A Specter Haunting Washington: The Income Tax Debate Returns From the Dead Yet Again
There’s a specter haunting Washington state, and to many Democrats and Republicans, it might as well be communism.
But it’s not communism. Indeed it’s not even socialism. It’s the notion that the wealthy should pay as large a percentage of their income in taxes as everyone else. And that in recessions— when tax revenues decline because people are unemployed or spending less, and more businesses are struggling— those who can pay more taxes should, so that government can continue to provide basic services for everyone.
It’s the proposal, in short, that Washington state should adopt an income tax.
Many Democrats and just about all Republicans will tell you that an income tax is illegal in Washington state, but they don’t know that for sure, and they’re probably wrong. They will tell you that voters would never support an income tax in Washington, but polling data suggests otherwise. They will tell you that an income tax will hurt the economy, when most proposals for an income tax are accompanied by tax relief for working and middle class people that would actually stimulate consumer spending. They will warn that a tax on corporate profits will drive business out of Washington state, without mentioning that 43 U.S. states already tax some kind of business income, and that most small businesses would prefer to have a tax on their profits than on their gross revenues. (See “Myths and Facts About An Income Tax in Washington State“)
And when those and other similarly specious excuses are exhausted, the real reason for the political establishment’s objection to the income tax eventually comes out. We can’t pass an income tax, we are told, because it’s already dead.
The income tax is always already too late in Washington state. It has been shot down by courts, torched by governors, strangled in the cradle by state legislatures, and had a stake driven through its heart by voters more times than anyone can recall. It is definitely the deadest idea that most politicians around Olympia have ever heard of. Just ask an old timer. He (the old timers are usually men) can assure you that the last time this came up, it most certainly died, never to return.
And yet, the income tax debate simply will not die. Every decade or two, it returns. Often, it’s true, to be killed off again in some spectacular new way. But also always against the predictions and warnings of those who think they know better. It has this habit of never returning at the “right time”, because according to conventional wisdom, the right time for an income tax in Washington state is never.
“This is a Start— It is Time”
Yesterday, the income tax debate returned from the dead yet again. In a surprising move, Senate Majority Leader Lisa Brown (D-Spokane) made a pitch to save the state Senate’s proposal to temporarily increase the sales tax by 0.3%. The sales tax proposal is opposed by both the Governor and much of the House, who prefer to increase so-called “sin taxes.” Brown revived her proposal by suggesting that the sales tax could be truly temporary if the Legislature were to put a referendum on the ballot this November that would reduce the sales tax by a penny and institute a 4.5% personal income tax on Washington residents who make over $200,000 per year.
The last-minute proposal could usher in a new level of chaos and division among Democrats just one week before they are supposed to agree to a plan to close the $2.8 billion deficit. Even Senator Ed Murray (D-Seattle), a politician who has spoken openly in support of an income tax before, told the Seattle Times that “it’s probably too late in the session” to give proper consideration. No one claimed it has enough supporters to pass. And at the end of yesterday’s last-minute hearing, the Senate Ways and Means Committee took no action to move the bill forward.
So what was the point of summoning the much dreaded but always lurking income tax debate? Was this really a serious proposal, or yet another horror show in slow motion?
State Senator Rosa Franklin (D-Tacoma), who has introduced legislation to create an income tax every year for the last ten years, provided an idealistic explanation in testimony she gave to the committee. She said,
Last year, we made up for our revenue shortfall by cutting the budget. We did not address the growing imbalance or antiquity of our tax system. I have advocated for years for a tax system that is more fair and sustainable than our existing system— a system that was created a century ago for an economy that bears little resemblance to our world today. This is a very first step… This is a start. It is time. It is time that we begin to restructure an outdated system that does not fit in 21st century Washington.
Franklin added that the committee and the media should “not obstruct this discussion that needs to happen here,” and that the issue needs to be put directly to the voters to decide.
State Senator Margarita Prentice (D-Seattle), the committee chairwoman, introduced the hearing on SB 6250 yesterday by suggesting that the bill was offered as an opportunity to help Democrats hold onto the hope that the system could be made more fair in the long term even as they increased regressive taxes in the short term. “I know that many of you have heard us say over the years and over the last six months that an income tax is off the table,” she began, “and that is what we honestly believed… But sometimes a crisis presents opportunities you just can’t imagine, and we’re certainly in that kind of a crisis.”
It’s no secret that both chambers have struggled to come up with enough votes to approve a plan do anything and that is because of the choices before us, whether they be unpopular tax increases or also immoral tax cuts which would be very, very hard for all of us to stomach individually. We each can muster the inner strength to choose our own path but collectively it is much, much more difficult and this plan could at least get there. Best of all it allows us to make the tough decisions we need to make in Olympia this year while allowing the voters to decide whether now is the time to fundamentally change our tax system…
The “Conversation”
Is this really the kind of conversation that will succeed in breathing life into an income tax proposal that has died so many times before? Prentice’s style of conducting the hearing set an antagonistic tone that certainly riled up income tax opponents. She cut off Sen. Cheryl Pflug (R-Maple Valley), the first Republican member of her committee to speak, with a surly explanation that “Well, I am chair” and therefore did not have to recognize her, only to end up recognizing her anyway.
By holding a hearing without having circulated draft legislation 24 hours prior, the committee may have violated Senate rules. Even if it didn’t (it depends on how you define a “draft”), Republicans on the committee and conservatives giving public testimony disparaged the hearing as not only an affront to taxpayers, but also an illegal power play. When Sen. Joseph Zarelli (R-Ridgefield) first raised these challenges, some members of the audience applauded, causing Prentice to gavel and exclaim, “Alright. We’re going to clear the room if we have any of those outbursts,” while later saying that “I see no merit in trying to squelch a discussion of this type. This is America…”
Students from Evergreen State College, fresh from their participation in a local action as part of a national student strike against budget cuts to higher education, provided a significant amount of testimony in favor of the bill. Conservative lobbyists and people mobilized by right wing talk radio came out angrily opposed.
Liberal insiders offered more qualified support. Spokespeople from UFCW 21 and SEIU 775, along with the Economic Opportunity Institute’s Marilyn Watkins, all endorsed the income tax in general, but warned in not so subtle ways that it would be a mistake to conflate all tax reform with an income tax, and to thereby end up derailing the immediate opportunities for change that are within reach right now. Even if now doesn’t turn out to be the right time for the income tax, they indicated, they weren’t going to consider this issue dead.
And so it begins.
To be continued…
