If I were still working at The Stranger or free to blog full time here on HA, all I would be writing about right now is Governor Jay Inslee’s welcome new tax proposal. After years of stupidly austere all-cuts budgeting, Inslee has finally made the boldly responsible move to propose significant new revenue: $1.4 billion from new capital gains and carbon taxes in the next biennium. (And yes, it is an awful commentary on our political culture that I just strung together the phrase “boldly responsible.”)
Kudos Mr. Governor.
But of course, I’m not still Slogging or blogging full time, so I don’t have the time to go into the details. But what I will say is that as politically risky as a tax increase is traditionally presumed to be, Inslee’s proposal puts state Republicans in a much less enviable position than they might at first imagine.
As I have previously written, Washington State is on the verge of a constitutional crisis. It is simply mathematically impossible to meet the state Supreme Court’s McCleary mandate to fully fund K-12 education, without raising substantial new revenue. Can’t be done. There simply isn’t enough truly discretionary spending left in the general fund (let alone the mythical budget items waste, fraud, and abuse) to “reprioritize” to public schools. Inslee’s tax proposal is a recognition of that cold hard truth.
So when the Republican-controlled Senate rejects Inslee’s tax plan (and they will), what will they propose in its stead? Politically suicidal cuts like double-digit tuition hikes, emptying our state prisons, and eliminating health and human services? Or will they just defy the McCleary mandate, leaving the state in contempt of court?
Obviously, the latter.
To make matters worse for Republicans, how do they plan to pay for the twice deferred transportation funding package? Their own constituents are demanding long-promised road maintenance and expansion projects—projects Inslee’s carbon tax would fund. So if they reject the carbon tax, this leaves Republicans in the uncomfortable position of either opposing freeway expansion or championing an always unpopular gas tax! Pick your poison, GOPers.
No doubt Republicans thought they wanted to run against Inslee in 2016 as a tax-and-spender, but his budget puts them in a bit of quandary: Either they propose an alternative that finally names exactly which popular programs they seek to gut, or they risk branding themselves as obstructionists against funding roads and public schools—two programs that are broadly popular with voters, even their own tightfisted constituents.
Again, they’ll choose the latter, driving our state into a constitutional crisis and our roads and highways into further disrepair. And Inslee won’t just ask voters to reelect him in 2016, he’ll ask voters to give him the Democratic majority necessary to actually get shit done.
I have already called my State Rep and State Senator to urge them to support Gov. Inslee.
Inslee has been showing a lot of guts lately…about time some Washington State elected official did.
Or, the GOP can point out that Inslee broke his 2012 campaign promise, that a GOP-controlled state senate is a valid means of checking the acts of a governor who promises one thing and does another, cede the 2016 governorship election to Inslee, and concentrate on maintaining control of the state senate by (not exactly incorrectly)
scaringeducating the electorate about the march to broad income taxation created by the newly proposed taxation on income.As far as the constitutional crisis at state level, BFD. We’re heading toward (a different kind of) one at the federal level as well, and libbies don’t seem to be upset about that; if anything, they’re cheering it on. For now, anyway. We’re increasing education spending in WA, overall natural tax growth is already enough to cover nearly 60% of the increase in state spending proposed in the new biennium, and so we’re taking our increasing tax revenues and putting it preferentially to education. 1351 isn’t going to be fully funded, either.
If Inslee gets everything he wants, spending goes up 15% over two years. If he only has the natural increase in tax revenues to work with, spending goes up nearly 9% over two years.
Inflation will probably be around 3% over that same biennial period. So even with no new revenues, Inslee will spend 6% over the rate of inflation.
Those capital gains taxes? The people he’s going to hit just got hit with a 5% increase at the federal level (the late-2012 agreement between Obama and Boehner that kicked in during 2013) and another 3.8% increase due to ACA. So that’s an increase from 15% to 23.8% at federal level, and you want to increase it to 30.8% including the state tax proposed by Inslee.
Best wishes, governor.
It’s much, much easier to hide a gas tax increase in an overall environment of falling energy rates.
One need only to read the wisdom of the sage Roger Rabbit on these pages to learn that oil prices, and gasoline prices as a result, will be quite low well into the future.
What better time to raise a fuel tax?
Poison, picked.
‘Bob’ the sloppy solipisist, predictably comes down on the side of more inequality, less opportunity and more burdens on the 99%.
How brave.
@ 1,4
Bravery equates with breaking a campaign promise, I see.
Gutsy call, Rujax.
http://www.gutsycall.com
@5…
Reagan raised taxes eleven times after campaigning against taxes. Bush Sr. raised taxes after inviting all to “Read his lips.”
I suppose ‘Bob’ the sloppy solipsist considers them cowards.
There is a revenue crisis in this state. Gov. Inslee’s bold initiative addresses it.
It’s called ‘leadership’.
@3…
Let’s see which Republican jumps into the abbatior by propsing a gasoline tax hike.
Poison ingested, House/Senate seat lost.
Did Fred Munster ever offer an alternative, or did he just stomp his feet and whine.
Staunch opposition to productive legislation won’t cut it in Washington the way it did for Republicans in the US Senate. The GOP Senate majority in Washington is largely the result of two Republican Senators who represent blue suburban eastside districts: Andy Hill and Steve Litzow.
The proposal for a carbon tax hits the GOP majority where it hurts most: eastside suburbs. Does anyone think Andy Hill or Steve Litzow wants to have to explain to their respective constituencies why they oppose putting pressure on major polluters? Does a typical Kirkland or Newcastle voter continue to view their Senator as “moderate” once it’s crystal clear they’re defending big polluters?
Way to go, Governor. Proposing an increase in revenues is smart, but using a proposed carbon tax to turn the heat up on eastside GOP Senators is brilliant.
The national Republican Party used the “War on Coal” to turn persuadable working class voters against Democrats in the Rust Belt and Appalachia. Inslee is taking a page from the same playbook and inverting it to hurt Republicans in wealthy suburbs where environmental protection is valued. Smart.
RE: @2…
So according to ‘Bob’ the sloppy solipsist, drawing inference from his comment; education, transportation and social services do not deserve to be funded.
What kind of fucked-up attitude is that?
#10 “What kind of fucked-up attitude is that?”
Need anyone say? That’s the Republican Way! Man, I am sick to death of these assholes destroying society.
Cheap shot “I support torture” bob is a cheap labor conservative. Those programs help the workers challenge the bosses. He has never liked them.
@ 12
Those programs help the workers challenge the bosses. He has never liked them.
Written by a guy who has wondered if the concept of job losses resulting from a large increase in the minimum wage is a corporate lie.
I don’t think that turning ‘It’s for the children.’ and ‘It’s for cleaner air.’ issues into a union rallying cry is a wise move, Better.
But I think it’s exactly how someone with your understanding of the world would frame it. You can file it it right next to Rujax’ argument that Uber is a threat because people don’t have enough disposable income to pay for cabs.
I’d still really like ‘Bob’ the sloppy solipsist to tell us why education, transportation and social serviced don’t need to be/should not be funded.
Oh, and ‘Bob’ the sloppy solipsist ought not concern himself with an old comment about lack of disposable income…the issues around inequality and the cheap labor race to the bottom are outside his willingness to understand/comprehend.
@ 14
I’d still really like ‘Bob’ the sloppy solipsist to tell us why education, transportation and social serviced don’t need to be/should not be funded.
I think they should be funded, Rujax. And I think many more people should participate in providing that additional funding. Inslee extended the sales tax exemption for electric vehicles. Electric vehicles don’t use gas, so no gas taxes are collected, and yet they use the roads and contribute to their disrepair. Why shouldn’t those vehicle owners (myself included although I’m a lessee and not an owner) help pay for better roads, Rujax?
Under Inslee’s cap gains proposal, only people with substantial capital gains will be taxed. Why not well-off high-income earners who happen not to have a whole lot of investments generating capital gains, perhaps because they don’t save for the future but instead want two German-made sedans in the driveway. They might have children, though. Shouldn’t they pay something into increased education funding, Rujax?
Libbies always want stuff paid by someone else. Then they wonder why what they get is less than they wanted, and turns out to be regressive – increase in the sales tax, increase in some other tax or use fee. So what happens is their end result is even less equitable. And then they go try the same thing again, expecting a different result.
Broaden significantly the base of those paying taxes, and I’m much less resistant, because many more people are paying in and it’s a shared effort. It might be harder to get through the legislature, but it’s fairer and actually would end up bringing in more revenue because the base of those paying in is so much more broad.
That’s not what was done here. That’s what I don’t like.
I couldn’t begin to figure out the monetary aspects but there are other consequences of the cap gains tax proposal that might not be so great. Paying capital gains tax is voluntary if creating the taxable event is voluntary, Rujax. So stuff that might be sold in current day, generating revenues like excise taxes and transfer fees, and moving money through the economy, might instead be held onto if otherwise subjected to a cap gains tax, which avoids taxation and keeps money bottled up rather than moving through the economy where it can benefit more people through transactional events. If suddenly subject to capital gains taxation, might not people with a choice to sell or hold, Rujax, choose to hold, depriving the state of excise revenues and depriving the state economy of the use of that money? And here’s the kicker: The richest people, the ones who libbies scream about the most, because their money is bottled up in investments and don’t do people any good? They’re also the ones who don’t need to sell anything, because they live off of their dividends. So the people you want to shaft the most are the ones most immune from your efforts, Rujax. They can just sit there, watch their unrealized capital gains soar, and pay zero under Inslee’s plan, because they can choose not to sell. Nick Hanauer could argue for capital gains taxation, and then avoid them himself, by not making changes to his portfolio.
Taxes influence behavior, plain and simple. I won’t be surprised when we find out, a couple of years down the line, that there’s a revenue shortfall because projected cap gains taxes didn’t materialize because people became longer-term investors rather than sellers, and avoided those taxes. I won’t be surprised when the first sentences of Connelly/Westneat pieces written about the shortfall include the word ‘unexpectedly’.
Because it won’t be unexpected.
“Libbies always want stuff paid by someone else. ”
Really, Bob? What else you got? We’re all commies?
Try not to descend to the level of Derpshit over on the other thread.
@ 17
Hi, Steve, and Happy Holidays.
Any comment on the rest of what I wrote, Steve? Specifically, do you think that the increase since 2012 from 15% fed cap gains tax rate to 30.8% tax rate if current fed/ACA/proposed state cap gains taxes are added together will influence people who are the targets of that higher taxation to avoid paying them by continuing to hold their assets? Do you think a doubling of the tax on a sale will influence people who have a choice between selling and holding? If we’re actually going to count on this new money coming in because Inslee will be spending it, do you think it should be part of the conversation?
That’s what else I got, Steve.
While I’ve got you on the line, there’s a local group called The Senate, playing Jazz Alley next week. Have an opinion?
“They’re also the ones who don’t need to sell anything, because they live off of their dividends.”
Nicely made argument for the “death” tax, Bob. By God, the death tax will get’em if the capital gains tax doesn’t. But you guys want to get rid of both so coupon-clipping rich can lounge by the pool, generation after generation, paying no taxes, and yet no doubt still whining to each other about all the takers and moochers leeching off of their sorry asses.
“Hi, Steve, and Happy Holidays.”
Same to you, Bob. Here’s hoping that you and yours have a merry little Christmas and a Happy New Year.
“While I’ve got you on the line, there’s a local group called The Senate, playing Jazz Alley next week. Have an opinion?”
No, Bob, I’ve never heard of them. I’ll look them up.
Actually, Bob, they’re pretty darned good. Not exactly jazz, but very talented.
https://www.youtube.com/watch?v=Uc2muo1dyWw#t=39
@ 19
Nicely made argument for the “death” tax, Bob.
Um, OK. But it’s not an argument worth having here, because Inslee didn’t propose one.
Unless they’re Republicans. Then they’d suck.
Just kidding!!
@16 If you boil down cheapshot “I support torture” bob argument, it’s his usual argument that we should do nothing, ever.
Would it be so bad if investors became long term investors? Isn’t short term profits part of the problem of the economy.
You say “Under Inslee’s cap gains proposal, only people with substantial capital gains will be taxed.”
What are you trying to lie about? It’s not like all other taxes are going away and poor rich guys are going to have to pay the all the taxes of the state and all the 99% slackers sit back and laugh at them.. Even with these small new taxes, they are still going to be wildly richer than some poor mom working at a McJob.
After the placeholder who preceded him, we finally have a governor who is proposing something.
Republicans have already responded to the McClearly decision. They said, “Go pound sand.” And now a Republican legislator is sponsoring a bill to convert state supreme court elections from nonpartisan to partisan elections, i.e., candidates would run as Republicans or Democrats. I guess they want all 9 justices to be Democrats, instead of just 8 or 9 of them.
@2 “Inflation will probably be around 3% over that same biennial period.”
You do realize, don’t you, that members of the Federal Open Market Committee have been beating their heads against walls trying to figure out how to get inflation up to 2%? Even printing $3.5 trillion of money didn’t do it.
@2 “Those capital gains taxes? The people he’s going to hit just got hit with a 5% increase at the federal level (the late-2012 agreement between Obama and Boehner that kicked in during 2013) and another 3.8% increase due to ACA. So that’s an increase from 15% to 23.8% at federal level, and you want to increase it to 30.8% including the state tax proposed by Inslee.”
Correction, the 1-percenters, and to a lesser extent the 5-percenters, got hit with those increases. For married couples making less than $73,800 of adjusted gross income the capital gains tax rate is a big fat ZERO.
I recently got into an argument on an investing blog with a guy who claims unemployment benefits create a disincentive to work. That’s nothing! He should see the disincentive that a zero capital gains tax rate creates! Wanna guess how much work I did this year? I’m a workforce participation rate dropout statistic.
@3 I can hardly wait to see how well your gas tax idea works when everyone is driving Teslas.
@13 “Written by a guy who has wondered if the concept of job losses resulting from a large increase in the minimum wage is a corporate lie.”
It probably is, unless the bosses are willing to empty their own wastebaskets, or someone comes up with a robot that can do it for them.
Really, Bob, do you actually believe that if the minimum wage is raised all the fast food joints will go out of business, all the nursing homes will evict the patients and close their doors, all the daycares will close, and office buildings won’t be cleaned anymore? Puh-leeze.
@16 “I think they should be funded, Rujax. ”
Great, but with what money? Do you have a tree that grows the stuff? Ah, I see, Bob’s money tree is taxing buyers of electric vehicles! Shake that tree, Bob! See how much money falls from it!
“Under Inslee’s cap gains proposal, only people with substantial capital gains will be taxed.”
Which sounds like a damn good idea to me, because they’re the most undertaxed people in this state.
“Why not well-off high-income earners who happen not to have a whole lot of investments generating capital gains …”
Why don’t you draw up a list for Inslee of jobs paying over $100 an hour? Should be pretty easy, because nobody will be on it except a few CEOs, a handful of sports coaches, some corporate lawyers, and a bunch of doctors.
“Libbies always want stuff paid by someone else.”
I suppose that’s true if you assume no liberals make under $50,000 a year in this state, which is the income bracket paying most of the state taxes.
“Broaden significantly the base of those paying taxes, and I’m much less resistant, because many more people are paying in and it’s a shared effort. It might be harder to get through the legislature, but it’s fairer and actually would end up bringing in more revenue because the base of those paying in is so much more broad.”
Actually, we have an extremely broad tax base, although it’s certainly not a shared effort when the bottom 20% pay six times as much of their income to the state as the top 20%, but in any case it’s extremely easy to get through the legislature and is the system we’ve had for 100 years, but no, it’s not fair.
“might instead be held onto if otherwise subjected to a cap gains tax”
This is exactly the same argument used by traders who invest hundreds of millions of dollars in high-frequency trading systems.
“The richest people, the ones who libbies scream about the most, because their money is bottled up in investments and don’t do people any good? They’re also the ones who don’t need to sell anything, because they live off of their dividends.”
This is so funny I don’t know where to begin. Let’s start with googling “high-end repo men.” You’ll get to watch some very entertaining videos of guys grabbing private jets and million-dollar yachts from overleveraged high rollers. You actually think those people never heard of debt? Or never miss a payment? And I hate to tell you this, Bob, but if you think the rich make their money from dividends you don’t know a damn thing about investing. The rich DON’T WANT dividends, because dividends are taxable, whereas unrealized capital gains are not. And when the rich drop dead and pass their unrealized capital gains on to their heirs, the first $5 million of unrealized capital gains become untaxed capital gains, thanks to the basis stepup that heirs get. You’re not gonna tell me you don’t know about the basis stepup, are you Bob? Of course you do. You’re a doctor. You have a CPA. You probably have an estate planner, too. Or maybe you don’t, maybe you think you’re immortal, or maybe you couldn’t figure out how to reproduce and have no heirs.
“They can just sit there, watch their unrealized capital gains soar, and pay zero under Inslee’s plan, because they can choose not to sell. ”
Until they need cash to send their kids to Ivy League colleges, make payments on the airplane, or pay the wife’s credit card bills. Here’s the thing, Bob. People like this have lifestyles you can’t pay for with any salary, so to live large — as they like to do — they MUST sell appreciated assets to pay their huge bills.
All in all, Bob, comment #16 is the most illogical and insipid defense I’ve seen recently of the special privilege of not paying taxes this state has given to the rich. Do you really think some tech millionaire is going to move his business from Redmond to Mississippi because he has to pay a state capital gains tax? Can you make a list for me of how many Silicon Valley billionaires have moved to Mississippi to escape California’s income and capital gains taxes?
@18 “Hi, Steve, and Happy Holidays.”
That’ll get you in trouble with the conservative PC police. Is something wrong with Christmas? Are you a Muslim? Are you an Arab? Careful, or your friends may think so.
@18 “Specifically, do you think that the increase since 2012 from 15% fed cap gains tax rate to 30.8% tax rate if current fed/ACA/proposed state cap gains taxes are added together will influence people who are the targets of that higher taxation to avoid paying them by continuing to hold their assets?”
High frequency trading is now 80% of the stock market’s volume. Do you know how many people of ordinary means engage in high frequency trading? Yeah, I didn’t think you did.
Come to think of it, now that you’ve got me thinking about it, maybe instead of trying to shut down high frequency trading with more SEC regulations, we should just raise the fed capital gains tax some more.
@19 That’s pretty much the size of it. Romney was right about the 47%, you know. Only 53% of the population still works.
@ 28
I wrote that inflation would be around 3% over a two-year period. That’s around 1.5% per year.
Most recent BLS figure is 1.3% nationally, down a bit from the previous month due to favorable energy @3 prices.
Somewhat more relevant since we’re talking about spending in WA is the BLS figures for the Seattle area, most recently 2.1% (October data):
http://www.bls.gov/regions/wes.....eattle.htm
So I maintain that I’m accurate by roughly stating @2 inflation will be about 3% over a biennial period.
Let’s put it another way, since you give me the opportunity, RR:
Without new revenues, Inslee will still be increasing state spending at 3x the rate of expected inflation over the next two years, and most of that will go in one way or another to education.
Someone can always file suit and ask the state supreme court if that spending better addresses its previous decisions.
@36 So you did. My bad.
@36 “Without new revenues, Inslee will still be increasing state spending at 3x the rate of expected inflation over the next two years”
Well, that would be population growth, McCleary, I-1351, the legislature’s promise to freeze college tuition hikes, state worker COLAs that have been deferred for six years, and a massive backlog of transportation maintenance and repair, not to mention several other items. What do you suggest, Bob? Releasing prisoners? Kicking old folks out of nursing homes? Ignoring McCleary? I’m for not funding I-1351; I realize it’s a voter mandate, but the voters ignored the fact that the drafters of the initiative provided no funding, and they can’t expect to get it for free.
@ 38
What do you suggest, Bob?
See @16.
I want many more people to pay in. You’re far from the 1%, RR, but you can afford to pay more – you tell us on a nearly daily basis how fantabulous your stocks are doing. A LOT of people who don’t have substantial capital gains can afford to pay more.
So make them. The bonus in doing so is that far more revenue will come in as a result of taxing a larger base of citizens.
Capital gains taxes are voluntary because the transactional events that trigger them are to a large extent voluntary. They also are volatile,
http://horsesass.org/friday-ni.....nt-1276574
and that isn’t good for the stable revenue stream that will be necessary to support permanently increased spending. One could argue that in down times we can simply fall back on our state reserves, I suppose. Problem with that is Inslee plans to raid the reserves as part of his proposal, even though these aren’t down times. You knew that, didn’t you, RR? That he won’t just be trying to tax the rich, but he’ll be spending our rainy day fund even though the sky is clearing?
Taxes like fuel and sales are regressive, to be sure. But people need to drive, and they need clothing, even in a recession, which protects the substantial majority of those revenue streams. People usually don’t have to sell their undervalued Boeing shares in a recession, and they usually won’t. Which means money Inslee is counting on in perpetuity won’t be there when it’s most important to the state.
I’m very sure none of this is news to Goldy. If he hadn’t traded his job being Dan Savage’s Dan Savage
http://blog.seattlepi.com/seat.....dy-is-out/
for a gig being Nick Hanauer’s Nick Hanauer, he’d have mentioned it.
Everyone got out their crystal balls?
It’s not a zero sum game this economy of ours. Presidents and Governors don’t raise or lower taxes out legislators do. This year is going to be a big show until the last minute when they actually have to make the sausage. They either cut or find some new income. In some cases they just need to make sure folks who should be paying are paying their share.
Business will do what it needs to do continue doing business. Business also benefits from taxes in so many ways. A little less concern over the whimpers of business might be a good thing. They are playing politics of the bird with the broken wing.
Electric cars are a good thing whether you believe they are just cool, easy to maintain, reduce carbon and other things in the atmosphere, reduce our reliance on foreign oil or just keep more of this valuable wonderful old sunlight in the ground. Still there aren’t enough of them on the roads they are making an impact…and they are lighter than the SUVS the rich and folks wanting to be in the cool crowd have replaced them with. We need to pay to repair existing infrastructure. Should we be putting in new infrastructure that impacts our remaining natural world? What will we as individual consumers do with these lower fuel costs. We should continue buying small cars with high fuel mileage (unless we really do need that huge truck for work, or really are a soccer mom week in and week out). The car companies are going to bet we will go with bigger vehicles so American. Though I have to admit that new Aston Martin looks soo cool. We really should be raising the federal and state fuel taxes by at least cents each while the opportunity is there.
Use this opportunity to free us from the oil trap we are in, and reduce our nations need to be drawn into the middle east. Nope our sons and daughters will go there because of the ties that bind, because or marvelous modern American civilization or empire runs on oil. ISIS in our lives while letting those wonderful folks over there make the hard choices and fight or become part of a backward religious Caliphate that will make Stalin’s Russia or Hitler’s Germany look like nirvana. Or the killing fields of Pol Pot. As things are we will be drawn in. That though could be the price of cheap oil. Kinda sucks don’t it.
More on volatility of a capital gains tax and raiding the rainy day fund when it’s not raining:
In this piece
http://seattletimes.com/html/l.....30xml.html
it’s stated that
California taxes capital gains — profit from the sale of stocks and investments. It’s volatile, so Brown joined it with a conservative policy that saves excess amounts from boom years in a rainy-day fund.
This should be pretty familiar to Goldy since he retweeted a link to it on November 29.
Shouldn’t someone be asking why Inslee is staking the ability to pay for all his new spending on a volatile form of revenue, and at the same time he’s stealing from a fund intended to protect the state from that same volatility?
Anyone?
Bueller? Hanauer? Goldy?
“I would veto anything that heads the wrong direction, and the wrong direction is new taxes in the state of Washington.”
-Jay Inslee
42. What is the context of that quote? Link to where he said that?
@43…
http://o.seattletimes.nwsource.....21xml.html
http://slog.thestranger.com/sl.....-new-taxes
http://blogs.seattletimes.com/.....increases/
The Republicans could start looking at the 50 or 60 Washington State officials who are paid more than the Governors $166,000. Perhaps the Governors salary should be raised. Perhaps the President’s of WSU and ESU deserve their salaries that are more than twice the governors, but there is something unseemly about the pay a few select college coaches are getting. No coach at any of our public universities deserve to be paid more than the President of that university. None deserve to be paid more than the Governor. Market principals the Republicans use insist there are fine couches available who would be willing to couch at a salary equal to the President of the University or the Governors salary. While the schools may argue the money for these couches come from a different pool of money why isn’t that money going to provide these excessive coaching salaries going instead to benefit our student athletes at all levels. Encourage physical sport to all, or a bit more of that $60 million that just WSU gets from student athletics going into the state coffers to pay for roads that service players and fans going to those students games safely.
Though I believe these couches deserve to be well paid, they are still public officials. If nothing else the salaries of these coaches say something about our priorities as a society.
Thank you for the quote links. What if Enslee came out and said “I was wrong, I though it was possible but it’s not. I have to raise taxes to accomplish what the state needs to do.”