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Little spillover seen from Washington's income tax intitiative

From msnbc.com's Tom Curry:

Seattle, Wash. -- As he walked through a middle-class neighborhood in Lake Stevens, Wash., last weekend targeting likely Democratic voters who hadn't yet mailed in their ballots, House Democrat Rep. Rick Larsen came face to face with a tax question that might affect this year's races in this Democratic-leaning state.

Ed Moriarty, a sales representative for Motorola, greeted Larsen and had a cordial conversation on the congressional race, then asked, "What's your position on the state income tax?"

If voters approve the measure, called Initiative 1098, the state would impose a tax on incomes above $200,000 for individuals and on income above $400,000 for couples. It would cut property taxes and business taxes on small firms.

"I don't have a position," Larsen replied, saying to Moriarity with a chuckle, "I'm like you; I'm going to talk to my wife. I really haven't spent any time going through the initiatives." Larsen is facing a strong challenge from Republican John Koster who opposes the income tax.

Lake Stevens voter Moriarty seemed inclined against the tax saying to would affect "the small business guys, partnerships, 'S' corporations and LLCs, they pay personal income tax…. I just think it's a slippery slope myself."

To Larsen's noncommittal stance, Moriarty said, "That's fine. I'm just curious."

Over a cup of coffee at local supermarket, Larsen said, "People are not associating any of these initiatives with any other race. They don't equate these with any candidates."

Seattle-based pollster Stuart Elway agreed with Larsen's assessment, saying, "I don't think the initiatives are associated with the candidates. Mostly it's a matter of state issues and federal candidates."

He added that the tax measure is unlikely to spark a big surge among conservative voters. "We are such a high turnout state -- always in the top two or three, and the Secretary of State is predicting 66 percent turnout this time -- that the 'enthusiasm' is already baked into the data."

Matthew Parker, a spokesman for Koster, said "I think it will help our turnout," but added, "I don't think it will dramatically change turnout."

Republican Senate candidate Dino Rossi opposes the proposed income tax, while Sen. Patty Murray has not taken a position on it. In the tight House race in Washington's Third Congressional District, Republican Jaime Herrera opposes the tax proposal; her Democratic opponent Denny Heck has taken no position on it.

Prominent Seattle attorney Bill Gates Sr., one of the sponsors of the ballot measure, said in a conference call with reporters Wednesday the political environment this fall probably makes it more difficult to pass the tax proposal.

"Things are in a bad state (economically) and people are feeling some pessimism... it may be in many cases it would influence them to vote 'no.' On the other hand, I think the people in this state are anxious to have the best possible public education system, so that would influence them to go ahead and give approval to 1098," he said.

Sandeep Kaushik, spokesman for tax initiative supporters, said "We see 1098 as fitting into a larger national debate that is going on about taxation and particularly around the question of taxing the wealthy. We haven't seen much movement on the federal level in recent months… but here in the Northwest we have seen efforts on the state level to take action." In January, Oregon voters upheld the state legislature's decision to increase the state's income tax on higher-income people.

According to non-partisan Tax Foundation, if voters approve the tax, Washington would be the first state since Connecticut in 1991 to enact a personal income tax. Seven states have no state income tax.

Supporters of the measure have raised $6.3 million to push for passage; foes have raised about an equal amount. Major funders of the pro-tax side are the Service Employees International Union, the National Education Association, and the state employees union, as well as Gates himself. Gates is the father of Microsoft founder Bill Gates, Jr.

Major donors to the 'no' side include Microsoft CEO Steve Ballmer, Paul Allen, co-founder of Microsoft and now a major real estate investor, and Amazon.com founder Jeff Bezos. (Msnbc.com is a joint venture of Microsoft and NBC Universal.)