In a couple of days, the Yes on 1098 campaign will turn in somewhere north of 360,000 signatures for Initiative 1098 - far more than enough to qualify for the ballot - and the campaigns for and against the measure will begin to heat up. Opponents of I-1098 claim the measure will excessively impact businesses, but they've overlooked an important fact in their rush to condemn it.

Since I-1098 proposes a modest tax on adjusted gross income (AGI) above $200,000 for individuals or $400,000 for joint filers, it neither favors nor punishes businesses - or any other income source for that matter. Whether received from daily wages, winning the lottery or taking a share of a corporation's profits, the same rates and thresholds apply to all.

Washington's current

business tax (the Business and Occupation or "B&O" tax), on the other hand, is a different story. Since B&O taxes are levied on gross receipts - before expenses, before depreciation, etc. - businesses pay tax regardless of whether they turn a profit. Moreover, small and medium businesses pay a disproportionately high share of their income in business taxes.

I-1098 addresses those issues in two different ways:

• First, by taxing high incomes (earned after a business has turned a profit), instead of taxing gross receipts (regardless of whether a business has turned a profit), I-1098 will make it easier for entrepreneurs to find an economic foothold and grow their business.

• Second, by increasing the B&O tax credit from $420 to $4,800 per year, and reducing the state portion of the property tax by 20 percent, I-1098 will make it easier for the state's existing small businesses to make ends meet.

Only a small proportion of high-income individuals who claim net business income will be affected by I-1098's income tax. In 2007, just 1.6 percent of all Washington tax returns reported over $200,000 in adjusted gross income while claiming net business income. Put another way, of all Washington tax filers claiming any net business income in 2007, only 10.6 percent showed an AGI of more than $200,000. And since 85 percent of high-income returns are filed jointly, a substantial proportion of those tax filers would be exempt from paying state income tax on adjusted gross income up to $400,000 per year.

In other words, I-1098 will make it possible for more businesses than ever to start and succeed in Washington.

It looks like I-1098 will make it onto the November ballot in Washington. Petitions turned in on Thursday, July 1, to the Secretary of State's office contain an estimated 360,000 signatures, well over the required number.

Aaron Keating is Communications Director at the Economic Opportunity Institute in Seattle, WA.