High Income Earner Taxes and Stable Revenue Sources

April 22, 2010

From Business Week:

Bill Gates Sr. is leading a new initiative campaign for a state income tax on wealthier residents, saying Washington's current tax system is unfair and doesn't supply a steady stream of money for important state programs.

Bill Gates Sr. has noble intentions in attempting to find an equitable and stable revenue stream for the residents of Washington. A fair distribution of the tax burden can have many possible meanings depending on the individual and his/her values. Steady stream of revenue however can be studied by comparing the stability of different revenue sources. Evidence suggests that income taxes are not as stable a source of revenue as some alternatives.

Tax revenues from personal income are also volatile—in fact, the second most volatile tax source in both the nation and the district after corporate income taxes.

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