"Here in Washington, we're as bad off as any place could be. We are simply the most regressive tax system in the nation."

Bill Gates Sr., father of the Microsoft founder and spokesperson for Initiative 1098, which would create a state income tax, didn't sugar coat his message when he and Phinney resident John Burbank spoke at a Sept. 14 fundraiser at 36th District Sen. Jeanne Kohl-Welle's Queen Anne home.

Gates pitched the initiative as a much-needed step toward improving public education in the state. Washington currently ranks 46th in the country in spending on education per $1,000 of income and 37th in per pupil spending, he said.

There have been $12 billion in cuts to the state budget during the past three years, including chronic underfunding of education, said Burbank, executive director of the Economic Opportunity Institute.

"It's an impossible situation we're putting our teachers in," he said. "And, it's going to get worse."

Initiative 1098 would create an income tax of 5 percent on single filers making more than $200,000 per year or joint filers making more than $400,000. The tax would increase to 9 percent for single filers earning more than $500,000 or joint filers earning more than $1 million per year.

While the lowest 20 percent of Washington earners pay 17 percent of their income in taxes, the wealthiest 20 percent pay only 2.6 percent of their yearly income in taxes, Gates said.

"We're at nowhere near proportional contribution toward the cost of our government," he said.

The income tax would only apply to the wealthiest 1.2 percent of Washington residents, but it would bring in $1.6 billion in net revenue in the first year, Burbank said. By the second year it would bring in $2.2 billion, and by 2018 it would bring in $3 billion annually, he said.

Seventy percent of the revenue generated by the new tax would go toward education. The remaining 30 percent would be used to pay for public health services, Burbank said.

More than 40,000 residents have lost basic health coverage and another 120,000 are already on the waiting list for it, he said.

In addition to creating an income tax for the state's wealthiest residents, Initiative 1098 would reduce state property taxes by 20 percent for all home and business owners.

It would also increase the small business tax credit from $420 to $4,800 annually. That increase would eliminate the state business and occupation tax for more than 80 percent of businesses and reduce it for another 10 percent, Burbank said.

He said small businesses pay twice as much in state and local taxes proportionally than big corporations, and under Initiative 1098, 95 percent of taxpayers would see a reduction in their taxes.

"It's important for the lower class, it's important for the middle class, it's important for schools," he said.

Critics argue the initiative is a way of picking on the rich, but the government would not be doing anything bad or incorrect by taxing the richest 20 percent of Washington residents, Gates said.

He said if Initiative 1098 passes in November, Washington's tax system would still be unfair toward the lowest earners, just not as much so. Or, as he originally put it, "The chart will still look like hell."

If the initiative passes, the top 20 percent of earners would be paying 5 percent of their annual income and the middle class would be paying 10 percent, Burbank said.

Burbank said residents do not need to be concerned that the state government would expand the income tax to lower earners in the future.

According to the initiative, any changes to the income levels affected by the tax would have to come from a popular vote. Also, the Washington State Legislature is too afraid to touch the issue of an income tax, which is why Initiative 1098 is coming before voters in the first place, Burbank said.

Kohl-Welles, whose home hosted the more than 150 fundraiser attendees, including Seattle City Attorney Peter Holmes, former 36th District Rep. Helen Sommers and popular travel writer and television host Rick Steves, introduced a similar income tax bill to the legislature two years ago. It didn't pass.

"I think this is something that makes eminent sense because our tax structure is one of the most regressive in the country," she said.