Pigs are flying, they’re throwing snowballs in Hell, and I’m about to agree wholeheartedly with the Evergreen Freedom Foundation (EFF).
Gov. Christine Gregoire had modestly proposed eliminating a handful of tax loopholes, valued at more than $50 million annually, to help close the state’s yawning budget gap, but as the Seattle P-I reports this morning, the Legislature failed to repeal a single one. That leaves 503 tax breaks — over $32 billion a year — still on the books. The Legislature also failed to enact a bill that would have required periodic review of tax exemptions, a “good government” issue I felt so strongly about, that I actually drove down to Olympia to testify before the House Finance Committee on its behalf.
While I don’t remember seeing Jason Mercier testify at the hearing, from his quotes in this morning’s P-I, the EFF’s budget analyst and I apparently agree that all of the state’s tax exemptions should be reviewed, and in a perfect world, revoked.
“From our perspective, you shouldn’t have any tax exemptions at all. The state should have a uniformly low tax rate that allows businesses to prosper or fail based on the free-market system, and not corporate welfare,” he said. “The answer is not to pick and choose the state’s winners and losers based on the power of a firm’s lobbyist, but to treat everybody equally with a uniformly low rate.”
He said that addressing problems with the tax code by granting exemptions is a solution for one business, “but not for the rest of the employers and employees who are being harmed by that problem.
“That was the biggest frustration with the state’s Boeing thing. Boeing wouldn’t have needed this massive tax break if the state had been addressing the legitimate business climate problems over the last decade,” he said.
“It’s a vicious cycle now because you have a bidding war between the states, trying to out-subsidize each other instead of trying to make the best business climate.”
I couldn’t agree more (which is really saying something, considering I vacillate between thinking the EFF’s political agenda is either stupid… or just shy of evil.) And considering Jason’s comments, I can’t help but wonder why the EFF didn’t join me in supporting Ron Sims’ Tax Plan, which would have met both of their stated goals: it eliminates business tax exemptions by eliminating business taxes entirely. As I wrote back in August:
While I personally had some initial reservations over this aspect of the plan, I have grown to appreciate it’s subtle brilliance. Eliminating corporate taxes is not only a clever political move in regards to the plan’s passage, it also eliminates one of the most corrupting forces in Olympia… the annual feeding frenzy of corporate lobbyists influencing legislators to pass billions of dollars of special interest sales and B&O tax exemptions. Without corporate taxes there can be no corporate tax exemptions. While the Sims’ plan is sure to be a job creator over all, it is certain to put more than a few lobbyists out of work.
To be fair to Jason, Sims’ plan was met with a stunning lack of imagination from both the right and the left. Sims proposed to eliminate the state portion of the B&O and sales tax, and replace the revenue with a graduated, personal income tax. This would have left the state with no direct tax on business operations, a thought so shocking to some of my fellow liberals that it sent many to orthopedists with tragic knee-jerk related injuries. Meanwhile, for people like Jason, the thought of even thinking about considering discussing the thought of the remotest possibility of a debate on an income tax, is apparently analogous to clutching a copy of Das Kapital to your breast, while belting out a rousing chorus of The Internationale.
I, on the other hand, have my eyes firmly on the prize: correcting Washington’s cruelly unfair tax system… by far the most regressive in the nation. And that is something the Sims Plan would clearly do, in spades.
If fully implemented, the Sims’ proposal would transform Washington’s tax structure from the most regressive in the nation to one of the least. That it would also create the most pro-business state tax environment in the US, while eliminating the economic distortion generated by our tangle of tax exemptions, is a definite bonus. Believe it or not, it is possible to be both liberal, and pro-business, and I’m confident that if more people took the time to seriously consider the Sims Plan, it could garner enthusiastic support from both sides of the aisle.
But I’m guessing that’s not what Jason and the EFF really want. For when they talk about eliminating taxes on businesses, they’re not particularly interested in replacing the revenue from somewhere else. Their goal is not just to eliminate taxes, but for the most part, to eliminate much of government as well.
So enjoy the porcine aviation while it lasts, for I’m guessing it will be cold day in Hell before the EFF and I voice agreement on tax policy again.
Excellent post, Goldy, however, can someone explain to me how the D’s completely ignore the Sims plan because they don’t want to go out on a limb but WILL go out on a limb for a 9 cent gas tax increase? It seems the potential fallout over the gas tax could/is/will be the same as proposing real tax reform, so why not try to do some real good? At least with any tax reform, the voters would have to approve it, so the D’s couldn’t be accused of doing an end run around the voters, like they are currently with I-601. Comments?
If Governor Gregoire wants to show some very public leadership (and maybe increase her approval rating…), she could try to get this ball rolling and build support for it across the state before next year’s legislative session. Not that I think it will happen, but we can imagine…
Eliminating the B&O tax is a fairly easy sell to business. Eliminating tax loopholes is an easy sell to just about anyone (well, anyone not being lobbied by the other side). The real question is whether enthusiasm for those can be built up enough to leave net positive support for a small state income tax (overcoming ingrained resistance) or a much higher sales tax (impractical and regressive, although it provides steady consumption tax revenue) or a VAT (probably too complex to sell).
Jon – the gas tax is much less politically risky, because most people are personally familiar with the state of our roads, admit we need to spend some money on them, realize we have to raise the money before we can spend it, and are a little more comfortable from knowing that gas tax revenue has to go to transportation.
Revamping the entire state’s taxing and revenue structure is a huge political gamble that will likely take a lot of time and cause a lot of turmoil. The ground for it has to be laid first, or else opponents will be able to quickly scuttle whatever is proposed.
Tax all the private sector until they leave the state! [hehe…Atlas has Shrugged]
Your link to The Internationale in ENGLISH by Billy Friggin Bragg is a tragic opportunity LOST!!
I’m weeping openly (like the “Don’t Pollute” Indian) and attempting to reassemble the detritus of my belief system.
If you wanted a traditional version, try The Red Army Chorus’ 1985 version. It’s in the original french….and it’s definitive and spectacular.
One of the problems Goldy, is that folks don’t trust the Dems on State taxes. Many feel the Dems will “bait and switch” and are only looking to increase state revenue….period.
How do you assure us that any modifications or major changes you propose will be TAX NEUTRAL?? Those are key words…tax neutral. And what about the administrative costs of changing to an income tax and eliminating busiess taxes????
David@2 is right—you have a huge PR campaign ahead. THE MAJORITY OF CITIZENS DON’T TRUST GREGOIRE after the gas tax and other tax increases she supported.
Jon—the reason the Dems went out on the hook for the Gas Tax increase is twofold…they are ARROGANT and STUPID!@!!
They have dug themselves such a credibility hole, I doubt they will climb out unscathed.
The Transportation Budget is outrageous. How many Engineers does it take to spend very little money??? Apparently 3,000 + outside engineers.
The Dems have no idea how to get things done in this state ina fiscally responsible manner.
David @ 2:
I’ll have to disagree with you, as the gas tax increase only gives the talk show folks more ammunition for their “see, Democrats are only about taxing & spending” campaign. Also, don’t be surprised if the increase is overturned by a large margin if it gets on the ballot. The issue, as I see it, is not that most people are against a tax increase per se; it’s the manner it was done. I think the voters have shown (right or wrong) that they want these tax issues to be on the ballot, hence, any tax reform plan would be approved by them, and not passed at the last minute in Olympia. Politically, I see much less risk in that approach then what they’ve done this last session.
Mr. Cynical
Yeah, like Republicans have a leg to stand on when it comes to fiscal responsibility. Get real.
Jon @1,
I don’t think it is fair to simply blame the gas tax on the Democrats. It passed with bipartisan support, and with support from Republican leadership. Furthermore, I plan to post on this later, to show how overblown this issue is. But the main premise is, the gas tax is an excise tax, not a sales tax, and therefore must rise over time just to keep pace with inflation.
Dude @5,
Lowest common denominator, dude. I didn’t figure everybody here would get the joke, so I wanted them to be able to understand the lyrics. But if you have a link to the Red Army Chorus version, by all means forward it.
Cynical @6
We’ve been through this before. The Sims Plan required constitutional amendments both to implement an income tax, and eliminate both the sales tax and the B&O tax. As to whether the resulting income tax would be strictly revenue neutral, well, that’s kind of a red herring. There is nothing magic about current revenue levels, and they should rise and fall depending on our needs.
Their goal is not just to eliminate taxes, but for the most part, to eliminate much of government as well.
Yes. They don’t like the idea of funding public schools. They want private religious christian schools for those who can pay out of pocket and would re-litigate the Scopes monkey trial if given a chance.
While it might seem cheeky to use tax legislation as a way to bash those of the “other” party, taxes are manifestly apolitical. That is the problem. Politicizing something that is fundamentally necessary to maintain a vast diversity of society benefiting infrastructures, ends up taking away the common ground that is so important. We seem to too easily overlook that the colonist’s revolution against the crown, was not anti-tax, but anti-representation in the development of the tax laws. We need a conversation that is all inclusive, that is representative of the diversity of the whole of the population.
Political demogoguery reduces the discourse, creates divisions, eliminates options, proposals, and compromise. Taxes are necessary; unless one accepts an anarchical chaotic world in which private security forces rule the streets and black markets, funnelling the mass of residual assets into the fewest and fewest hands(think Russia) while the rest of the populations cannibalizes one another to eek out a barely existent survival. I doubt that any person would argue against the concept of equal taxation–equal being the one term upon which the entire discussion hinges. So let’s have the discussion without the acrimony and bitter bile that commonly gets spewed around here.
The gas tax isn’t very risky. Most of the carping is coming from Eastern Washington, which has only 22% of the state’s voters.
Goldy,
Falling on the floor laughing and crying
Simas as a tax architect? Can’t even count ballots and you want him designing economic policies? Ron in charge of redistributing the wealth? whoa comrade.
And your agenda to soak the rich is too obvious. While i tend to agree w/ the overall libertarian theme, you guys have incisors filed, arms around my ankles for my money…that is, I hardly believe you have any pro-business motives.
I don’t doubt factually we have the most regressive tax system in the country. First overall we have a higher overall tax load, so you have to account for that, not just disparity between rich and poor.
Trust too factors in. Many on the right would do almost anything to end the B&O tax, but flinch when a Democrat gets ahold of the mechanism.
Maybe (akin to Nixon going to China) you need to strongly support EFF or someone w/ the chops to make this happen, even if the goal isn’t the socialist one of redistribution.
Sims is in campaign mode and desperate. Nothing but a liar. Remember his temper tantrum when he wanted to raise taxes and the voters shot him down, he closed parks and pools.
Now what kind of good home training is that?
Wasn’t there a Republican Governor who once thought an income tax was a good idea?
Goldy@9–revenue levels “should rise and fall depending upon our NEEDS”
Herein lies the problem Goldy.
The Seattle LEFTIST PINHEADS don’t know the difference between NEEDS and WANTS.
You have failed in answering the fundamental question about TAX NEUTRAL. TAX NEUTRAL means the total tax dollars collected remains the SAME. You don’t get it, do you?? You want support on this?? Try again.
Goldy @ 9: I wasn’t blaming the D’s for the gas tax; I was questioning why they would ‘spend political capital’ on (right or wrong) an unpopular tax increase and not address root problems. I agree with you, I thought it was very courageous of Sims to propose his plan; why can’t more Democrats (they run the show) show the same courage. Furthermore, as I said, I think the potential for voter backlash is more of possibility with the recent hikes than any proposed tax reform plan. I-695 is a perfect case in point, as the anger that the excise tax was creating was very evident, but nobody in Olympia really wanted to change anything, so instead of sensible reform, Timmy E. came in with the meat cleaver. You can’t tell me that the voters would have just as mad if the Legislature put a decent reform package up before 695 came along. Same thing applies with the gas tax and the other increases, no matter how needed they may be.
Interesting, no mention of the Newsweek debacle here at HA. Usually chatty Goldy is silent about this one. Doesn’t help the left I guess.
JCH @4 Maybe you should consider the same as Atlas, shrug, and then maybe you should consider moving to lets say,,,,,,Texas or Tennessee. You and your ilk are much more appreciated by the sheep that live there.
Idiot @ 14…you are so bigotted. “That kind of good home training” is basically called fiscal responsibility. Something you and your theocon/neocon/pervocons have no real understanding of. Go back to finish junior high school and study real hard in math. Maybe you can learn simple arithmetic…. (very doubtful)
I never expect Goldy to tell the truth or be accurate, but I thought I’d correct him for everyone else. The EFF is not proposing to eliminate business taxes as Goldy says. They are, by the very quotes Goldy uses, advocating a uniformily LOW tax. Got it?
U2 at 20 – go back to school and learn the definition of bigot. Ron is a liar or don’t you remember the lies he told about the election process?
Goldy — why call it the SIMS plan? Funny, I haven’t heard a peep out of Ron of this PLAN of his since he lost handily in the Democrat primary last September. Ron Sims lacked the credibility to propose such a radical change in state taxation just a few months before the primary for Governor. He never backed such a thing previously, and was always promoting increases in the regressive sales tax as a way of solving government’s desires for cash. Ever since Ron Sims was elected to the King County Council, the sales tax rate in most of King County has gone from 7.9% to 8.8% (all due to local sales tax increases), with an additional 0.5% imposed on restaurant meals.
This plan is a good idea, but why torpedo and bury it by using the name of a two-bit has-been hypocritical politician? I think the GOLDSTEIN PLAN would sound a lot more credible and principled …
I would support replacing the B & O and sales taxes with a state income tax, and it doesn’t have to be a progressive rate tax, I would support a flat-rate income tax.
Whether conservatives trust Democrats to revamp our state’s tax system is a non-issue. I’m not willing to do what it takes to be trusted by the conservatives. If conservatives trust you, there’s something wrong with you. Democrats should fix our state’s tax system without the Republicans, if necessary. They can either get on the bus or walk.
Excellent post, Goldy. I agree with the comment above that the plan must be re-named. “The Sims plan” won’t get it very far.
As for all of you lefties commenting on this, where were you when the Democratic legislature and governor made our atx system even MORE regressive this session? The feeding frenzy was too intense for any of them to pause for even 30 seconds and discuss actual tax reform.
I’m all for the Goldstein plan (except for the part about rasining taxes to meet “our needs”) and I’ll bet if it was managed properly even the EFF would be for it. Managing it right means tying it to some I-601 type limits and assurances they can’t be ignored or taken off as easily as the 601 limits were.
Spyder@11–
So Spyderman—what do you do for a living???
Let me guess….government worker or government retiree.
Of course taxes are necessary a$$hole.
The problem is what we are getting for our money and what we can afford.
I’m frankly tired of cocksuckers like you trying the old peace and love ruse…
This is serious dickhead!
We are getting ripped off in Washington State.
Cut the unnecessary bureaucratic goo….
Then let’s talk.
Hooray for income tax Goldy here is some read on the subject:
http://www.maineinstitute.com/.....es_BPC.htm
Chuck @ 27…lol, you had to go back more than two years to find something that supports your preconcieved notions?
Richard @23,
I call it The Sims Plan because it was Ron who had the guts to propose it, and thus he deserves the credit.
I understand there are people who genuinely hate and despise Ron Sims, but a lot of what he is reviled for is his temerity to be a leader, and take strong positions on unpopular issues. The CAO, Brightwater, Sound Transit, his income tax proposal… these are all issues that clearly don’t buy Sims votes… and yet he doggedly supports them because he believes he is right on the issues. Maybe he’s not. But I can tell you that if not for Ron Sims, Sound Transit’s Light Rail would be dead, so what you might call arrogance or stupidity, I call leadership.
Everybody in Olympia knows that either we eventually implement an income tax, or our state government, and the services it provides, will eventually shrink to fraction of its current size. Some of you may think starving the beast is good thing, but the majority of voters and their elected officials do not. And yet Ron is the only major politician to dare to talk about an income tax. That’s leadership.
I don’t necessarily agree with everything that Ron does, and he’s certainly made some mistakes as an administrator. But he’s not afraid to lead, and I respect him for that. So until somebody else manages to jump out ahead on the issue of tax restructuring, I’ll continue to proudly call it The Sims Plan.
Righton @ 13
”Simas as a tax architect? Can’t even count ballots and you want him designing economic policies?”
Cute. . . .as if Simms had anything to do with counting ballots.
”And your agenda to soak the rich is too obvious.”
It is not about “soak[ing] the rich”. It is all about no longer soaking the poor. You admit that we have a highly regressive tax system. So, lets fix it so that we quit slamming the poor. The idea is to even out the tax burden because right now we are all getting our state services on the backs of the lower income folks.
”I don’t doubt factually we have the most regressive tax system in the country. First overall we have a higher overall tax load, so you have to account for that, not just disparity between rich and poor.”
Bullshit. Washington ranks 24 out of 50 states for tax burden in 2004 and 2005 ( http://www.taxfoundation.org/statelocal.html ). We have it pretty good, and we have a state worth living in. If you don’t want a shit-hole of a state to live in, some tax revenue is necessary. Don’t be fooled by the pseudo-Republicans in Washington who cut taxes and promise that everything is just fine. They are lying assholes who are, in the long run, recklessly trashing our country.
I agree, making our tax system more equitable is not “soaking the rich,” it’s fair play. How can anyone defend a system under which the top 1% pay only 3% of their income to the state while the bottom 20% pay nearly 18%?
dj @ 30
OK, if Sims isn’t counting ballots, he’s also not going door to door to get the tax payments. So as a leader, he’s shown his poor/bad leadership. It is indeed bad that’s he effectively pushed ST to deliver something. I could probably push to build a train to nowhere too, but that wouldn’t make it right.
If you guys deliver a cap on the spending / taxing, that isn’t overturned, made “emergency” overrideable, ok, i’ll play ball. But my offer is hollow, cuz the left cannot freeze the nature/size of government.
And gee, I pay 45 to 50% of my income in taxes (add my sales tax to my prop tax, to my fed income taxes)…i’m not swayed by needing to pay more. Lets start from the premise we all are paying too much in taxes, then maybe i’ll live w/ paying more than poor folks.
And as for funding the state to make this a better place, ..gee..that’s a dumb idea…they’ve shown they can’t, and arguably the $$ are better spent by thousands of private decisions.
Oh yeah, you guys think Sound Transit is and example of good government, and Microsoft or Amazon examples of businesses that the government should be running…right?
No way are we falling for the “equitable” income tax ruse! I’ve lived in other “progressive” states and the state income tax forms are as complicated as the federal. Why? Because legislators need to be seen giving breaks (ie, letting folks keep their money) to lots of special interest groups, so the can get votes.
If the taxes are so regressive, why aren’t the riffraff and ex-cons fleeing the state? I hear Oregon must be Nirvana. From where I sit we see lots of folks coming into this state as it has better public assistance programs. Check what Idaho pays in public assistance!
Patrick;
How about fair: all taxes, including property tax are
if inomce 20k or less; flat $500 or so
21k to 100k; 15%
100 to 200k; 20%
above that 25%.
no double counting, no sales tax, no death tax, no bond levies hidden as special assessments that should really be taxes, no funny business
will never happen
And gee, I pay 45 to 50% of my income in taxes (add my sales tax to my prop tax, to my fed income taxes)…
righton, you’re either an idiot or a consummate BS artist. I just checked my tax returns and my total bill came to 25% of income, including federal, property, sales, and B&O taxes. I’m self-employed, so I paid both parts of SS payroll taxes, something that doesn’t hit most people.
There’s nothing fancy on my return, just the usual deductions for mortgage interest, retirement plan contributions, etc.
Would you care to detail how you pay such an inflated figure?
Righton @ 32
”OK, if Sims isn’t counting ballots, he’s also not going door to door to get the tax payments. So as a leader, he’s shown his poor/bad leadership.”
WTF? My mistake. . . I though we were having a serious discussion here.
”It is indeed bad that’s he effectively pushed ST to deliver something.”
Ok. . . I hear you. You don’t like ST. I can respect your viewpoint even if I disagree. I am a big fan of ST. I hope to live to a ripe old age in Washington, and I look forward to the time when I can easily get around the region faster by mass transit than I can by car. I would gladly pay and additional $1000/year for the next 10 years to have the D.C. Metro system duplicated in our region.
”If you guys deliver a cap on the spending / taxing, that isn’t overturned, made “emergency” overrideable, ok, i’ll play ball. But my offer is hollow, cuz the left cannot freeze the nature/size of government.”
Ummm. . . Righton, neither can the Right. The difference is that the Left is much better at paying as they go. The Washington D.C. pseudo-Republicans are spending about $750/year your money and giving you the IOU. You (or your heirs) will have to pay that off sometime—with interest.
”And gee, I pay 45 to 50% of my income in taxes (add my sales tax to my prop tax, to my fed income taxes)…i’m not swayed by needing to pay more. Lets start from the premise we all are paying too much in taxes, then maybe i’ll live w/ paying more than poor folks.”
Sure, you probably are paying too much in tax. My guess is that you are not in the top 5% income bracket in Washington. Therefore, the Sims Plan lowers your personal State tax burden (see Goldy’s graphic).
”And as for funding the state to make this a better place, ..”
Who said anything about making it better. . . I’m thinking “triage” to keep the late-90s quality of life going here. Remember, the State took a huge hit when the car tab tax disappeared. We can let our highways and other transportation infrastructure decay to shit, but that seems idiotic to me. There are plenty of shit hole places in the world you can move to and never pay taxes if that is what you want (try Myanmar, Bangladesh, or rural Nepal). Of course, don’t expect sewer systems, water distribution systems, paved roads, hospitals, a reliable power grid, police and fire services, public transportation, social security, k-12 schools beyond miserable, higher education, or public health initiatives of any kind (i.e. safe drinking water).
“and arguably the $$ are better spent by thousands of private decisions.”
Sure, if you want Washington to decay into a fucking 3rd world country.
$1 billion on a train for 1000 people and you call us 3rd world? Dems’ only thing saving us from being Bombay? Come on, you jest.
You guys ever add your car, prop tax, and sales tax spending up? Spend $30k a year on stuff (gosh i hope not, but bet somehow we do..thats almost 2700. Got an average house; another 5000 to 10,000. So make 100k, 25k in fed taxes, plus andother 17k is 42% tax rate. (dont forget cell phone, telephone, garbage taxes, and if you really want to gag, addback the B&O tax underlying the goods and services you purchase.
Goldy @ 29
Okay, but what is Ron Sims doing TODAY and THIS YEAR to promote “his” income tax proposal? I haven’t heard anything about it. He is turning tail and hiding on the income tax issue, since he couldn’t even carry the votes of Democrats in King County last September. He thinks the wind is blowing against him, and he is afraid that it might cost him re-election this fall if he makes too many noises about it.
Goldstein Plan is a better name for it, since you are actually promoting it — and out of principle, not out of a desire to get an edge at being elected to office. And if you keep promoting the Goldstein Plan, it might actually become law. You would at least force politicians on both sides to get off the fence and seriously address issues.
Jamie @ 33
“No way are we falling for the “equitable” income tax ruse! I’ve lived in other “progressive” states and the state income tax forms are as complicated as the federal. Why? Because legislators need to be seen giving breaks (ie, letting folks keep their money) to lots of special interest groups, so the can get votes.”
I, too, have lived in other states with less regressive taxes. And, you are right that it is a pain in the ass to fill out another federal-like tax form. Deal with it! But, you are mostly blowing smoke if you are claiming that most states with an income tax are as regressive as Washington.
”If the taxes are so regressive, why aren’t the riffraff and ex-cons fleeing the state?”
Ummm. . . Jamie, “regressive” is quantifiable, not a matter of opinion. There is no question that Washington has one of the most (and some years the most) regressive tax structure in the country. It is shameful, really, because it means we get State services by making the poor pay a disproportionately higher fraction of their income for those services.
”Check what Idaho pays in public assistance!”
I didn’t find current comparative information, but I would be interested in seeing the figures. Either way, who the hell wants to live in Idaho? Let’s see what we would get for the privilege. (From http://www.ers.usda.gov/statefacts 2003 figures):
Per capita income: Idaho $25,900, Washington 33,300
Percent in poverty: Idaho 11.7, Washington 10.6
Percent with no high school diploma: Idaho 15.3, Washington 12.9
Percent with a college degree: Idaho 21.7, Washington 27.7
Overall: lower quality of life. I’ll take Washington, thanks.
righton @ 37
“Dems’ only thing saving us from being Bombay? Come on, you jest.”
Don’t be an asshole. Nobody said anything of the sort.
What keeps us from being a 3rd world state is that we have a government that collects revenue, makes decisions in the interest of the entire state, and spends the money to provide collective services. Both Democrats and Republicans participate in this.
righton @ 37, 32: You might want to talk to a tax preparer next year. 45-50% of your income goes to taxes?! Ridiculous.
For instance: where did that $17K figure come from? Thin air, apparently.
And $5-10K in property taxes? Not with your “average house.” According to the King County Assessor, in 2000 the average home value was $230,500, the average levy rate was 12.66, and the average property tax total was $2917.67.
[So, who paid $10,000 in property taxes that year? Residents of Medina, with average home values upwards of a million dollars. (And they’re not paying for those homes with an annual income of only $100,000.)]
So even assuming a well-above-average $100K income and $25K federal taxes to start with, adding $3K in property taxes and $2.7K in sales taxes only comes up to $30.7K (or a 30.7% total tax rate).
Congratulations! I just saved you a fifth of your income that you said you’d paid in taxes. Imagine if you had a professional tax planner working for you to shield your income and assets! Seems like your premise that “we all are paying too much in taxes” is based on faulty math and ideology.
Taxes
The highest one can pay in taxes is if you make arouind $90,000 per year. You will pay double SS tax, pretty high federal tax. Federal taxes alone will be around 28 + 13.5 = 41.5. Well that’s the top marginal tax rate. If you figure B&O tax, city and state, that adds another 3 percent, so that’s 44.5 percent. Land and sales tax places one over 50 percent.
However, it isn’t quite that bad. The income earned below 75k is taxed at between 0 and 25 percent. One can pre-tax 25 percent of their income in a SEP. There are mortgage and land tax reductions. Thus, even for the worst tax situation, I doubt anyone pays over 25 percent.
a. avg tax bill is not based on 5 year old housing prices. Check out median prices of single family homes..and note i gave a range of 5k to 10k. And i factored in the deductability.
b. I forgot SS taxes. More then onto the bill
c. regressing to dj at 39…so your sophisticated data analysis between Idaho and Washington says that taxes determine it lower living standards? So I can go pull up examples of lower taxed places with better living stds and claim tax is the only dependent variable? (you missed meaningful stuff like age, family size, rural vs urban, fewer boeings and microsofts, etc etc
righton @ 37, 43: You are just making shit up.
Housing costs in King County are probably the highest in the state, and yet, property taxes on a median priced home ($355,000) in the county are under $4K/yr, not “5-10K” as you so breezily estimated.
Someone owning such a house and earning $100K would not pay $25K in federal income taxes. Taxes would be $16K for a single person; $11K for a couple with one child. That’s assuming no deduction for retirement plan contribution or charitable contributions — so most people with that income pay less. Your estimate of 25K is a fiction.
Payroll taxes (SS and Medicare) are another $7K.
According to the IRS, average sales taxes paid by a family of 3 with an income of $100K in King County is $1.5K. You estimate 2.7K.
Throw in another $2K for gas and other excise taxes, and you get a total tax bill of $25.5K for a couple with child or $30.5K for a single person. That’s a total rate of 25.5 – 30.5%; not the “45-50%” you fabricated. With a little tax planning, such as retirement plan contributions, you could do even better.
Reply to 33, I do my child’s tax returns. My kid lives in a state with a state income tax. There’s nothing complicated about the state income tax return at all. All you do is transfer the income from Line 37 of the federal tax return to the “income” line of the state tax return, subtract the state standard deduction, and multiply the result by a percentage. That’s all there is to it. So I don’t know what you’re talking about when you say state income tax forms are complicated.
355k house? Come on, houses in Fremont and Wallingord (where you guys all live) gotta cost more than that. Montlake costs more, Leschi more. Do you all live in trailers in Burien?
I forgot to add the “taxes” on the gambling. More taxation. Also booze and beer taxes? Building permits are taxes.
I left out government takings in rural king county. That’s another thread
Reply to 32, government takes roughly 15% off the top (limited to the first $90,000 a year) for Social Security and Medicare, but you will get that back in benefits.
Excluding FICA, general taxation has never approached 45-50% of national income. Over the last several decades, federal revenue has ranged from roughly 18% to 22% of national income, state and local taxes about 15% or thereabouts. This includes the taxes collected from businesses and other organizations, as opposed to individuals. In Washington, over 40% of state revenue comes from the business sector.
Because of the regressivity built into both the federal and state tax system, generally speaking the more you earn, the lower your taxes as a percentage of income. The tax system is strongly tilted toward the self-employed and high earners, who get all sorts of deductions and tax credits not available to wage earners.
I don’t put Social Security and Medicare in the same category as other taxes because these programs are savings and insurance plans that return benefits to me commensurate to what I paid in. The only real difference between these programs and private savings plans and insurance policies is (1) the government takes far less off the top in administrative costs, making it a better deal for consumers, and (2) government benefits are far safer than any private plan, because the government won’t go bankrupt.
Yes, I suppose you’ll reply that the Social Security Trust Fund is nothing but an IOU, the government will renege, blah blah blah. My answer is, I’ll believe it when I see it happen. Since 1937, every penny of promised Social Security benefits have been paid. Since 1965, every penny of promised Medicare benefits have been paid.
Don’t get me wrong, I think there’s room for improvement in how we spend tax dollars. My household lives on a budget, and before I spend money, I want to know if the expenditure will (a) make money or (b) save money. For example, when it costs more to keep repairing an old car than to buy a new one, I buy a new car to improve my bottom line. Another example is buying a computer you use for your job or business because it helps bring in income.
If you want government to run on the same principle, then we have something to talk about. But how do I get you to understand that investing in transportation infrastructure is necessary for our local economy and returns more than it costs? What will it cost our area in jobs and economic output if the Alaska Way Viaduct, which carries a third of Seattle’s daily commuter traffic, must be closed for safety reasons? What will happen to the productivity of local businesses because their workers can’t get to work on time, and what will happen to our local economy if our port is not competitive because there’s no way to move incoming goods off the docks or outgoing goods can’t reach the docks?
One of the overlooked aspects of the new gas tax is the portion of this new revenue that goes to “freight mobility” projects. How many people even know what freight mobility is? It’s transportation projects, such as grade crossings, built to facilitate the movement of commerce, i.e., trucks and freight. These investments increase our state’s economic output, attract business, create or preserve jobs, improve shipping efficiency, and raise productivity. They produce far more than their cost, and are a good investment for taxpayers. If you vote for an initiative to repeal the 9 1/2 cent gas tax, you are voting against the freight mobility funding included in this tax. The loss of that funding will cost our state more than the taxes that would be paid. That’s analogous to paying a mechanic more to fix an old beater than it would cost to buy a new car. It doesn’t make much sense. Nor does it make much sense to impair our economy by refusing to spend money to bring our 1980s traffic system into the 21st century, when those expenditures will return far more economic value than their cost.
Light rail may be a mistake. We’ll have to wait and see. Personally, I’m skeptical. On paper, the monorail seemed a better idea, but unfortunately the monorail is running into some serious problems of management and execution. As I said, we’ll have to wait and see how these schemes pan out. It does seem clear that you can’t solve the Puget Sound corridor’s transportation problems solely with more freeway lanes. In any densely populated urban area, mass movement of commuters is a logical part of the total transportation picture. It probably will take a combination of freeway lanes, arterials, buses, and some type of transit separated from street traffic (light rail, elevated rail, monorail, or whatever) to move enough people, fast enough, to maximize our region’s economic potential in terms of getting people to jobs and moving freight.
What I do know for sure is that taking the pay-no-taxes and spend-no-money approach can’t possibly improve the movement of either people or freight, and our transportation system will get even worse as aging structures have to be taken out of service and major commuter corridors are shut down as a result. Doing something requires paying taxes, but doing nothing will bring Seattle to a standstill and wreck our state’s economy.
Reply to 46, my wife and I have a nice north-end suburban home that we could not sell for 355K even in today’s hot market, and our property taxes have held steady for several years at a little over $3,000 a year. I think the 355K median figure is accurate. Homes in Bellevue and close-in neighborhoods like Wallingford or Queen Anne are worth more than the medium, but there are plenty of homes that are worth less than the median because they’re farther out, in less desirable neighborhoods, or are older and smaller homes that aren’t as attractive to buyers.
Righton @ 43c
your sophisticated data analysis between Idaho and Washington says that taxes determine it lower living standards?
It was not an analysis. . . it was empirical information that I mentioned when Jamie @ 33 brought up Idaho. But, do taxes determine standard of living? They most certainly contribute in important ways. Do other things contribute as well (geography, luck, historical contingencies)? Of course.
If business has no taxes
on it they will want outright gifts of money from the state. I kid you not.
What’s wrong with gifts of money? Seriously. Don’t we already do this for businesses like Boeing. Plus Boeing creates union jobs. So maybe there should be more gifts of money to business.
righton @ 46: Way to go! Why bother with actual data when you can respond with cherry-picked anecdotes? Anyway, like it or not, $355K is the median price for a house in King County as of last month.
On the other hand, I can see why you would avoid dealing with actual data. It leads to debunking of the mythology you’ve been spraying all over the place. If you’ve got data responding to my post @ 44, let’s see it.
Thanks for posting on our comments concerning the state’s tax system: one that is transparent, simple, accountable and has uniformly low rates for all. A state’s tax system should never be used to pick and choose the economy’s winners and losers. If the tax system was based on uniformly law rates, priorities of government budgeting was utilized and meaningful independent and comprehensive performance audits of all state spending were authorized, taxpayers would be able to realize an efficient and accountable government focused on providing only the core functions of government. This link has details to programs that likely don’t rise to the level of a core function of government: http://www.effwa.org/main/arti.....cle_id=801
As for testifying, we are only able to testify if requested to by a legislator. Thanks again for taking the time to post this thread.
Sure scott
Picked madison park; not where i live, but nicer than whatever $350 buys you.
$820k home, annual taxes 8384
and when these guys bought it, seller paid excise tax of $13456.
http://www.metrokc.gov/finance.....it1=Search
I think @ 100k, if I do the tax thing right, and assume sales tax on 25,000 of spending, and 3000 of charity, and above 9700 in prop taxes, its taxable net income of 72650 (not a tax guy).
So tax on that is 13769
Add the prop taxes of 9700 (already claimed tax benefit)
also the 2250 of sales tax (i may be high on this, guessing)
my cell, landline, etc.. guessing another 20 per month? 240/yr
gotta be others stuff i’m forgetting, but above adds to
25k on 100k, so TR of 25%. Ok less than I claimed. Still too dang high. (and the house thing is not outrageous for a lot of folks who bought 10 yrs ago and riding the wave, curve. And I forgot to amortize any part of the “excise tax”….arguably not just a 1x windfall tax but something fair to consider (i’d also add death taxes, evertyghig.
so my numbers are low.
goofed on prop taxes, so my math is about 1000 too high
Boeing takes more than it gives and the drastic up/down action that Boeing has on the local economy is worse than the benefit of having them here. We should treat them like a Chinese doctor. The tax benefits are gone when they hurt the local economy. I don’t care if Boeing leaves. I couldn’t care less.
Ethnic slur by Loosey?
Yeah, lucy you’d still have your gov’t job and free bus pass
righton @ 54: LOL. You start by proving the point of my earlier posts (i.e., typical total tax burdens are 25-30%, not the 45-50% you claimed) — then you move directly to a desperate attempt to regain your claim that the tax burden is actually higher.
Given your earlier loose acquaintence with the facts, why should we waste any time looking at your latest “analysis”?
Still, I can’t resist — sort of like not being able to turn away from looking at a gruesome car wreck.
Your example overestimates federal income tax because you neglected to deduct standard exemption(s) and mortgage interest. This latter would usually be quite high for a $820K house — which, again, is not typical for taxpayers in the income bracket you proposed.
However, you also neglected to include payroll taxes in your estimate — so this balances your earlier error. Overall, your estimate of $13769 is not a bad estimate for total federal income and payroll taxes on $100K income.
In the end, you come up with a total tax estimate of 25%, which is about the same as mine. You assumed an atypically expensive house which raises property taxes but also increases mortgage interest deduction — so it worked out to about the same.
You then go on to try to rescue your earlier point by adding unquantified amounts for amortizing the real estate excise tax, plus estate taxes, and everything else (whatever that is). Since you didn’t bother to provide numbers, I will. Amortizing the $13456 excise tax over 15 years gives you less than $1K/yr. That raises your tax burden by 1% — so we’re still within my range of 25-30%.
As for estate taxes — give me a break. Middle-class people making $100K/yr don’t pay estate taxes, even if they live in an $820K house.
No matter how you slice it, typical total tax burdens for the middle-class are in the 25-30% range, not 45-50%. Maybe you think 25-30% is still too high (I’m not thrilled with it myself). Go ahead and make your argument based on that figure — just don’t clutter it up with outrageous distortions.
“This guy didn’t build the railroads. He peed on my rug.”
The Dude
Lucy @ 56,
If Boeing leaves, Washington will lose a lot of family wage union jobs, and most of those union workers probably voted for Gregoire. It isn’t just about a handout. It is about politics.
One of the many reasons that Locke was persuaded not to run again was because of the perception that he was not business friendly. When Boeing headquarters moved to Chicago political insiders felt that Locke would lose to any republican.
People care about jobs, and if you like voting Democrats, like Gregoire, into power, then we should give away money to businesses that create jobs.