More On Tax Planningfrom The Advisor's Professional Library
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- IRAs: Eligibility The eligibility rules for contributing to traditional and Roth IRAs are complicated. Learn how to effectively use them in retirement plans.
The state of Washington, beset by budget cuts as are many states across the nation, is considering a radical step: an income tax on the rich. And Microsoft founder Bill Gates and his dad, William Gates Sr., are campaigning in favor of the measure that's on November's election ballot, as reported in The Los Angeles Times.
Washington hasn't had a state income tax since 1933, but in a TV commercial that's also on the Web, Gates Sr. takes a plunge into a dunk tank, surrounded by kids having a wonderful time. Soaking wet, he says, "Some people say Initiative 1098 is about soaking the rich. But it's really about doing something for the next generation. You see, state cutbacks have put our kids at risk, and we can't just sit here and do nothing about it."
Of course, life's not that simple: not all the wealthy are in favor of being "soaked." Steve Ballmer, Microsoft's chief executive; Jeff Bezos, founder of Amazon.com; and John Nordstrom of the luxury department store chain are firmly against it, and spending big to have their say.
The proposal is similar to President Barack Obama's; it would tax gross income above $200,000 for individuals and $400,000 for couples, and take the resulting $2 billion per year and sink it into health care and education. Small businesses and property owners would come in for a tax reduction.
Neighboring Oregon "easily" passed a 'tax-the-rich' law earlier in the year, and raised taxes for corporations, too. But Washington has used its income tax-free status to attract business, and some are crying foul.
The jury is still out, but Gates reminds people that the strategy has been around for a long time. And the small businesses that will benefit from the tax cuts attached to the measure are looking forward to a break.