Help Save The State Budget; Tax the Rich instead of the Poor

Our stage budget faces a significant shortfall and critical programs–from schools, to childcare, transit to housing–are at risk. While Republicans and “Democrats” who economic policies that look just like Republican ones like to claim “we have a spending problem,” that just isn’t true. 

And now we have a chance to take huge steps to fix our broken tax code. 

Average Taxes Are Low In Washington, Just Not For Working People

Washington State is a low tax state, especially for the rich. At 29th out of 50, we are the least taxed blue state in the union, with lower taxes than several purple states, and eleven deep red states too. Our taxes are lower than Kentucky and barely higher than uber-libertarian Idaho. Given that the starting point is that the US has much lower taxes than most other rich world countries, collecting about quarter less than other countries as a share of GDP–we in Washington are living in a very lightly taxed economy, as a share of GDP.  

However, it doesn’t feel like that because we tax the poor and middle class much more aggressively than we tax the very rich. Washington is the second worst in the country at this–our poor pay 13.8% of their income in taxes, and our rich pay 4.1%. Only Florida is worse, and that is only because of the tax on extreme capital gains windfalls over $270,000 that was recently affirmed in a near 2 to 1 vote margin. 

Government Efficiency

While Washington State could certainly produce much more value for taxpayers if we unshackled the state from the silly rules that make it hard to build public and private housing, transit and other critical infrastructure–no one has produced a defensible argument that cutting state government funding will make it more efficient. It’s been done before; it merely hobbles the state and makes services suck or disappear and people suffer and die unnecessarily.  

Never Let A Crisis Go To Waste

We are facing a significant budget gap over the next two years, and a more daunting one over four years. (Even though predicting four years into the future is almost always folly, the rules require balance over that time frame–there will be big adjustments again in two years.) So the State Senate has finally found a little chutzpah and is proposing some serious revenue raisers in the form of four bills focused on our grossly undertaxed uber-rich. There is an additional one to lower the sales tax–a tax which hits the poor the hardest. 

This is a serious swing at fixing our broken tax code, and if the whole package passes, balance the budget. The overall plan still involves some painful cuts–many of which I oppose and I think are avoidable. I’d like to see them be more aggressive to avoid that–but these are still very good revenue bills and they need our support.

Please take five minutes to sign in pro for SB5797, SB5796, SB5798, SB5794, and SB5795. Each one takes about a minute—just click on the link.

Get your spouse, partner, friends, family and neighbors to join. This is the difference between providing lifesaving support to people in need or not doing so–and it is accomplished by taxing the rich. 

The Bills

SB5797 (Frame, D-36) Financial Intangibles Tax

A penny on the dollar tax on stocks, bonds, and other financial assets more than $50 million–the first $50M is free every year. It would only impact 4,300 extremely rich filers, and is estimated to generate $4 billion per year by 2027. 

(Worried wealth taxes are unworkable? Don’t be!)

SB5796 (Saldana, D-37) Large employer payroll expense tax

This is similar to JumpStart in Seattle (which, despite promises of doom and death spirals, has generated lots more revenue than was predicted since implementation), and similar to the recent tax Seattle passed to fund social housing. It is a 5 percent tax paid by big companies on payroll expenses above $176,100 per year. It would raise about $2.3 billion per year for public schools, health care, and basic needs for seniors and people with developmental disabilities. 

SB 5798 (Pedersen, D-43) Raising the arbitrary 1% property tax growth limit

Currently, state and local governments' property tax collections can only increase by 1 percent each year, with few exceptions. But 1 percent isn't enough to keep up with inflation, population growth, or increased community needs. That is why local tax general funds are able to handle less and less each year.

This would raise the 1% lid, tying tax increases to inflation and population growth. This will still be inadequate because of the Baumol Effect, but it will be a huge help. It will also help the state collect almost $800 million over four years for schools. People who qualify for the Property Tax Exemption for Senior Citizens and People with Disabilities would be exempt from paying state property tax.

SB 5794 (Salomon, D-32) Repealing outdated tax preferences

Repeals 20 obsolete or outdated tax exemptions. This generates about $1 billion over four years for public schools, health care, and social services.

SB 5795 (Krishnadasan, D-26) Reducing Regressive Sales Tax

Reduces sales tax from 6.5 percent to 6 percent, a decrease in revenue of approximately $1.3 billion per year, but a benefit to low-income people who pay an unfair and disproportionate share of their income on sales tax.

Please, please - sign in pro, share, and tell a friend!

(Special thanks to the Seattle/King County Coalition on Homelessness, who provided this list and short descriptions in a recent alert. I have borrowed some of their descriptive language where relevant).