I agree wholeheartedly with the headline, if not the text of a recent Seattle Times editorial: “Washington state’s finances require long-term solutions.”
Of course, the one long-term solution the Times doesn’t mention is tax restructuring… you know, reforming our tax system so that revenues actually keep pace with growth in the economy, while distributing the burden more efficiently and fairly. That’s to be expected from the Times ed board, which on revenue issues has pretty much become a mouthpiece of the state GOP.
But the editorial does make one argument that’s as applicable to the revenue side of the equation as it is to the spending, and which progressives should heed as we attempt to deal with this unprecedented budget crisis:
Opponents will say that such suggestions don’t produce that much money in this budget period, and they will be right. These are ideas for the long term — and now is a really good time to consider them.
This is, of course, exactly the argument I’ve been hearing from many of my fellow Democrats whenever I advocate for a high-earner’s income tax as part of the solution to the current fiscal crisis. It can’t produce revenue fast enough, I was told last year as legislators battled to put together a two-year budget in the face of record revenue shortfalls. It can’t produce revenue fast enough, I’m being told this year, as legislators prepare to fill an additional $2.6 billion gap. And no doubt the same argument will be used to brush aside the suggestion again in 2011 and 2012, as the state struggles to deal with what are becoming perennial revenue shortfalls.
An income tax is a distraction, I’m told, that only complicates the political machinations necessary to assure that some sort of tax increase be a part of the current budget negotiations.
Yeah, well, the problem with this line of reasoning is that while implementing an income tax can never be a short-term solution, it’s exactly the kind of long-term solution we need to make sure that more short-term solutions won’t be as necessary in the future. And with the budget crisis — and the unpopular cuts it necessitates — fresh in voters minds, now is the best opportunity we’ve had in decades to get some sort of income tax approved by voters.
Wait until we don’t have a short-term budget crisis, and there won’t be the popular will to swallow and accept an otherwise unpopular long-term reform.
The Times editors and their fellow Republicans are thinking long-term; they want to use this crisis to permanently shrink the size of state and local government and cripple its ability to provide the services people want. They may not be willing to come out and say it, but they are advocating for a paradigm shift, in which government plays a much smaller role in our local economy, and a much smaller role in funding health, welfare, education and public infrastructure.
We should be thinking long-term too.
Several studies of how states are doing during this recession point out that states that rely on income taxes are actually doing worse in terms of revenue than those that don’t. Income taxes are more volatile than sales and property taxes, in other words. See http://www.realclearmarkets.co.....97522.html as an example.
So what is the evidence that having an income tax in WA would have lessened this crisis? And if it would have, why would WA’s experience have been different than states like CA that do have income taxes?
I’ll most likely be dismissed as a troll, but I really am interested in this subject and would welcome serious conversation on the volatility issue. I also understand that there are other reasons to impose an income tax, but volatility in revenue collection seems to be one that comes up often here in WA, which is difficult to understand given that WA’s tax revenues have been amongst the most stable of any state these last few years. We are doing great compared to most other places!
Goldy, if your daughter does better at school than her classmates, do you punish her for that?
Or if her best friend gets an “F” in a subject your daughter got an “A” in, do you suggest your daughter share her “A” with her friend so they both are equal with a “C?”
Progressives see economic equality as the highest form of social justice, so they have become obsessed with questions of income inequality.
@2. Your analogy is flawed but I can see why you use it. It has easy similarities that seem equivalent if you don’t think about it.
The daughter put forth an effort, took a risk on studying instead of watching TV and earned an A.
The entrepreneur put forth an effort, took a risk on building her business instead of coasting and earned an immense wealth.
But….
Education is unlimited, the amount of wealth and resources is more finite.
There is not a limited bucket of knowledge, that for the daughter to drink from and get an A, means the classmate is forced to be stupid and earns an F. Both can learn and be smart without out hurting the other.
At some point, the entrepreneur has gained enough personal wealth that she can comfortably provide for her family so I don’t have a problem taxing her after that point, so that others can approach her level of personal wealth.
@1. Redmond Dad 12/14/2009 at 10:35 am,
raises a good (and verifiable) point.
Let me add a twist.
A long term view would impose and additional income based tax that would go to zero if/when we find ourselves in a recession.
Also, the proceeds of an additional income tax go 100% to the rainy day fund.
Thoughts?
A long-term view would be to raise taxes during a recession (like we have done in EVERY OTHER RECESSION) and use the proceeds to create jobs.
@4. Hummm.
So when the economy goes down, the rich are allowed to get richer? That sounds like a incentive to crash the economy.
Rich people would be lobbying all the time to have the slightest down turn labeled a recession.
Who defines what “comfortably provide” means?
I suggested in the other thread you visit http://www.globalrichlist.com/ and enter your income.
I am willing to bet one of the many people beneath your wealth level will see you as having more than you need. For example, do you have a garbage disposal in your sink? How would that guy in some third world country that has watched family members starve to death think of someone that has a machine to get rid of unwanted food. If you have unwanted food, to him, you have waaaaay too much.
Do you see yourself as having so much more than so many other people?
@2, @3 A better analogy would be that if you’re thirsty, do you look for a drinking fountain or a soap dispenser? Similarly, if you need to raise money, do you go to where there is some (i. e. people who have it) or do people with empty pockets?
There’s an outfit called the Fulcrum Foundation that raises funds to subsidize Catholic schools and provide tuition assistance to children of families with modest means. Is it wrong that they concentrate on inviting the well-heeled to their fundraising events?
Do you see yourself as having so much more than so many other people?
Yes, Probably like you, I feel I’m blessed to have a higher standard of living than much of the rest of the world and I know how precarious that level of wealth is.
Your example is supporting my point that wealth and resources is more finite. That just as middle class and poor Americans would like the rich and ultra rich to spread the wealth around, the poor of the world would like the rich nations to spread the wealth around.
Am I wrong? Are they wrong?
It’s a falasy to think in terms of tax systems as either rewarding desirable conduct, or punishing bad conduct. When it comes to the income tax, those who oppose it always argue that it “punishes” those who are financially successful.
“Sin” taxes are specifically designed to discourage certain conduct, and their revenue accumulation is mostly incidental. These are the taxes on alchohol, tobacco, etc.
But most taxes are primarily designed to raise revenue. Any collateral affect is incidental. Sure, there is a lot of effort made to avoid unintended side affects, or to “tweak” the system to encourage certain conduct (energy efficient cars, etc.), but the primary goal of the system is to raise the revenue the government needs.
So in raising such revenue, doesn’t it make sense to go to seek out those who have the most income? Why seek greater revenue from those with less, with resulting harsher unintended consequenses due to incursions into their already-tight budgets for housing, food, etc., when a slightly larger rate imposed upon higher incomes would not only bring in much larger income, but it would also have considerably less consequences upon the household paying those taxes?
If you insist on calling it a rewards/punishment system, then shouldn’t you at least acknowledge that those who benefit most from the U.S. should pay a larger share?
i’ll say it goldy: i want a government that plays a much smaller role in our local economy, and a much smaller role in funding health, welfare, education and public infrastructure.
@3 all metaphors fail to communicate the wholeness of truth. your objection here is logical and i respect that. my critique of your argument is as follows:
we need to separate the grade from the means by which she is able to attain it.
if goldy’s daughter studies hard, she is an available recourse to her classmates as a study buddy. it is not the A that she shares but the resources she has created in the persuit of the grade.
what this means is, the accumulation of equity by an individual or group does not imply the depletion of equity from the disenfranchised. to the contrary, individuals or groups, wealthy in equity are more inclined to reinvest their resources into employment.
@8 the fulcrum foundation is doing the right thing by going to the wealthy to collect money but there is a difference between the methods by which the non-profits collect money and the government collects money. non-profits are funded by voluntary donations while the government is funded by an illegal seizure of assets.
Of course, those who oppose basic tax reform (which would include some form of an income tax) always will say that we can’t impose a new tax in the midst of a rescession, and at times of prosperity they argue that we don’t need tax reform.
Of course, any tax reform doesn’t necessarily mean that it will hurt struggling businesses or families. In fact, it might well DECREASE taxes on small-to-medium businesses or families. But you wouldn’t know that from the howl of the big guys who would be hurt the least.
Goldy–
You made it clear repeatedly in the past that your idea of tax reform will result in a major tax increase. If you try & balance the $2.6 shortfall with tax increases, do you really believe it will stimulate the Washington economy??
C’mon Goldy.
7.6% increase in L&I rates.
How much in Unemployment Taxes??
Washington State has finally flown up it’s own ass! Remember that bird I referred to that reminds me of the Atheist Progressives?
What was it called?
It flies about in smaller & smaller circles at an accelerating rate until it flies up it’s own ass???????????
Oh yeah…The DARKINERE!
Besides revenue, the state could start taking other “stuff” that it needs. ‘Just go right to the abundant sources that exist within its boarders for just about anything.
Example: State is building a new highway, and thus will need lots of cement. Evergreen Cement Company has lots of the stuff. There’s no reason to take cement from people that don’t have it, so WA .gov should just take the cement from ECC.
Next problem?
i’ll say it goldy: i want a government that plays a much smaller role in our local economy, and a much smaller role in funding health, welfare, education and public infrastructure.
So where in the world is your ideal place that does what you want? What country, or state do you want to emulate?
GOP Long-Term Tax Plan: The working class pays all the taxes, and the owning class pays none.
Libertarian Long-Term Plan: cut taxes for everybody, reduce government spending, privatize everything you can get your hands on… =o
Oba-mao had a fundraising dinner on Billionaire’s Row in san fransisco.
I doubt there were any of what liberal brian williams calls average people in attendance.
Was that wrong?
Blue John @15, challenging the flat-tailed monotreme (in italics):
Somalia fits the bill, I believe.
Though I think it might be a bit dry for that marsh-dweller.
“Yeah, well, the problem with this line of reasoning is that while implementing an income tax can never be a short-term solution, it’s exactly the kind of long-term solution we need to make sure that more short-term solutions won’t be as necessary in the future.”
Bingo! This is where Gregoire fell on her ass. She promised pie-in-the-sky that couldn’t possibly be supported with the existing tax structure. She’s tried to provide health care for the poor by taxing the poor. When she leaves office, she will have done nothing for either education or health care in any long-term sustainable sense.
Nothing is possible in this state without tax reform. In Washington state, tax reform is antecedent to everything else. Yes, it’s hard to do, but Gregoire didn’t even have the guts to try. Neither did Locke or Gardner. That’s why all three of those governors turned out to be forgettable bench warmers, to the great disappointment of the Democratic activists who worked hard to elect them. At least Dan Evans, a Republican, made the effort. We haven’t had a real governor since Evans, just a dull string of uninspiring nobodies.
@20 Edit last sentence to read: “We haven’t had a real governor since Evans, just a dull string of listless underachievers.”
(Edit function timed out too fast.)
There are two words that stand in opposition to reform on all levels. The two words are career and politician.
@2 Taxation isn’t “punishment.” It’s to pay for public services that make the whole society more prosperous. Without a legal system to protect private property, you would have no private property. Without public infrastructure and public education, you wouldn’t have a job or business.
But if you want to debate taxes in a “punishment” context, I’ll be more than happy to have that debate with you. The first thing I’ll ask is, why do we give the wealthy a free ride? Because they very clearly are not paying their proportionate share.
When I post on this blog that it doesn’t pay to work because the tax system discriminates against wage earners, that isn’t propaganda. It’s the truth. We’re a capitalist society and we mollycoddle the Owning Class.
They not only enjoy the highest incomes, but also the lowest tax rates and the most generous tax exemptions, deductions, credits, and subsidies. Workers? They get screwed. There are so many disincentives in our system against holding a wage job that it’s easy for me to turn working into gallows humor, because our tax system is that bad.
Redmond Dad,
in re your initial post, here is a fine place to start your reading:
http://dor.wa.gov/content/abou.....Report.htm
And we keep hearing that the rich people are the ones creating the jobs. So here’s a novel idea. When tax time comes around, those rich people who have created all these jobs should be required to list all the people who now have jobs because of them. Then, for each one on the list, they could get an amount, like $5000, taken off their taxes.
It takes wealth to create sustainable private sector jobs. Government jobs with a declining tax base is unsustainable.
Gregoire signed 2 consecutive unsustainable Budgets.
The chickens have come home to roost.
Businesses are leaving Washington because they can see the Progressives view them as a Kash Kow…they won’t cut spending.
They look to the private sector to bail out poor fiscal management.
It won’t work.
It’s a spiral.
Gregoire is poised to nose-dive this state into the ground.
We need to grow the pie and encourage real investment….not more government deficit spending misrepresented as ‘Investment”
@26 “It takes wealth to create sustainable private sector jobs.”
Is there some reason why those who create wealth — workers — shouldn’t get more of it so they, too, can invest and create jobs?
@26 (continued) “It takes wealth to create sustainable private sector jobs.”
This is an interesting assertion considering that two-thirds of U.S. stocks are owned by institutions (mutual funds, pension funds, banks, insurance companies, etc.) whose capital, by and large, represents the savings of ordinary people.
@26 (continued) So here we have Klown whining about the poor abused rich.
Never mind that big business and wealthy households largely escape state taxation in Washington. T
The rich pay only 3% of their income to the state. The poor pay 17%.
Klown is right about one thing, though: We’re screwing small businesses. They pay 40% of total state taxes, compared to 30% in other western states. The B & O tax, in particular, hurts small businesses and job creation.
So why are you against making the rich and big business pay their fair share in order to give tax relief to small businesses and low and moderate income households?
It takes wealth to create sustainable private sector jobs.
Wrong. It takes being able to sell goods and services for a profit to create jobs. If we don’t have an economy over here, where people have disposable income to buy stuff and services, all the wealth in the country won’t make a difference, nobody else will be able to buy anything.
You could be incredibly wealthy, set up a state of the art factory and not create a single long term job, because nobody is buying what you are selling. It would be like opening a Macys store in Somalia.
State of the State speech
I do not subscribe to this axiom.
It is true that businesses such as Microsoft, Boeing and Moe Bar are only as valuable as the workers they hire.
But it is also true that the workers are only as valuable as the leadership and planning they are provided.
The man who defends the goose that lays golden eggs is not looking out for the goose (rich people) but himself, the benefactor of the golden eggs.
I am not concerned with the safety of the goose that lays golden eggs (rich people) because when that goose senses danger, its just going to fly away. Just like Boeing, its going to say “fuck you Washington!” and start laying eggs in Japan.
You can’t outsmart the goose. Its smarter than you.
@32. Are you saying that workers SHOULDN’T be paid enough so they too can invest?
I agree that top management can make or break a company. Enron comes to mind. It didn’t matter how earnest or skilled the underlings were, the company was going down.
We need to change the rules of the economy to encourge jobs and manufacturing to be done here in the states. I think it’s called protectionism and that’s a good thing, under the right circumstances.
@33 a good employer will pay their workers enough, not because they have to but because they want to maintain the best skilled staff.
i wish i understood the enron thing better.
i have been unemployed for over one year now. i have a journalism degree and experience in film. i do not believe my lack of employment has anything to do with this imagined surplus untaxed wealthy employers.
Hi, I found your link on Twitter. I am ashamed for how the politics is done in the US today. Chicago style is a mild way to say it. Last nights vote is a prime example, one of many.