HorsesAss.Org

As Goldy noted earlier this morning, a “temporary” sales tax increase of about one-third of a cent is an idea that is gaining traction in Olympia. The money would be used for health care. The problem, of course, isn’t the small increase or the laudable goal of providing health care, it’s the already ridiculously high sales tax rate we pay because of our stupid, broken tax system.

Jeff Mapes at The Oregonian also noticed the proposal and casts a hopeful eye northward on behalf of struggling Oregon retailers, speculating that a Clark County sales tax rate of 8.5% or more would cause even more residents of Southwest Washington to shop across the river.

Perhaps more relevant for us in the Portland area, the rate in Vancouver is now 8.2 cents on the dollar. So you can do the math on what you save buying one of those $1,000 flat-screen TVs in Oregon – that is, if anyone is in a mood to buy one of those things now.

Clark County has always born the brunt of Washington’s stupid, broken tax system. With no income tax, and thus no way to reciprocate with Oregon on income taxes, Oregon reaps a financial windfall from workers who live in Washington. As Clark County has grown over the years, not only do Washington and Clark County lose millions in revenue each year to “leakage,” jobs take a hit as well.

Personally, I don’t like the idea of a “millionaire-only” income tax. It will be spun as a punitive, soak-the-rich scheme. At least one rich asshole would publicly threaten to move out of the state, causing lots of middle class conservative assholes, clinging to their adolescent Ayn Rand fantasies, to screech about socialism some more. It’s just not worth it.

What I would propose is a “simple progressive income tax,” with say three basic tax rates. Those at or near the poverty line would pay little or nothing, and as income goes up, so does the percentage rate.

While most people hate taxes, what they truly despise is the complexity of the federal income tax system. One reason Steve Forbes and others got so much mileage out of a flat tax was that people loved the idea of filling out their income taxes on a postcard.

You could do the same thing with a graduated income tax, if, and this is a big if, you could somehow prevent Legislators and lobbyists from creating an endless number of deductions, tax credits and loopholes. (Yes, it would be like taking heroin from addicts, but a fellow can dream.)

Citizens should be able to just take their adjusted gross income from their federal taxes and pay a simple percentage rate. It really would fit on one page.

And then the other thing would be to somehow Constitutionally limit the maximum rate of sales tax, because the cynics of the world usually insist that if we allow an income tax, the sales tax will never go down. Solving that problem would be key.

Now that I’ve laid this out so simply, I expect policy experts to design and implement it in short order.

Washington state’s business, media and political establishment are often breathtaking in their lack of boldness, so I guess it should come as no surprise that, faced with a nearly unprecedented economic and budgetary crisis that has finally ripped the mask off our decades-old structural revenue deficit, the few calls for real change are being shouted down with deafening cries of “No we can’t!”

Take for example today’s Seattle Times editorial endorsing a 30% tuition increase over two years to help offset dramatic funding cuts.  Yes, I agree that tuition “should rise significantly to preserve student access, quality and years of progress toward preparing a sophisticated work force,” and without a doubt, these “whopper tuition increases” are somewhat mitigated by the fact that our state schools are an absolute “bargain compared with peer institutions.”  And it’s hard to argue against the notion that, as painful as it might be, given the size of the impending funding cuts, “it would be much worse without the tuition jump.”

But nowhere in the editorial did the Times mention anything about financial aid.  Not once.

And then there’s the news today that a temporary sales tax increase is once again gaining traction, a week after dreadful polling convinced most lawmakers that such a ballot measure would be virtually dead on arrival.  The solution?  No, our special Olympians aren’t rallying around an innovative high-earners income tax (which actually polls well), but instead, are coming back with a smaller, third of a cent sales tax increase proposal in the hope that voters might reluctantly swallow this less painful pill.

You know, conventional wisdom says that an income tax is a nonstarter, whatever fairness or simple math or recent polling says, so why even bother to go there?

The problem is, both these solutions, the tuition and the sales tax hikes, are half-measures that may make the budget easier to balance in the short term, but do absolutely nothing to address our long term problems.  And both solutions place their financial burden solely on the backs of those who can least afford it.  Both solutions, on their own, only make our revenue system less fair and less stable, and in the long run, will only serve to undermine working class Washingtonians’ faith in the ability of our state government to adequately meet their needs.

Increase tuition and fees by $3000 a year, and our schools will still remain a bargain compared to “peer institutions,” but without a commensurate increase in financial aid, many of our state’s low and middle income students will be priced out of an opportunity to attend a four-year university.  And if voters cooperate and agree to temporarily raise the sales tax a mere third of a cent on the dollar, we’ll save some crucial health care services now… only to watch them trickle away over time once the increase sunsets and the steady erosion of our state government’s purchasing power continues unabated.

Now, in this time of crisis, we have the opportunity to ask voters to grit their teeth and join us in embracing real change… and all we seem to get out of our so-called leaders are half measures.

Well, personally, I’m tired of half-measures, and morally conflicted about continuing to join the current Democratic establishment in fighting half the battle, when it has become increasingly apparent that they will never fulfill their promise to join me in fighting the other half.  Long term revenue adequacy can never be achieved without tax fairness, and the refusal (with few notable exceptions) to publicly acknowledge this simple truth, undermines our ability to achieve either.

From the Department of Irony:

Microsoft was told by a federal jury to pay $388 million to a Singapore company for infringing a patented invention used to deter software piracy.

The jury in Providence, R.I., deliberated less than two days before finding Wednesday that Microsoft violated a patent owned by Uniloc Singapore Private and Uniloc USA. Uniloc claimed Microsoft wrongfully used its security technology to earn billions of dollars.

Though my understanding is that Microsoft has taken Uniloc’s president hostage in an effort to negotiate a more favorable settlement.

For the second year in a row the Washington Post’s Chris Cillizza has named HA to his list of best state political blogs.  A big thanks to you loyal readers who apparently lobbied on our behalf.

Washington

Horses Ass
Strange Bedfellows (Seattle Post Intelligencer)
Politics Northwest (Seattle Times)
The Petri Dish (Everett Herald)
Political Buzz (Tacoma News Tribune)
Northwest Progressive Institute Advocate

You’ll notice HA is listed in bold, at the top of the list.  According to Cillizza:

In a state where one blog was far and away the most recommended by Fix readers, we have noted it by bolding the name of the blog.

Eat my dust, newspaper blogs!

But considering all the guff I get about the unserious name of my blog (yes, I’m talking to you John Carlson), I’m perhaps most proud of making a second, even more exclusive list:

The best named blogs on the list: Doc’s Political Parlor & Lawn Mower Repair (Ala.), Rum, Romanism, Rebellion (Ariz.), My Left Nutmeg (Conn.), The Old River Road (La.), Writes Like She Talks (Ohio), Not Larry Sabato (Va.) and Horses Ass (Wash.)

A horse’s ass by any other name would smell as… well… you get the point.

[youtube]http://www.youtube.com/watch?v=lihLdXHx8jM[/youtube]

In print, budget battles are all about numbers, but in real life they’re actually about people.  The ad above, funded by a coalition of hospitals, clinics and health care unions, makes that point very well.

I’m told this ad will be running in fairly heavy rotation, and I’ve got a sneaking suspicion it’s just the opening salvo.

I’ve been admittedly obsessed over the past couple weeks with making the argument for a high-earner’s income tax, but the other policy issue I’ve been advocating this session also appears to be gaining a little traction: a move toward a high tuition/high financial aid model that could raise additional funds for higher education, while increasing access and decreasing costs to students from lower and middle income families.

A few weeks ago Rep. Reuven Carlyle (D-36) staked his own credibility to the concept in a guest column in the Seattle Times, and just last week, the even the Times editorial board wrote in favor of raising tuition and financial aid.  And today, coming on the heels of Gov. Gregoire’s proposal to let tuition rise 28% over two years, none other than University of Washington President Mark Emmert, writing in his own guest column in the Times, argues that if we are going to keep the “higher” in higher education, colleges and universities need more “flexibility on tuition.”

The leaders of our four-year colleges and universities understand that our schools must take cuts. But we also know that we can keep students coming to school and graduating on time if we are simply given more flexibility on tuition. We can help our students and our state without new state money. Moreover, we can fix much of this problem without denying access to students because of their income or family background.

The UW has the lowest tuition of any of its peers and is one of the best bargains in the country. With increased financial aid and the expanded federal tax credit, we can remain an excellent value for our families, maintain our world-class quality, and not slash the number of students we admit.

To give higher education the opportunity to resolve this crisis without requiring more state money is the only responsible thing to do. To do otherwise is to deny thousands of our citizens a chance to succeed in the knowledge economy.

Huh.  Guess the idea doesn’t sound so wing-nutty after all, when it’s coming from the mouth of Emmert.

So how does it work?  How can we possibly raise tuition while maintaining access and affordability to lower and middle income students?  Well, as I’ve explained before, it’s simple math:

Let’s say you’re a low to middle income student currently receiving financial aid in the form of $3,000 in grants, and the UW suddenly jacks up its $6,800/year in tuition and fees to $17,800.  Now let’s say the UW (ie, the state) increases your grant by another $11,000 to offset the hike.  How much extra money did this cost the state?  Zilch.  You were paying $3,800/year and you’re still paying $3,800.  It’s a zero sum game.

But if you’re a student from a wealthy family, who does not need financial aid, and thus does not qualify for it, you’re suddenly paying an extra $11,000 into the system… money that can be spent to increase the quality of education at the UW, or expand the number of seats, or even lower the costs for truly needy students.

The key of course is to increase financial aid commensurate to the needs of the students, both the dollar amount, and the upper range of incomes that qualify for aid.  The goal should be to accept students based solely on merit, and to charge them for their education according to their ability to pay.  That, in my opinion, is the best way to extend opportunity to all of our state’s young people.

Or, you know, we could continue with what we do now, where wealthy families who have easily afforded years of $23,420 annual tuition at Seattle’s exclusive Bush School, send their kids on to the UW at the same $6,800 bargain rate as everybody else, at the same time the university is being forced to slash classes and slots. Does that really make sense?

I know, I know… Washington voters overwhelmingly rejected an income tax 35 years ago.  But before timid lawmakers brush aside proposals to put a high-earners income tax on the ballot, they might want to look at some more recent polling data:

Almost three-quarters of Americans think it is a good idea to raise taxes on people making more than $250,000 per year, according to the latest CBS News/New York Times poll.

In fact, two-thirds of Americans think the tax code should be changed so that middle-class Americans pay less than they do now, while “upper income” people pay more.

That’s right, 74-percent of Americans support raising taxes on the wealthy.  74-friggin’-percent! So somebody please explain to me why now isn’t the perfect political climate to put a millionaires tax on the ballot?

[youtube]http://www.youtube.com/watch?v=_1V_BGn2E7A[/youtube]

Johann Hari takes an extraordinarily eye-opening look at Dubai.

Please join us tonight at the Seattle chapter of Drinking Liberally for an evening of politics under the influence . The festivities take place at the Montlake Ale House, 2307 24th Avenue E. beginning at 8:00 pm. Or stop by earlier for dinner.

[youtube]http://www.youtube.com/watch?v=nU6rXYQ5HDs[/youtube]

Not in Seattle? The Drinking Liberally web site has dates and times for 328 chapters of Drinking Liberally spread across the earth.

Over the 74 years since it was first implemented, Washington’s state retail sales tax has been raised eight times, from 2% in 1935 to 6.5% in 1983.  On average, the sales tax rate was raised once every 6 years during its first 48 years of existence, culminating in a 2-cent jump between 1981 and 1983.

Yet it has remained unchanged over the past 26 years.

The steady rise in rates over the first two-thirds of the sales tax’s history stemmed partially from the fact that growth in demand for public services generally tracked growth in personal income, while retail sales steadily shrunk as a portion of the overall economy (from 32% of total consumer spending in 1959 to only 26% by 2000), primarily due to our ongoing shift from a manufacturing to a service and information based economy.  State government simply couldn’t meet the demands of our growing economy without periodically raising the sales tax rate, and at times, expanding its base.

But since 1983 the rate has been frozen at 6.5%, and with inevitable results.  Over the past decade and a half Washington state’s personal income has grown by 225%, while state sales tax revenues have increased by only 198%.  And for a state that relies on the sales tax for over half its general fund revenues, that is a recipe for a structural budget deficit.

Contrary to the Eymanesque meme of out-of-control government spending, state taxes and expenditures are steadily declining both per capita, and more importantly, as a percentage of the total economy.  Sure, our severe recession has exacerbated and accelerated the problem, but it was always there lurking beneath the ups and downs of the economic cycle.  Already even with Mississippi in terms of state and local tax burden, and contemplating drastic cuts in our social safety net, Washingtonians can no longer put off the tough questions:  are we willing to raise our taxes to help maintain the level of services and quality of life we’ve come to expect, and if so, how?

The easiest and quickest solution would be to raise the sales tax, which would immediately generate additional revenue with little administrative overhead.  But a 1 cent increase only raises an additional 2 billion dollars over the next biennium, enough to fill but a portion of the remaining budget gap, and recent polls show an increase even a fraction of that size is extremely unpopular amongst voters.  And with WA already laying claim to the most regressive tax structure in the nation, and combined state and local rates now topping out at 10 percent, it’s not hard to understand why.

The other solution—the one I’ve been relentlessly plugging for weeks—is a high-earners income tax, that depending on the plan, would only tax the top .1% to 4% of households.  The very households, it turns out, who have benefited most from our state’s economic growth over the past couple decades.

Over the past decade the average income of the wealthiest fifth of Washington families has increased $14,136, from $119,954 to $134,090, while real incomes of the poorest fifth and middle fifth have remained flat, or even declined.  And the disparity only grows when looking back a further decade.

Again, lower and middle incomes have remained relatively flat, while the top fifth of households have seen their income grow 41%, from $94,930 to $134,090.

Add to this growing income inequality our profoundly regressive tax structure, where the bottom fifth of households pay 17.6% of income in state and local taxes while our top 1 percent pay only 3.1%, and the argument for an income tax appears clearly grounded in both fairness and mathematics.  It is the wealthy who have benefited the most from our state’s extraordinary economic expansion over the past few decades, and the public investment that helped make it possible, and it is the wealthy who clearly have ability to pay.  Meanwhile our lowest income households are already struggling to pay what amounts to the highest state and local taxes in the nation, all the while seeing their real incomes stagnate or decline.

Coming up soon:  why taxing the rich has less of an anti-stimulus effect than cutting government spending.

Outlawing speech and commenting that someone’s speech (cough*Glenn Beck*cough) is reckless, irresponsible and deplorable are two different things.

Clearly Fox Noise has never had a problem with its employees being reckless and irresponsible, so nobody with any sense gives credence to their programming. Until far more Republicans admit to themselves, if not the wider society, that Fox Noise offers nothing of value, we will have to keep pointing all this out.

When we opposed the party in power, we didn’t pick up guns and rocks, we started blogs, and since we had meaningful ideas to offer, we succeeded. Republicans should try it sometime, it’s really kind of fun! (The fun part is offering meaningful ideas. Anyone can start a blog and uncritically ape right-wing talking points. Which is why to this day their blogs suck so badly.)

Senators Patty Murray and Maria Cantwell, two of only nine Democrats to vote in favor of raising the federal estate tax exemption from $7 million to $10 million, and lowering the top rate from 45% to 35%, apparently both told Publicola’s Chris Kissel that they did so to reduce the financial strain on “small businesses.”

“Small businesses are hurting and we need to make sure they’re protected,” said Murray spokeswoman Alex Glass.

Um… define “small,” but… whatever.

Kissel goes on to suggest the real motivation behind our senators’ vote:

The measure will have the greatest impact on wealthy folks like Seattle Times publisher Frank Blethen, who unsuccessfully lobbied both Murray and Cantwell to vote for a repeal of the estate tax in 2006. That same year, voters here rejected a measure that would have repealed Washington State’s estate tax.

Gee, I dunno.  With McClatchy essentially writing off its 49.5% stake in the Times, I’m not so sure that lowering the estate tax’s top rate helps Blethen and his heirs all that much.  I mean, 35% of zero is still zero, isn’t it?

Talk about a clever estate planning strategy.

The Columbian in Vancouver, Wa., is facing a “debt foreclosure action” related to a loan it obtained to help finance its move to a new building. Unfortunately for the newspaper, and unfortunately for reporters and others who have been laid off, it has since moved back to its former building and is facing legal action by Bank of America.

But The Columbian has no plans to cease operations. From its business section:

(Publisher Scott) Campbell emphasized that it would be business as usual for readers, advertisers and employees of The Columbian.

“The fact is we have a huge readership — in print and online — that represents the largest aggregation of Clark County citizens available,” he said. “Our products are very valuable to businesses that are trying to reach consumers in an increasingly overloaded and confusing media environment. The economics of the (newspaper) business are changing, but there is a clear path to a sustainable long-term business model.”

Campbell said the publishing company’s strong preference is to resolve the debt issue, but he described the agreement process as complicated for both the bank and the newspaper.

Meanwhile, the new building at 415 W. Sixth St. continues to be marketed for both lease and/or purchase. Two of its six floors are leased.

So here we have a newspaper in financial trouble over a bad real estate decision, and it’s being sued by Bank of America, which acquired Countrywide and Merrill Lynch. If things run true to form we can expect that taxpayers will be called upon one way or another. We know newspaper owners in this state have asked for a tax break, and there has been noise about the City of Vancouver purchasing the new Columbian building for city offices.

On the optimistic side, it is true that The Columbian benefits from a unique media landscape, being the only traditional media outlet of any consequence in Clark County. Historically Portland media has more or less ignored non-heinous news north of the river, and Clark County long ago lost its lone AM radio station to robot-controlled oldies programming. Unlike a lot of metro areas that consider themselves one place, the Columbia River is still a magical barrier when it comes to the flow of information.

I have no earthly idea how long Campbell can ride out the Great Recession, and nobody knows for certain when the economy will truly turn the corner. If Campbell has enough wealth to do so, it looks like he will wait it out.

But as national job figures continue to appear dismal, it’s hard to imagine a big uptick in advertising dollars for newspapers anytime soon.