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.