Some examples of how taxes matter, from Washington’s liquor tax to Seattle’s proposed head tax. Approaching a tipping point?

Taxes influence behavior, from consumption to production. Tax sugary beverages heavily, and people will buy less of them (at least at the shops where the tax is imposed. High business taxes invariably push some producers to shift facilities elsewhere.

In our 2017 foundation report, we reiterated one of Opportunity Washington’s priorities: support for policies that encourage investment, job growth and economic opportunity. And we pointed out,

Washington’s high business tax burden puts many employers in our state at a disadvantage in national and international markets.

Several examples of how taxes matter showed up in the news recently. Seattle Times business columnist Jon Talton runs down the city’s growing tax burden.

In the “taxes” part of “death and taxes,” here is a bit of our inevitability this year:

Property taxes on a median-value house in King County rose $800 compared with 2017, and are up 43 percent over the past four years. In addition to rising home prices and voter-approved levies, the Legislature’s move to fund schools to meet the Supreme Court’s McCleary ruling is the biggest driver.

The Seattle City Council is expected to adopt soon some form of head tax on employers grossing more than $8 million to $12 million a year. The money raised would go for additional spending on homeless services.

The council is also considering a special taxing district for a big swath of the central core. Property owners would be assessed for infrastructure needed to reclaim the waterfront when the Alaskan Way Viaduct comes down.

And don’t forget the income tax the council approved on wealthy residents last year.

There’s more, but you get the idea. And, while Talton points to some studies indicating Seattle does not rank with the highest-taxing metros (data lag may have something to do with that), there’s no question city officials have an appetite. And, as Talton writes, the growing burden has an influence on job creation.

Fiscal conservatives and even many centrists worry that the city could kill its golden-egg-laying geese by too much taxation.

It’s not a competitive issue to be dismissed. Eastside leaders, and even those in the South Sound, would love to see the city stumble, creating an opportunity to grab some of its corporate assets and talent.

The head tax could be particularly destructive for Seattle employment.

In what might be considered understatement, he adds. 

The city’s boom over the past decade has not been a result of the City Council’s brilliance. Instead, it has come from Amazon and other companies; Paul Allen’s South Lake Union innovation district; being cheaper than the Bay Area; and the “back to the city movement,” drawing companies and workers to high-quality cities.

This unique moment in history is not guaranteed to continue.

At Crosscut, Kenneth Shear writes that if the head tax passes, grocery prices will rise and the city’s tax burden will become more regressive.

KUOW looks at Washington’s liquor taxes and how they influence production and distribution decisions.

You may want to think twice before you start a business making whiskey in Washington state. That’s because Washington’s liquor taxes are the highest in the country, according to a new report out today by the nonprofit Tax Foundation.

The story uses the example of Seattle’s Westland distillery.

Westland’s single-malt whiskey is made in Seattle, where it is first fermented and then moved into giant copper stills. When it’s ready, the whiskey is trucked out to a giant warehouse in Hoquiam on the Washington coast. There, it’s put into barrels and left to age for a number of years.   

After that, it’s bottled and trucked across the country to a warehouse in New Jersey.

Why New Jersey? One big reason is taxes.

Back in 2016, Westland sold the business to a big liquor giant, the Rémy Cointreau Group. Their distribution network is based in New Jersey. The sale to Rémy was important to Westland’s business strategy because it helps them sell to other states.

Taxes are lower in those states. 

It matters.