State Senate Dems have been blogging the current session, and Majority Leader Lisa Brown has a new post up talking about, yes, taxes.
There’s been a lot of talk in Olympia recently about a sales tax increase, but we need a revenue proposal that makes things better and fairer for regular families in our state — not worse.
We need to keep in mind that, in Washington, individuals in the lowest 20 percent of the tax bracket pay 17 percent of their annual income in state taxes, and individuals in the top 20 percent of the tax bracket pay less than 3 percent. For a sales tax to be fair, any increase would have to include a full working families tax credit to offset the unfair impact on those who are hardest hit by our tax structure.
I also worry that a sales tax increase would make us even more dependent on an extremely volatile revenue stream. Consider recent evidence: state revenue, more than half of which comes from the sales tax, has taken a nosedive in the current recession. The total downward adjustment of state revenues since the last legislative session is $4.9 billion – $2.3 billion in the past two months alone.
The New York Legislature is considering what I think is a fair and stable way of addressing their revenue challenges.
Should we do something similar in Washington?
Yes, yes, we should do something similar here in Washington, and the first step toward achieving this something similar is to actually mention it by name: a high-earners income tax.
It is encouraging to see Sen. Brown publicly consider such a proposal, but also quite telling that she obviously felt the need to obliquely link to the NY State variant, rather than speaking its details openly, without hesitation. The income tax—any income tax—has long been considered the third rail of WA politics, but we’re not talking about forcing anything down taxpayers’ throats here: we’re talking about talking about holding a public debate over whether to put a high-earners income tax on the ballot where voters could approve or reject it for themselves. Why should that be so hard?
Still, Sen. Brown appears to be taking the initiative where other Democratic leaders have failed to tread, and she deserves kudos for that. What she needs now is unqualified public support from her caucus members who privately acknowledge that a high-earners income tax should be a responsible part of any proposal to close our current budget gap… politics permitting. It is high time to speak truth from power.
Before all the anti-tax bozos jump all over this with their vile invectives and Ad hominem attacks, we might consider a complete restructure of how taxes finance government and the public. No matter how anti-tax the bozos are, they still want government to do a whole bunch of stuff for them, but hope others will pay for it. That ain’t gonna happen. What can happen is careful deliberation about what taxes should be used for what purposes. It makes perfect sense that those who choose to drive cars pay taxes and fees that support transportation and public safety (this includes cities as well as Interstates). Aren’t there other items in budgets that need similar intelligent solutions?
I have forever been against using property taxes to support education. All citizens need to step up and choose whether or not to pay to educate the future. Thus Federal money is a necessary good, while property tax unfairly places burdens on those who still have mortgages. Sales taxes are a reasonable and rational way to fund education, voted upon regularly, raised or lowered by demographic needs etc.
Likewise a state income tax is very useful to cover government operations, at the state and even county levels, in conjunction with property taxes. If you demand a claim to own stuff, then pay to protect it, and all of the costs for supporting that sort of infrastructure (and higher education equates to greater security and integrated social improvements). Parks & recreation are an absolute good, as are the arts and must be supported either through tax breaks on corporate and personal income taxes (as in the old much higher tax rate days) or directly through legislative statute. Excise and business fees, taxes, licenses need to cover the regulatory investments to hold business operators and owners accountable for their proclivities for greed.
Tiering the tax systems also locates funding source opportunities for health care basic coverages and for the hidden costs of governing. We need to remember that every single dollar of government spending quite quickly ends up in the hands of corporations (mostly outside the state–energy companies, big oil, paper production, IT services, vehicles, etc. et al). Everything government does is paid for through contracts that provide direct or indirect (labor pays local taxes and services do they not?) payment to corporations and small businesses.
The H.I.T job!!
I just love it. Time for those who’ve been voting R and getting HUGE tax breaks to pony up and pay, and pay back, what they owe.
If lower income people pay 17% of their income to taxes, then so should the highest income earners.
Put it to a vote: MAJORITY RULES!
Here is one fair question:
When Brown sets the Income Tax Rates, to what level of Revenue is she setting them?
If she is trying to set them at a rate = to the peak of the Economic high…she will certainly get nailed as indeed, that is a major tax increase.
If she sets them at a rate to generate the same amount of revenue projected for 2009-11 Biennium, you coudl make the case it is not a tax increase.
Something tells me this will be the former…
If so, I suspect voters will view this entire Budget Process as a chincy charade.
1st the onerous Budget cuts.
Then the Tax increase.
So Goldy, is this going to be an overall Tax increase (aka taking more money out of our colloective pockets) or is it going to be TAX NEUTRAL.
Anything more than Tax Neutral is a Tax Increase.
I hope Brown understands that Millionaires will flee…as Puddy pointed out happened in California. It’s well documented.
And some of those millionaires will take a bunch of jobs with them.
Every action has consequences.
It is important to think thru the consequences and be realistic and upfront about the undesirable ones.
Don’t let your dogma get in the way of good, sound decision-making.
Mr. C at 4 writes:
“So Goldy, is this going to be an overall Tax increase (aka taking more money out of our colloective pockets) or is it going to be TAX NEUTRAL.”
If by “collective” if you mean the millionaires and billionaires. Yes, then the rich people will see it that way.
Just the same way when President Obama gave 95% of the country their tax cut first. Now that we got ours, FULL STEAM AHEAD MR. PRESIDENT ON YOUR AGENDA!!!
See that’s a twist on your playbook Mr. Cynical. Your message was “tax cuts for the people because it’s your money and you know how to spend your money better than the government.”
Only problem was, the people didn’t get squat and the Paris Hilton and Dick Cheney types made off like the bandits they are.
Ya’ll gots played big time by the “community organizer.” OUCH!
Another miserable attempt by the almighty Senator Lisa “egg on face” Brown that will go down in flames. Just like her chickenshit “lawsuit”/end-run attempt over the peoples’ passing of I-960. Stupid bitch can’t do anything right. Just when I thought it couldn’t get any worse than Gregoire. How nice.
Cycical,
I doubt any of those Millionaires have businesses in uncompetitive markets. Their leaving will open up market share and someone will step in. For a person who sounds like they believe in the markets you don’t put much faith in it.
Also, have you thought about the externalities involved in businesses leaving the state? It isn’t just about what the owner pays in taxes. It is about having infrastructure that supports the work and workers. Things like housing and transit. As well as synergistic research centers and educated populations. Not to mention the simple reality that moving a business is a risky venture many owners (of med. size companies) will sell it off (meaning no major net job loss) and start one elsewhere.
Second, there a lot of states with progressive tax structures (many are more conservative then ours) and they have plenty of large incomes to tax.
I agree that sound decision-making means looking at the consequences. However, knee-jerk “the rich people will leave” reactions aren’t a starting point.
Further, I think it goes without saying at this point that something needs to be done. WA state has one of the most backward unsustainable revenue systems I’ve seen. As someone coming from VA (not some liberal wonderland) I think WA could learn something from a state with extremely stable revenue streams. A balance of sales (no/low tax on food and drugs), progressive income, and valued (local) property taxes really is the best way to build a well functioning state revenue system.
@1 There are a number of things in your comment that are inaccurate, but I’ll single out the one that sticks out like a sore thumb:
“Everything government does is paid for through contracts that provide direct or indirect (labor pays local taxes and services do they not?) payment to corporations and small businesses.”
Response: The majority of what government does is accomplished by salaried government employees. That money does not go to contractors, vendors, corporations, or small businesses.
@6 et al.: Another miserable attempt by shills for the Freeloader Class to rationalize away any suggestion they should pay their fair share.
Cynical’s doctrine seems to be that we have to bribe businesses to stay in our state. I’m thinking if they’re a revenue drain (incentives, development grants, assorted giveaways, etc.) instead of a revenue source (taxpayers), why not encourage them to leave? We’ll be ahead if the freeloaders go somewhere else.
The conservative mantra is to pay workers nothing and make workers pay all the taxes. That’s a pretty effective design for permanent economic depression. If consumers have no money, they won’t buy anything, and businesses will have no sales.
We can’t possibly do something to help the people at the bottom! The people at the top pay damn good money to buy these politicians to do their bidding. It is more important for these politicians to honor their “contract” with the rich fatcats, than it is to do what is right for the vast majority of us.
You lefties crack me up:
How many taxes and programs already DON’T pay for what we were told? Cig taxes? LOTTO?
Once we get an income tax it’ll just be a matter of time before we have income AND sales tax. City, State and Federal.
NO? Look at the east coast.
Look at the seatbelt law that started out as “just” a secondary offence.
Oh yeah, I’ve got your anti tax bozo hanging.
Chaz @7,
Ignore Cynical. He talks out of his ass.
I mean think about it… what is the marginal utility of moving out of state to avoid an income tax when 44 other states also levy one?
Lets say you earn $300K/year. Nice living. Under the EOI proposal I use as my starting point, you’d pay 3% on income over $200K, amounting to an additional $3,000 a year. How many folks earning $300K a year are going to uproot themselves and move from Seattle to Texas to avoid $3,000/year in taxes? Where’s the sense in that?
Or, let’s say you earn $5 million and this tax costs you $224K/year… a big chunk of money. But you’re earning $5 million/year for chrisakes, and you can afford to live wherever you want. Are you really going to move to Texas, where you don’t want to live, simply to save $224,000 you’re just gonna piss away on some luxury? I don’t think so.
All things being equal, if you don’t have any preference for one state over another, and no job or business to tie you down here, perhaps you choose the state with the lower tax rate. But the notion that this tax is going to result in an exodus of rich folks to TX, FL, WY, NV, SD and AK is ridiculous.
Funny thing is, WA already has one of the highest business taxes in the nation, especially on small companies and startups, an imbalance that cannot be corrected without an overhaul of our tax structure. And yet folks still flock here to start up businesses. Go figure.
4 There aren’t any millionaires in California?
Yeah, right…
Cynical, that’s really lame even for you.
Maybe the Legislature ought to consider an out-of-state landlord tax.
I-960 will get overturned just as soon as enough far left wing judges get on the state court. Just give it another 2-4 years.
ArtFart – wow, CA has 1 millionaire left! Congrats on your powers of observation…
Sam Adams,
Get off of it. Take Virginia which has a population a little smaller than ours and an economy of a similar makeup. VA has sales, income, and property tax but the tax rate per capita is smaller. Balance and stable revenue are good for all stakeholders. Economies are more stable when government spending is stable, businesses enjoy states who can provide stable levels of service, and that is the reality.
Actually, millionaires tend to live in areas that have high taxes, because, as it turns out, they like good roads and schools and police & fire protection, parks, sidewalks, streetlamps, speedbumps, etc…
20
Point well-taken. As Mike Lowry (Damn, I miss him) once said, the rich should stand up and demand to pay higher taxes because taxes pay for those things that individual wealth cannot buy–clean air and water, a sound infrastructure, an educated populace and workforce, protected wilderness, etc. He was, of course, entirely correct.
The flat tax does not look as though it would be challanged as being unconstitutional and could, I expect be put into effect more quickly than a graduated income tax or a high income tax since both require accounting from the start of the calander year.
@21, @22 – WA state currently does all those things yet faces $9 billion deficits. When is it enough? Stop giving in to the unions!
23 Ah, yes indeedy. Organized labor, the right wing’s all-time favorite whipping boy, at least after Communists, Muslims and uppity wimmen. How DARE those greedy bastards think that ordinary people should expect job security, medical care and the privilege of not having to eat out of dumpsters when they’re old and grey? That’s only for….(nose-in-the-air for emphasis) the good people, whose blood is sufficiently blue.
GBS: You realize YOUR TAXES will go up. I know you are in the BIG TAX BRACKET!
maybe this would be a time for a …….
flat tax
how about
1% on income above $35,000
better than bleeding the heart out of the state
Obama raised tobacco tax 62 cents today. I thought Obama wasn’t raising taxes on peeps under $250K a single dime. Looks like it was raised a few dimes!!!!
@27
You know, as a (relatively) poor smoker I don’t have a problem with raising the tobacco tax. Not one little bit.
If I don’t like the tax I have an easy way of avoiding it: quit smoking.
Chaz–
The problem is the other taxes & fees on top of the income tax….that can be re-enacted at any time.
That’s why I would fight the income tax.
You are letting the camel’s nose under the tent…pretty soon the whole smelly camel is in Kountry Klubber steve’s bed!
@29
I think wingnuts need to pay a 100% income tax and a 300% sales tax on everything including food and services.
We know the Moonbat!s supported Obama and Gregiore, therefore they should be more than willing to pitch in and cover the $9Billion shortfall.
Come on Chris Stefan cough up $10,000 more; she’s your Queen! You jockstrapped her. Open that bank account and put your money where your vote was.
Response: The majority of what government does is accomplished by salaried government employees. That money does not go to contractors, vendors, corporations, or small businesses.
Roger, you certainly didn’t quite comprehend the intent of my remark. To whom do the dollars paid to the salaried employees go??? Well quite frankly they spend their dollars on contractors, vendors, corporations and small businesses. They buy food, gas, energy, mortgages (contract), furniture, cars etc., et al, so on and so forth. The dollars spent on labor are no different than the dollars spent on paper. The only substantive difference is that employees pay local, regional, and state taxes (and IRS) whereas most corporations have figured out how to significantly lower their shares by outsourcing and offshoring. Every dollar in salary becomes a dollar in the economy, but most is gobbled up in out-of-state corporations.
Goldy@14
Don’t kid yourself. If Washington starts an income tax you will see people leave.(see Cal)
Our State budget problem in a nutshell. Dem’s want to be althings to all people. To many people in our state want everything for free(housing,food,transportation)there are way to many nonproducers compared to producers. Until nonproducers become producers nothing will ever chance in our State or Nation for that matter!