1) Two years after I-1098 passes, the state legislature (a majority of them anyway) decide they want to be voted out of office, so they vote to amend it.

2) After the legislature commits what amounts to political suicide, no one chooses to challenge whatever law the legislature passed via initiative/referendum.

3) After it is challenged, it goes to the ballot and the voters of Washington approve expanding the income tax.

None of those three scenarios seems likely to me, and even less so all three of them occurring.

As for the property tax percentage you mention, I-1098 does in fact cut the state portion of the property tax by 20 percent. On average, about 80% of property taxes paid go to local counties and are for schools and investments in other public structures. So the effective property tax reduction for an individual or business would likely be around 4%, depending on their local situation.

You can calculate and itemize your personal and business tax changes under I-1098 using EOI’s online I-1098 Calculator, available here: http://www.eoionline.org/tax_reform/calculator.htm

I am worried that all the tax paying Washington state citizens will be paying an INCOME TAX in a few years.

Also several Seattle news stations tell us it is not 20 percent it is FOUR!

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But your own analysis above is incomplete, in that you address only business income for taxpayers with an AGI above $200,000. A more comprehensive approach would include all tax filers claiming net business income.

Our updated fact sheet reflects that broader perspective, noting that of all WA tax returns claiming net business income (from a sole proprietorship, S-corporation and/or partnership), only 10.6% show an AGI of more than $200,000. And since 85% of high-income returns are filed jointly, under I-1098 a substantial proportion of those tax filers would be exempt from paying state income tax on AGI up to $400,000 per year.

Most business owners will also see a tax cut under I-1098. According to analysis by the Department of Revenue, I-1098 would exempt 81% of Washington businesses from B&O tax payments, and reduce B&O tax payments for another 12%. Every business that owns property would also see a 20% cut in the state portion of their property taxes. (See second link below.)

Links:
http://washingtonpolicywatch.org/2010/06/22/initiative-1098-will-business-owners-pay-state-income-tax-updated/
http://www.eoionline.org/tax_reform/fact_sheets/PropertyTaxReductions-Jun2010.pdf

~Aaron Keating
Communications Director
Economic Opportunity Institute