A press conference to announce Initiative 1077, the high earners income tax initiative, was held today at Soho Coffee in the Central District of Seattle.

Bill Gates, Sr., Initiative 1077’s first signatory

Announcing the initiative was Bill Gates, Sr., who addressed the need for a more fair and equitable tax structure that encourages the growth of small businesses. “Our tax code is unfair. It harms our economy and fails to provide the stable revenue we need for important state services.”

Soho Coffee is one of thousands of Washington businesses that would see a reduction – if not an outright exemption – from the state B&O tax if I-1077 is approved by voters in November.

The Initiative, as outlined in an earlier post, would tax income over $200,000 for individuals or $400,000 for couples. It would be coupled with a 20% reduction in state property taxes, as well as the aforementioned increase in the B&O exemption from $420 to $4,800. Revenues would be dedicated to funding education and health care.

It was a packed house, and reporters posed questions to Bill Gates, Sr. about the language and specific implications of the initiative.

One of the questions posed to Gates, a retired attorney, regarded the legal precedent established the first time an income tax was passed by voters in Washington State. [Some background: In 1932, the Washington State Supreme Court ruled income fit into the legal definition of property – and thus subject only to a uniform tax. This ruling voided the voter-approved graduated income tax, and also scuttled subsequent attempts at a state income tax.]

Enter 2010. With 70+ years of new legal precedent, highly respected legal scholars – and well as Gates himself, believe a voter-approved income tax measure would stand up to a constitutional challenge. “There’s a very strong belief by those who are best-informed about this, that on a review of this situation, our State Supreme Court will conclude that a tax on income is within our constitution,” said Gates.

Another reporter asked whether Gates thought the tax would drive wealthy people from the state, to which he responded by saying he would stay – and wondered where others would go. (Research does not prove a causal link between top income tax rates and where high earners live.)

A point emphasized by Gates was this initiative is a tax break for those struggling most through this recession – and not just small business owners. Two thirds of Washington households own their homes – and a 20% reduction in the state portion of property taxes amounts to real savings, especially for the elderly on fixed income budgets and families recovering from the recession.

Looking for more information about Initiative 1098? Visit the Economic Opportunity Institute website.