Earlier today I argued that Democrats need to take advantage of our current short-term revenue crisis to fix our long-term revenue deficit, by taking the budget crisis as an opportunity to win voter approval of a high-earners income tax. But how do we do this at the same time we meet the very real need to raise additional revenues now?
It’s not all that complicated.
Gov. Gregoire supports a revenue package, and the Legislature will likely pass one, no doubt comprised of hikes in alcohol and tobacco taxes, elimination of some tax breaks, and perhaps extension of the sales tax to professional services and/or a small hike in the sales tax rate itself. None of this will be popular, and most of it will be regressive, and while an emergency clause would eliminate the possibility of the tax hikes being delayed by a referendum, we should expect an attempt to repeal the package by initiative. So my suggestion to legislators is, why not pass the package, and then just put a repeal measure on the ballot yourselves?
Sound crazy? Not really. Take this scenario for example.
Let’s say you pass a package that raises an additional $1 billion a year in new revenue, while at the same time putting on the ballot a referendum that would repeal the hikes and replace them with a tax on household income in excess of $300,000 a year. Voters are given a choice: they can keep the current taxes that hit just about everybody by voting No on the measure, or they can vote Yes and shift these taxes to a handful of our state’s wealthiest households… those same households that profit most from Washington’s most regressive tax structure in the nation.
But one could take this concept even further. Instead of a dollar for dollar offset, the high-earners income tax could be set at a rate that raises, say, $1.5 billion a year, with the extra $500 million coming back to voters in the form of a half cent reduction in the state sales tax below our current 6% rate, or maybe a similar sized reduction in the state property tax.
Vote Yes, and not only do you get rid of the new tax hikes, the vast majority of voters would actually lower their own taxes. That’s how Tim Eyman wins initiatives (when he wins them), by promising to put money back into voters’ pockets. And unlike an Eyman initiative, there’s no corresponding cut in popular state services.
This isn’t just smart policy, it’s smart politics, as it leverages the short-term crisis to help address a long-term problem, while providing an outlet for voters who might otherwise vote for a straight repeal initiative. In fact, the Legislature’s referred referendum could be written in such a way as to protect the short-term revenue against repeal by initiative, essentially by re-enacting the hikes in the not so unlikely circumstance that both ballot measures passed.
Step 1: enact the revenue package legislatively. Step 2: refer a referendum to the ballot that enacts the same revenue package, but replaces it with a high-earners income tax once implemented. (In the eventuality that an income tax is passed, but ruled unconstitutional, the existing revenue package would remain in effect.)
Simple really, and not all that confusing.
And a helluva lot more responsible than passing up the best opportunity we’ve had in decades to seriously debate an income tax.
Brilliant idea.
Unfortunately, it requires a majority of legislators to have a modicum of guts to make it happen – so don’t hold your breath…
gee, Goldy…You hammered Susan Hutchison for months because she was deliberately trying to mislead the voters, and now you are supporting a tax increase that is completely supposed to mislead voters…Hypocrite?
Jacob @ 2,
“now you are supporting a tax increase that is completely supposed to mislead voters…Hypocrite?”
WTF??? There is nothing misleading in the proposal. Perhaps it confuses you, but your inability to comprehend does NOT equal “misleading”.
Slow down there, Squirt, and try reading it again…carefully.
This is brilliant. Let’s grab the electorate by the collar and make them think about who is paying taxes now and who is getting the benefits. Love it. Give the Democrats back a direct populist issue and one that makes so much sense.
Where do we sign up to pressure our legislators?
Nope, no thanks! I’ll keep what we have now rather than supporting an income tax. It’s bad enough that we have to deal with the federal income tax.
more class warfare…..par for the course from the progressives.
Everyone should be treated equally when it comes to taxes.
besides, here is exactly what will happen if goldfarbs idea is passed: in a few years, when our dumbass spend-it-all legislature has burned up the income tax money, they will start to lower the bar on who pays the tax. Sure, first it starts out at those making $300k or more, then it will be lowered to $200k because the state always needs more…and then it will be $150k…and so on.
…and in the end, the poor and middle class who decided to soak the rich, will be victims of their own tax code.
govt should be working on spending less, not more money.,,,but alas, this is bizzaro land….
I enjoyed rereading The Prince during the cold spell, while under the covers with the dog and cat. The Prince and the recent warmer weather have rejuvenated me. In spite of the holiday season, I’m working as one of Santa’s elves on the side of cynisism.
You have to first have the legislature vote on and approve an amendment to 610 (? the initiative that demands 2/3 yea to raise taxes), because there’s no f–king way we’re going to get a 2/3 vote to raise taxes from the get-go. Then the Governors signs it; then the Legislature has to actually vote on legislation raising taxes that can pass with a 50/50 vote. We have a session of 2 months. What’s the chance of that happening?
Tagging professional corporations (law and financial) with a tax they’re currently exempt from wouldn’t need an amendment to 610, because it’s not a “new” tax. And it wouldn’t be regressive; the people who use financial advisors or lawyers probably won’t notice a few more $$ tacked onto their bill. Poor people don’t use those services.
But all this stuff takes time and guts. I doubt if we have either in the Legislature this year. Programs will be cut in any case; without more revenue, many more will be cut, and I expect that to happen. That’s not to say you shouldn’t demand that your legislators do what they’re paid to do: deliver a humane budget.
Let’s say you pass a package that raises an a
Like it.
BUT ….
Couldn’t the entire thing be overturned by a well written initiative? E.g. … resolved that no new taxes can be imposed until a balanced budget ius enacted with no new taxes?
My own alternative is a fiscal responsibility bill. Why not pass a law putting teeth into the Constitutional requirements for K-12? The law could require that K-12 must be fully funded or a falt automatic VAT or high income tax must be put in place to preserve the State’s financial integrity.
Given the restrictions to the non K-12 discretionary budget, I suspect it would be very difficult to write an initiative overturning this one.
Puddy thinks high earners tax should start with leftists @ $100,000 on GROSS INCOME BEFORE Deductables. Conservatives start @ $300,000
Nuff Said!
Max @6,
I like this proposal a whole lot. This is a populist proposal that is actually populist–it helps the average Joe, rather than screwing him in the backside like Tim Eyman’s faux-populist proposals. As a guy who pays about every state tax and local there is, from B&O to various licensing “fees,” I would sure prefer to see a more predictable income tax. Not that this proposal goes that far.
A sales tax on professional services? Do you mean doctors and dentists? As in, adding $144 to the cost of a $1,500 dental crown, or $19.20 to a $200 doctor visit? Would health insurers be required to pay sales tax on medical care covered by insurance?
If you put this tax on legal services, here’s what will happen. Corporate clients won’t pay it, because they’ll take their legal work to out-of-state firms. All the big corporate firms have offices in Portland, San Francisco, and Los Angeles. So, the people who get stuck with this sales tax will be the little people who get in car accidents or need divorces. Can you see the state taking $480 on top of the lawyer’s $5,000 fee for a $15,000 personal injury settlement?
I can see taxing barbers, hair stylists, and so on. But if the legislature tries to slap a sales tax on accountants’ tax preparation services … there will be riots in the streets. I don’t mean little riots like “Battle of Seattle” (a/k/a WTO), I mean real riots. As in “armed revolt.”
I have an idea, though. Let’s put a 25% excise tax on Canadian money. If Canucks want to spend money in our state they can damn well spend American money!
It’s an interesting approach but I’m not sure how to get around the Constitutional issue.
Texas Is A Third World Country
Speaking of Canadian money, quite a few years ago — back when a pack of gum cost 25 cents –Mrs. Rabbit changed planes at Dallas/Fort Worth while traveling to the east coast. During the layover, she stopped at a concession stand to buy a pack of gum, and reached into her purse and pulled out a Canadian quarter and handed it to the sales clerk without looking at it.
They called security.
The sales clerk thought Mrs. Rabbit was trying to pass counterfeit money! Apparently they’d never seen Canadian money in Texas before. Mrs. Rabbit had to explain to the police that people in Washington state handle Canadian money all the time and to us it’s the same as American money.
Ultimately, they let her go. I guess because of that “lack of criminal intent” thing that makes it hard to convict people who don’t realize they’re committing a crime.
It’s a good thing this happened when gum cost only a quarter. Can you imagine what would have happened to Mrs. Rabbit if she had tried to pay for that gum with paper currency with Lincoln’s picture on it?
If I had known her at the time, I would have told her to take some Confederate money with her. You can buy the stuff cheap at any toy store but they love Confederate money in Texas.
@6 “Everyone should be treated equally when it comes to taxes.”
In that case, you’ll no doubt agree that instead of the poor paying 17% of their income to the state and the rich paying 3% of their income to the state, the rich and poor should pay the same percentages of their income to the state. Yes?
@5 “Nope, no thanks! I’ll keep what we have now …”
I’m sure you will, you selfish jerk:
Poor pay 17%
Rich pay 3%
@10 That’s the system we have now, except for heirs it starts at $3.5 million.
re 7 — Yeah. The Prince is great. What a guitar wizard!!!
But if we tax the rich, won’t they move to another state and not pay taxes there?
What then?
I’ll tell you what’ll happen: They’ll all move to Utah, marry four wives, and sleep with 14 year olds.
Well, they do that anyway
Senate Democrats have agreed to strip the Medicare buy-in from the health reform bill because Lieberman demanded it. The last vestige of a “public option” is now gone because Lieberman won’t vote for even a tiny little bit of “public option.” Not even for 55-year-olds who are frozen out of the job market because of their age.
I’m sure looking forward to a day when we won’t have to grovel for Lieberman’s vote anymore.
Republicans haven’t done anything constructive in this Congress. Why would anyone vote for them in 2010?
#5 “It’s bad enough that we have to deal with the federal income tax.”.
Bad enough? Please tell me you aren’t 5 years old? Are you SERIOUSLY saying you think we should shutdown the military? Or at least cut the military budget by 75% or more? Why do you hate America? Why do you hate our troops? Why do you want our “men and women in uniform” to die? And you want to end social security and Medicare? So you hate old people too? Just send grandma off to the death panel and be done with it.
LOL. I know I know. I don’t want to pay taxes either. Like all children I want stuff for free. But as we grow up, we have to understand that wanting things (parks, military, boarder fences, welfare) all cost money. As long as every Republican wants an EVER bigger military budget ($600 billion+ each year)…and Democrats AND Republicans want social security and Medicare…I don’t see you getting out of paying income tax.
@ #6 Max Rockatansky: You support the aforementioned income tax then, because in Washington, the lowest 20% of income earners pay over 17% of their income in taxes, while the top 1% pay just 2.9% of their income in taxes.
(See: http://www.itepnet.org/wp2009/.....tsheet.pdf)
If, as you say, “everyone should be treated equally when it comes to taxes”, then clearly high-income earners need to pay more, and low-wage earners need to pay less.
That way, we’re all paying the same percentage of our hard-earned money to the guvmint.
Social Security and Medicare are funded by dedicated payroll taxes, not federal income taxes.
And sure, we should all be treated the same, so why can’t I personally incorporate, deduct nearly all of my living expenses from my income, have virtually no liability, move all my assets to a Cayman Islands account, and live forever? Ya’ know, fair is fair.
PS: Is Puddy still waving his Craftsman around? Naughty. Naughty.
Roger Rabbit said:
“Republicans haven’t done anything constructive in this Congress. Why would anyone vote for them in 2010?”
They’ll pick up some seats in November 2010 because Obama isn’t getting his agenda through with the way he’s doing business now.