickle down economics, limited government theory is the form this takes. It's utter hogwash. There are no robust economies in the world that sustain themselves where rich people don't pay their fair share. If you care about your community, you put your money where your mouth is.
Next: Prosperity. Many who oppose this initiative think it's bad for the economy of WA. Their statistics are hogwash. All the places on earth where rich don't pay their fair share are hell holes.
The rich must pay their fair share. If we put income tax in place, all the rich people will leave, they say. Untrue. Theoretically, it implies biz people are money grubbing sociopaths who only care about taxes. But if true that taxes would drive us all away, then income taxes in CA, NY would've driven their people away, didn't happen. Silicon Valley, for instance.
Celebs still live in L.A. despite taxes.
But more important to business people is the social/economic climate that produce opportunity to create wealth. Public education, universities, roads, etc. are more important.
Bottom line: This moral issue is about fairness... as a society, do we want to face the need to live up to obligations to put our money where our mouth is? And have a reasonable perspective on how to invest in public infrastructure that makes prosperity possible?
Bill Gates, Sr.:
WA's 47th in public school systems. This is inconsistent with the dreams of this state. We want a great education system, that's what the initiative is about.
We need the money to rectify this. We need to be able to participate in a basic health plan.
This is a very modest income tax: 98-99% of citizens won't be asked to pay anything. If you make $500,000 a couple, you'd pay $5,000. A million? $25,000 total tax bill. 2 million? Total tax bill, around $80,000 a year. Not an onerous tax. Just a way to get the wealthiest to contribute, not in proportion to others, but something to the state that benefits them.
Bloomberg News: Why just the wealthy?
Tactical. WA has high antipathy of income taxation. We're trying to organize a way to fund schools, something that wouldn't reach everyone in the population, especially targets those who haven't been called upon to pay their fair share to the state.
Q: Money to education,health care... what if legislature uses the funds as offset? Taking the money out and using it for something else?
There's a constitutional obligation to fund education. The courts are dealing with that. The burden on the legislation would be impossible to avoid.
Financial Times: How did Bush tax cuts play into this in WA? Polls are negative.
National debate on taxation is a part of this debate. It reflects an important argument about how to build prosperity. Trickle down and limited government since Reagan is being debated as to whether it works. I don't think it works unless you're as rich as me, in which case it works very very well. But the bottom 50%, $32,000 a year, are not doing well. Concentration of wealth is at the very top, tippy top 1/10 of 1%.
I fear for our country. We're in very bad shape, the dialog is not super productive. You're gonna see the death of this trickle down thesis over the years as you see it does not work-- for the other 99% of you.