Perhaps I’ll eventually work up the energy to fully fisk the Seattle Times’ predictable, knee-jerk editorial slamming I-1077 as a jobs killer “Proposed state income tax will stymie job creation“, but for the moment, I’d just like to say that… really? We should be taking economic advice from the Times?
As far as tax increases go, I-1077 is relatively minor, only about $1 billion a year net, and falls only those who can most afford it… those top three percent of households who will still benefit from a somewhat less so, but still largely regressive tax structure. In return, we not only get desperately needed new funding for K-12 education and health care, but substantial middle class and small business tax breaks.
In fact, if anything, I-1077 actually improves Washington state’s already enviable business climate. As the Times explains, but does not understand:
The larger break goes to business owners. I-1077 gives every business $4,400 more in credits. A number of very small businesses would be exempt entirely from the business-and-occupations tax. But at companies in a position to create family-wage jobs, a $4,400 credit is not going to do anything.
This $4,400 credit will exempt 80 percent of Washington businesses from the state B&O tax, while lowering taxes on an additional 10%. How many times have we heard that small businesses are the engine of job creation, yet the Times editors dismiss 90 percent of businesses in the state as not being “in a position to create family-wage jobs”…?
How myopic could they get? Are they entirely clueless about how the new economy works? Do they have any idea how many people make their living these days as independent contractors or running mom & pop businesses? Do they understand that “very small businesses” sometimes grow into larger ones if given the opportunity to thrive, and that even a blogger begging for contributions to pay his bills means one less upward tick on the unemployment rolls?
Billions of dollars of extorted tax breaks for Boeing, that the Times can embrace, but a $261 million tax cut distributed to 90 percent of Washington businesses, well… I guess if the Blethens don’t rub elbows with them down at the Rainier Club, they don’t much matter.
I’m no economist, and my own entrepreneurial ventures haven’t made me rich, but hell if I’m gonna take seriously a lecture on job creation from a paper that has spent much of the past decade slashing its own staff.
UPDATE (from Geov)
I don’t post here often, but in conjunction with the Times’ whining that I-1077’s tax breaks don’t go to really big businesses, you know, the ones that matter, my friend Jeff Reifman reports that just yesterday, Microsoft got a doozy:
Struggling to close a $2.8 billion fiscal deficit, the Washington State Legislature ended its recent special session with two huge gifts for Microsoft:
1) It gave Microsoft an effective $100 million annual tax cut by revising the definition of the royalty tax. Under the old law, all of Microsoft’s $20.7 billion annual software licensing sales were taxable in Washington state at .484%. Under the new law, the royalty tax will be apportioned so that only the portion of sales to Washington State customers would be taxable, a tiny fraction of Microsoft’s taxable revenue.
2) It also gave Microsoft amnesty on an estimated $1.25 billion in unpaid taxes, interest and penalties that the company has avoided paying since 1997 by reporting this revenue from a small Reno, Nevada office. The state’s Department of Revenue has ignored this practice and refused to address precedents that call the legality of Microsoft’s accounting into question.
Most of the legislation was led by Chair of the Finance committee Rep. Ross Hunter, a 17 year veteran former employee of Microsoft.
Got that? While Olympia struggles to close a $2.8 billion shortfall, mostly by slashing services, it plants a big wet kiss on Microsoft, and it’s such business-as-usual the Times can’t be bothered mentioning it; but when citizens try to do the legislature’s job for it by offering a package that would give tax breaks to the majority of Washingtonians, the Times editorial board shrieks in horror.
Just in case you wondered where you stood.
Oh, and while I’m here: has anyone else noticed that Tim Eyman, who’s made a good living for the last decade exploiting middle class resentment over Washington’s regressive tax structure, is stridently opposing a measure that does far more to bring tax relief to his voting constituency than anything he’s ever done? Just in case you ever wondered whose side he’s on. (Hint: his own, and Mike Dunmire’s.)