Few in Olympia are bother to say it’s not about the money. Mencken’s right: It’s about the money. And we can expect many more taxing ideas to surface, shine, and disappear in the next few days weeks months bits of time.
In the Seattle Times, Matt McIlwain, a managing director of Seattle-based Madrona Venture Group, makes a strong defense of Washington’s much-maligned tax structure.
OUR state has a tax system that favors growth, investment and opportunity. We have no income tax on personal income, employee stock ownership or capital gains. Compared to other states, our smarter approach favors forward-looking innovation and investment that creates more job opportunities for people in our state. It also enables personal-income growth that encourages consumer consumption and fuels sales-tax revenue increases to fund state services, local governments and schools.
He cites recent increases in education funding with tax hikes as an example of how the system is working to nurture economic vitality. And, he adds,
I have seen firsthand how attracting talent, capital and expertise have helped many startups succeed in Washington state. And this success creates a virtuous cycle. For example, Microsoft is a global leader in software, cloud computing, gaming and more. Companies like RealNetworks were founded by Microsoft employees and then RealNetworks employees founded Isilon Systems. All these companies went public and created countless jobs and opportunities for Washingtonians.
His conclusion:
The state’s own economists project an additional $5.6 billion in tax revenues for the 2019-2021 budget without the need for new taxes. This leaves plenty of room for budget writers to further increase public spending on education, research, human services, ports and roads, without increasing the financial burden the state places on families, businesses and investors.
Seattle Times editorial columnist Brier Dudley, conversely, argues for a capital gains tax. His novel new twist on the old argument is that changes in federal law will reduce the consequences for affected taxpayers:
The bottom line: capital-gains taxes are likely falling 7 to 8.8 percent.
That means the 5 to 7.9 percent capital-gains tax proposals in Washington would be a wash: The state’s rich could increase their share and fix the problem with zero increase in overall capital-gains taxes.
Skeptics will point out that little done in D.C. cannot be undone and that’s what’s promised is often not delivered. And, while Dudley says most states impose capital gains taxes, those are all states that impose income taxes.
In making his case, Dudley takes aim at the levy swap proposed by the Senate and the carbon tax.
The latter proposal is galling, not just because voters rejected such a tax in November.
The proposal’s green veneer can’t mask its stench of regressivity. It’s the opposite of capital gains — a reverse Robin Hood, taking money from regular folks and giving it to powerful special interests. Plus some for schools.
Because carbon taxes are so regressive, November’s Initiative 732 offset economic pain it would have caused with a sales-tax cut and rebates for the poor.
Speaking of the carbon tax, Austin Jenkins reports for the NW News Network,
During a public hearing Tuesday, businesses said on a proposed carbon tax in Washington state would cost jobs and hurt the state’s economy.
The measure would impose an escalating tax on greenhouse gas emissions from fossil fuels and electricity. A provision in the bill would set aside some of the money raised to help fossil fuel workers who lose their jobs.
Mary Catherine McAleer with the Association of Washington Business took issue with that.
“Legislatively planning for people to lose their jobs is deeply concerning to us, especially because most of our state’s counties are still above eight percent unemployment, primarily in rural areas,” she said.
Again, tax policy matters. Even in California, where proposals can get really unusual.
