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Posted by
WashACE Blog
Thursday, April 16, 2009
Tax Protests, Proposals, and Perspectives
Posted by Richard S. Davis on 4/16/2009 10:55:00 AM
Yesterday, the folks who wanted a vehicle for tax hikes finally got their shot. Rep. Eric Pettigrew introduced HB 2377, a 0.3 percentage point increase in the state sales tax rate, bringing it to 6.8 percent. The tax hike requires voter approval and would be in effect from January 1, 2010 through December 31, 2012. Interestingly, one-fifth of the new revenue would be used to fund the so-called "working families' tax exemption," with the balance going to a newly-created health care trust account.
Members of the coalition are planning to review the final round of
public polling this weekend to see whether the public has sufficient
appetite to raise taxes to restore health program cuts, she said.
Language in the bill by change by Tuesday, she said.
"Each (member of the coalition) will have to decide by Tuesday
whether they are in or out," Sauer said. That's Day 100 of the current
legislative session. Lawmakers are scheduled to adjourn five days
later, on April 26.
(I should note that Rep. Maralyn Chase introduced HB 2354, a sweeping 1 percent tax on intangible property like stocks and bonds. No analysis has been done on the bill, which looks like the biggest tax hike in state history. We can only hope it's an empty gesture, but ... watch it nonetheless.)
As lawmakers pondered tax hikes, a surprisingly large crowd of protesters rallied against "out of control spending," the growing national debt, and the prospect of increasing tax burdens. Here's Brad Shannon's account in the Olympian.
The rally, which was one of many similar events throughout the state
and nation Wednesday, drew an estimated 4,000 to 5,000 people who
chanted “stop spending my money!”
Coincidentally (??) the Washington Post reported that " Americans' Tax Burden Near HIstoric Low ... for all but the wealthiest Americans." I'm not sure that will placate the folks who see rising debt, unsustainable spending, and economic insecurity threatening their standard of living and the prospects for their children's futures.
The only accurate way to compare tax burdens is by comparing both state and
local taxes among states. By that measure, Washington ranks
19th-highest per capita and 35th-highest in taxes as a percentage of
personal income, http://www.taxfoundation.org/files/sr163.pdf.
Economists generally prefer measuring as a percentage of personal
income because it takes into account economic activity and demand for
services. Rankings have become a popular staple among certain national
publications, but they can be misleading.
Well, yes, they can be. So can business climate rankings, alhtough I don't recall such zealous attention to detail when Forbes reported favorably on Washington's business climate or when the Tax Foundation and Small Business Survival Committee provided equally flawed analyis of the business tax climate in the state. The Department's right: Forbes missed the mark. I'd quibble that it makes sense to look at tax burden from both perspectives - per capita and as a share in personal income - and not pick one over the other. But interstate comparisons should always combine state and local taxes.
Ultimately, I think voters will base their decision on new taxes - should they have a decision to make - on their perceptions of their personal tax situation, their assessment of the quality of government spending, and their confidence in the legislature's fiscal management. How do you think that will come out?
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