WA Democrats, you agree with your tax critics


One of the more unexpected twists and turns of the pandemic is how it resulted in a huge surge of taxpayer money into the state government.

It was pretty clear from the start that the coronavirus crisis could be a boon for certain industries like big tech, but it was widely predicted that the government would be gutted.

“Pandemic wrecks national budgets, could trigger deep cuts,” was a typical headline from summer 2020.

Washington state forecasters predicted a $5 billion hole in our state’s 2021-2023 biennium.

But that was wrong (to defend the forecasters, it was a once-a-century event). People kept working and spending much more than expected, so tax revenues for the biennium are now expected to be $7 billion higher than expected, not $5 billion lower.

That’s a $12 billion surprise you’ve never heard of. (This doesn’t include all of the federal aid money, which added several billions more.)

The interesting thing about this good news is what the ruling Democrats here are doing with it. With the exception of some savings in rainy day funds, they are moving towards spending virtually all of it.

At a budget hearing Monday in the State House, dozens of lobbyists and heads of government organizations and nonprofits gushed over the generosity. With large investments in transportation, schools, pay increases for state employees and other programs such as paid family leave, the biennial budget is expected to be about 25% larger than the last – a historic expansion in state spending.

But not every Democrat is completely enthusiastic.

“We’ve been balancing the budget here on the backs of the working class and the poor for decades,” says Sen. Patty Kuderer, D-Bellevue, “and I felt like it was time to relax that a little bit.” ”

Kuderer, who said she likes the budget’s overall spending priorities, is one of a few Democrats who have urged her party to return some of the money to the public with a cut in “regressive” taxes.

“Washington is last in the nation when it comes to tax fairness,” she said Wednesday. “Sales tax is the most regressive of all.”

Kuderer and Sen. Monas Das, D-Kent, jointly sponsored a bill to reduce sales tax from 6.5% to 5.5%. It has never been heard, even though Democrats control the legislature and the governor’s office.

Sales tax eats up far more of the wages of low-income workers than those of the rich. Because of our state’s overwhelming reliance on sales taxes, the Institute on Taxation and Economic Policy ranks Washington as the absolute worst of its “terrible ten” states for hollowing out the poor. We’re just below Texas. Here, the lowest-income workers pay 18% of their income in state and local taxes, while the richest pay 3%.

Democrats began trying to change this inverted system last year by introducing a capital gains tax on stock gains of more than $250,000. But they haven’t followed up on planned regressive tax cuts — and don’t seem very interested this year, even with so much money floating around in the Capitol at Olympia.

Politically we are an outlier. Maine’s Democratic governor, blessed with similar surpluses, just announced $500 in tax breaks for most taxpayers in her state. The California governor issued what he called “the largest federal tax refund in American history.” The Kentucky governor, also a Democrat, is calling for a year-long sales tax cut and a deferral of vehicle taxes.

I realize Democrats can’t be seen here cutting car taxes like they did in Kentucky because Mr. Tim Eyman would be floating in bliss. Nobody wants to see that.

On Wednesday, some Democrats in the state Senate proposed expanding a tax credit for the state’s smaller businesses. That is a beginning. As for people? They offer you… free parking passes at state parks.

We sent our state an extra $12 billion and all we got were these lousy parking tickets?

I know that spending throughout the budget goes to many useful and good things, hence this week’s outpouring of love for it. And I’m kidding about the parking permits (please send me one).

But there is a serious, longer-term political problem raised by Kuderer’s and Mas’ criticism. That said, if we’re ever going to get out of this Horrible Ten ranking, politicians must first convince voters that they’re not going to just add all the new progressive taxes to the old regressive ones.

That’s a big reason why voters here consistently oppose a state income tax. Polls show people fear the new taxes will pile up on the old ones and yet never be enough, no matter how much money comes in.

Democrats, you agree with these critics.


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