Taxes
Quality of Life: We Take It For Granted
I recently saw a sign from a no-toll campaigner that read, “Freeways are Free”. It is in the nature of the immense prosperity our nation has known since the end of World War II that things our parents and grandparents once saw as wonders and as luxuries, we sometimes mistake as a free and unlimited resource. Your driveway is connected to millions of continuously paved public roads that would allow you to drive to anyplace USA. We often take it for granted that school is “free” and universal through the twelfth grade, and that we have (mostly) affordable public universities and colleges available after that. Police and fire are one pone call and often less than 240 seconds away. We don’t think twice when we see the FDA stamp on the side of a meat at the store, we figure our food supply is inspected and safe. Social Security checks are automatically deposited in the accounts of the retired and disabled. This and much more are now so much a part of our everyday life, we can, like the lady with the “free” sign confuse abundance with free.
What our parent’s knew
These things are not free, but they are critical. From pioneer times, Washingtonians have seen the wisdom of funding education, so much so that it is in fact our number one state constitutional mandate! Public safety is right up there too, which includes properly funded courts, police and a correctional system. Our state may not seem to us isolated today, but that’s because generations of Washingtonians saw to it that we were linked by highways, rail, air and ports to the nation and the world. Our state runs a trade surplus with the world, exporting everything from airplanes and apples to software and coffee.
Public Investments Mean Jobs
And as we can clearly see, it really does “take money to make money”. A degree of public investment is needed or the private sector to function at its full potential. Without roads, our apples don’t make it to market. Without ports, our wheat would not be exported. Without schools, our companies import skilled workers, or simply relocate, and we would not attract start-ups.
The private sector requires a well-managed state government to perform these tasks, and that means taxes.
So the question is who and how much?
We can all agree that when taxes are too high they can kill economic activity and undermine the very things we set out to achieve. If they are too low, services will be so limited or compromised that the private sector becomes dysfunctional. Some of the lowest tax regions or America also have a correspondingly low income, with some states having workers take home half of what we on average make in Washington. In our times, if we don’t fund education properly we end up with a low skilled workforce, low wages and a brain drain.
Washington’s revenues come from a diversity of sources, but three stand out:
- Sales on consumables (minus food and pharmaceuticals)
- Business
- Users
Sales Tax
Washington’s sales tax is levied on most consumable items, but it excludes food, over the counter medication and pharmaceuticals. The strengths of the sales tax are that it represents a way to fund the state government without taxing labor, which is a good posture for a state that has an exporting economy. It is also difficult to evade, especially for the majority of state residents who live far from a state with a different tax structure. It is relatively easy to calculate and collect, especially in age of automated point of sale devices, and we get revenue from folks who are visiting, or simply passing through.
The sales tax is however regressive, since it taxes folks with modest and low incomes at the same absolute rate for taxable necessities as it does people at the top of the income scale. I favor reform of our system to make the burden more progressive. I oppose taxing incomes on middle and lower income households, and I oppose higher taxes on start-up businesses and entrepreneurs. We need to help our middle class families and we need to encourage more businesses to start here and relocate here.
My guiding principle is to make sure that we properly fund those things Washingtonians expect of their state government, while being thoughtful on how we levy the taxes, endeavoring to protect our export posture, attract inbound investment, encourage households to save and invest, and to protect middle and low income families by making the burden as fair as possible.
Tobacco, Candy and Liquor
When the fiscal crises his, we were strategic in making very limited tax increases to items that are absolutely voluntary in nature and whose customers are not price sensitive within a limited range of price changes: tobacco, candy and liquor. This way, people who are hunkering down and sticking to basics would not impact at all, or impacted very slightly.
Business Tax: Entrepreneur Tax Break!
As many people know we tax business revenue. But what many people down know is that the first $45,000 is exempt from the state business and occupation tax. Now we have increased the exception to the next $45,000. This is a job-creating move. By not taxing the first $90,000 in revenue we are encouraging people to create new businesses. This, among many other things has placed Washington in the top tier of business friendly states and states that are the best to launch a new business.
Users: Tolls
Tolls are a classic user fee: let the user pay for the benefit.
Oddly, in opposing tolls, some local conservatives have betrayed one of their longest held principles of not using government to subsidize one group of people with another group of people’s money.
Our new bridge (see new bridge discussion) will require a local contribution. Tolling is the fairest tax in this case. No one likes tolls; anymore then anyone likes any tax. But megaprojects such as a new I-5 bridge are not going to be entirely financed by federal money.
I oppose imposing any other tax on local citizens for this project.
Our objective must be to make tolls low, cheap and extremely seamless at their point of calculation and collection. As you will read in my bridge discussion, this is a 21st century tolling process, one that does not have toll booths, spare change but rather super fast car readers, automated billing, flexible rates based on time, and more.
Summary
As a leader in the state legislature I have worked to slice government spending for the first time since the 1950s. I have worked to do this while not sacrificing what makes Washington, Washington: life long educational opportunities, world-class infrastructure for world-class economy and outstanding quality of life. Where taxes have been increased, they were levied on the most non-essential household items, and the increases were in many cases very small.
It’s easy to pander, promise lower taxes and be purposely vague about what you would cut. It’s even easier to make a cynical political calculation and cut spending on people who don’t have a vote or a voice: children and vulnerable adults.
As long as I have the honor to represent you, I will never take those easy paths, but rather I will protect our families by not hiking taxes on the basics, preserving services, and increasing taxes on things such as cigarettes only when needed.
