How do Finns prosper more — with so much less, ostensibly, than we have?

Imagine living in a relatively small nation, where per capita income is $11,000 less than in Washington state, and the only natural resources are timber, water and ice. People pay a 31 percent tax on personal income in excess of $82,000, a value-added tax of 14 percent on food and restaurants, and 24 percent on most other goods. How could anyone possibly do well there, much less run a business and prosper?

And yet, looking at living conditions — such as education, health care, quality of life, economic dynamism and political environment — this nation actually does much better than we’re doing in the U.S. Fewer people are poor, and more people there live longer, are more productive, and are … well, happier.

This place isn’t Arendelle of the movie “Frozen.” It’s Finland. Finland has a highly industrialized, largely free-market economy. The conservative Heritage Foundation rates Finland and the U.S. 74th and 76th, respectively, in terms of “economic freedom.”

In Washington state, our per capita income is close to $50,000 per resident. By that measure, we’re a rich state. But we’re underfunding our schools from pre-K through higher education; too many people are homeless, while many more face stagnating incomes and diminishing public services; and we’re all facing more uncertain economic futures.

So how do the Finnish people prosper with so much less, ostensibly, than we have? The answer is, they make shared investments to build their kids, families and communities.

Look at the economy in terms of peoples’ lives: When a baby is born in Finland, the family gets a baby box with clothes, diapers, bedding, towels, a picture book, a teething toy and other items. Paid family leave kicks in for at least a year, at 80 percent compensation with a guarantee you can return to your job. When mom or dad decides to go back to work, the cost of day care is subsidized so the maximum monthly payment is $322.

As kids grow up, their parents can devote real time to them. Every worker gets five weeks vacation, and the family budget is enhanced with a monthly stipend of $110 for the first child. The stipend increases with each child, so the stipend for the fifth child is almost $200. Pre-kindergarten is universal and free for all children. Schools provide meals for all children. In school, children are immersed in a system focused on creativity, teacher and student autonomy, foreign languages, math and music. No surprise: 15-year-old Finns are the top in the world in education. And when a student goes to technical college or the university, there is no tuition. Instead, the student gets a living allowance!

The Finnish health care system covers everyone. A friend of mine recently had surgery which required two nights in the hospital. His total bill: $103.74, inclusive of surgery, hospitalization, care and medicines!

In retirement, people receive about 55 percent of their average earnings along with a $560 monthly housing allowance. The average pension, including the housing allowance, comes to about $29,000 a year. Full pensions start at age 63. It’s guaranteed, like our Social Security, so the Finns don’t have to worry and hope that their 401(k) performs well. They don’t need 401(k)s! How is this financed? The Finns pay 5.7 percent of their wages into the pension system, and 7.2 percent after age 53. Compare that to our 6.2 percent tax for our Social Security. Employers pay more: 23 percent.

So sure, taxes are higher in Finland. But it’s a shared investment the Finns use to build their economy. The Finns have figured out that once you provide a universal platform of educational opportunity and health and social security, then businesses can just focus on doing business, being innovative, creating new products and systems.

That is what the Finns do. It has a dynamic private sector, ranked third in the world by Grant Thornton accounting (the U.S. is ranked 12th). There are double the number of small and medium enterprises per 1,000 people in Finland compared to the U.S.

And the Finnish people don’t have to scrimp to pay $1,500 a month for child care, worry about how to take time off from work when they have a child, wonder how to pay $12,000 yearly tuition for a public university tuition, or risk bankruptcy in a medical emergency, or wonder about having enough to eat when they retire.

That means that they can grasp their future with hope. Can we?

Originally published at the Everett Herald

Legislators have another chance to fix tax breaks, keep Boeing jobs in WA

I recently purchased a T-shirt from the Boeing store for my daughter, who is fan of the 737. It says, “If it’s not Boeing, I’m not going!” That may be true for her — but Boeing jobs are certainly on their way out of Washington.

How can this be? The Legislature met for a three-day special session in the fall of 2013, specifically to put in special tax breaks for the aerospace giant. That bill, sponsored by state Rep. Reuven Carlyle, D-Seattle,and state Sen. Andy Hill, R-Redmond, was introduced one day, had one hearing in the House, one in the Senate and passed the next day.

Those tax breaks work out to about $550 million a year. Since they were made law, Boeing has moved 3,600 jobs out of our state. That makes the recent news about the company avoiding $20 million in sales taxes last year an especially bitter pill.

Boeing jobs are going to California, Oklahoma, Pennsylvania, Missouri and South Carolina — but apparently not for the tax breaks in those states. The first three on that list have no special tax breaks for the company. Missouri‘s tax break amounts to $229 million over ten years, and requires Boeing to create 2,000 jobs to get it. South Carolina’s tax deal totals $1 billion, and requires the company to produce 5,800 jobs in that state.

Washington’s deal looks like gross largesse by comparison: a total of $12 billion in tax breaks since 2003 — with no requirement for new jobs, or even keeping existing jobs here! (Meanwhile, Boeing is developing a new finishing plant for the 737 in China.) If the Legislature had tied its tax “carrot” to jobs, we could have created up to 11,000 median wage jobs here. That would have been a fair trade.

Air_Berlin_B737-700_Dreamliner_D-ABBN

Our legislators can fix what’s gone wrong. In fact, Reps. June Robinson, D-Everett, Mike Sells, D-Everett and Luis Moscoso, D-Mountlake Terrace, have proposed legislation to tie tax breaks to jobs. House Bill 2147 would reduce Boeing’s tax breaks by increments for every drop in Boeing employment, starting with a baseline of 83,295 workers. That was Boeing’s Washington workforce when the tax breaks were passed. If Boeing shed 5,000 workers, then the tax break would dry up completely. The House Finance Committee gave this bill one hearing, and then sat on it.

Rep. Mia Gregerson, D-SeaTac, Robinson, Sells, Moscoso, Lillian Ortiz-Self, D-Mukilteo, Strom Peterson, D-Edmonds, and Derek Stanford, D-Bothell, have sponsored a bill to require aerospace companies taking advantage of the tax incentives to pay workers who have worked for them for three years at least 80 percent of the state’s median wage (about $16 an hour) by 2016, 90 percent by 2017, and 100 percent by 2018. The House Labor Committee passed this bill. From there, it went to the House Finance Committee, where again, nothing happened.

In January, state lawmakers will return to Olympia. Then those failures of legislative courage can be reversed by ensuring that the billion dollar aerospace tax breaks are tied to keeping good paying jobs right here in Washington.

Boeing ended its first quarter with a $9.6 billion cash cushion, after repurchasing 17 million shares for $2.5 billion and raising dividends by about 25 percent compared with a year ago. So Monday’s news about the $20 million Washington lost in sales tax revenue to the company looks like small potatoes.

But it’s a big deal for foster kids whose case managers are overstressed and overworked, trying to keep up with a workload that violates standards of care (and basic humanity). $20 million would enable our state to recruit and pay enough social workers to care for, protect and develop a pathway of hope and opportunity for these foster kids.

Those 32,000 students can’t get state financial aid even though they qualify, because legislators cut State Need Grant funding. $20 million would put college within reach for thousands of these students.

Those are just two of many examples. So what will it be when the Legislature convenes next month? Lumps of coal for those with the least, and billions of dollars for those with the most? Or will we recognize that giving tax dollars to a corporation that is shifting jobs out of our state is not a smart investment?

Originally published at the Everett Herald

State’s sales tax grinds us down – but it doesn’t have to be that way

It’s a good time to talk about money, who has it and who doesn’t, especially with the Legislature at loggerheads about the budget. Why? Because the taxes that fund our state’s budget come largely from the money we all spend.

Notice I said “money we all spend,” not “money we all make”? In most other states, taxes come from money people make, whether by working for a paycheck or watching the stock market go up, but not here. Half of our state’s revenue comes from sales taxes. So in Washington, when we spend less on taxable goods, state revenue for things like higher education and K-12 education takes a dive.

The years 2001 to 2011 were an excellent demonstration of this. Our state’s general fund revenues fell from more than $6,000 per capita to $4,000. How did we make up the difference? By shorting our kids — and by extension, our collective future. We now are 46th among the 50 states for K-12 investment as a percent of personal income. We increased tuition at the UW from $5,000 to more than $12,000. We starved public parks, closing some and running the rest on a shoestring.

This is no way to keep up with the demands of a 21st-century economy that depends on things produced by the government, like transit, roads, parks, and, yes, an educated citizenry.

Photo: John/Flickr Creative Commons

Taxable retail sales — that is, the tax you pay when you buy pants at Fred Meyer — have plummeted in the past two decades, as a percent of total state income. Such sales used to equal more than 50 percent of total GDP in our state; now they make up about one third. Consumer spending by people between the ages of 35 and 55, who should be at the height of earnings and family expenditures, actually dropped between 1989 and now by $7,500 (adjusting for inflation).

We can’t run public services on a stream of revenue that is turning into a trickle. So where can we find the revenue for public services? We simply need to follow the money. Seattle, Bellevue and the rest of the Eastside have one of the biggest concentrations of six-figure households in the country. When we consider seven and eight figure incomes, we are near the top… of the world.

But we in Washington don’t tap into any of that income, and not by accident or act of nature. The celebration and enhancement of the wealthy while public services for the vast majority of citizens are starved is the result of quite clear public policy. One result of these decisions is the pulling apart of the middle class, with the majority of families falling down the income ladder, and a small minority rising up. And with the shrinking of public services, we have effectively pulled the rungs out from under the people falling down the income ladder to climb back up.

Just-released IRS data shows that for the top 1,000 households in the U,S,, income doubled from about $80 million in 2003 to more than $160 million in 2012 (these figures are inflation-adjusted). Families between 97 percent and 98 percent of the income pile saw their income go up $23,000 to $253,000. Families between 80 percent and 90 percent got a $647 gain. But for all taxpayers below the 80 percent threshold — making up 4 out of every 5 families, income fell. For families in the bottom 50 percent, their average income fell almost 20 percent, by more than $3,000.

In our state, the 30,000 families at the top of the income heap contribute very little of their income — 2.4 percent — to help finance the state’s schools, colleges, mental health facilities, the State Patrol or our court system — while the middle class contributes 10 percent and families under $20,000 contribute 17 percent, primarily via sales taxes.

The choice confronting all of us (because the legislators are very likely to kick the can down the road for another year) is a moral one: Do we invest in our state, our children, our infrastructure, and our future — or do we allow this fiscal crisis just to grind us down? So far, it has been grinding us down. But when we consider that democracy is supposed to present opportunity for all of us, it makes sense to tax some of the wealthiest in our state (and, indeed, the world) to finance a stronger future for everyone.

Original: Everett Herald »

The stalemate over Washington state’s budget

The stalemate in Olympia over Washington state’s budget represents an ideological divide that won’t be overcome by negotiators sitting long enough in a room together. And unfortunately, neither side has proposed a budget and revenue package that would actually fully fund the educational opportunity and services families need in today’s economy.

Republicans who control the Senate are sticking to the anti-government, anti-tax rhetoric that plays well with their base. They insist we can increase spending on schools, cut university tuition, move money from the General Fund to transportation, and hand out more business tax breaks without raising taxes anywhere else. To get there, they void the class-size reduction initiative voters passed last November, assume a big increase in consumption of marijuana, shuffle funds around, throw in savings from unspecified “efficiencies,” and continue to skimp on compensation for teachers and state workers – who’ve already gone seven years without state-funded cost of living increases.

Democrats who control the House are saying we must enhance basic services such as early learning, K-12 education, mental health services, and child protection – and it’s time for the wealthy and big corporations who are profiting from economic growth to come closer to paying their fair share. They’ve proposed raising additional revenue from a capital gains tax on investment income that would fall exclusively on the wealthiest individuals in the state, closing some special tax breaks, and restoring selected business tax rates to the level paid two years ago.

But the Democrats’ budget also overturns the voters’ mandate on class size reduction and still leaves the state a long way from being able to fully fund what the legislature and the State Supreme Court have defined as basic education.

In fact, neither legislative leaders nor the Governor have proposed reforms for truly fair taxes or enough new revenue to fully fund public education and other essential structures and services our children, families, and workers need in today’s evolving economy.

Most of our state revenue comes from the sales tax and a gross receipts business tax that fall hardest on working families and small businesses. But we’re a long way from the 1930s when the system was designed and when taxing consumption of stuff brought in enough to educate most kids for jobs on farms, lumber yards, and factories.

Today – in an era of globalization, services, rapidly changing technology, and soaring inequality – an income tax has to be part of any fair or sufficient system.

Washington’s tax structure is the most unfair in the country, with low and moderate income families paying much more proportionately than the wealthy. Yet voters have been so skeptical of an income tax, that legislators are afraid to even talk about modernizing the system.

State Treasurer Jim McIntire recently proposed a new tax structure, including an income tax, reduced sales tax, and revamped business taxes. In contrast to the current system, under his proposal we’d have enough to fully fund at least K-12 education for the foreseeable future. But because it relies on a flat rather than progressive income tax and reduces sales taxes only a little, it still leaves lower income families paying more than their fair share – and the rich paying less.

Regardless of its merits, McIntire’s proposal is being entirely ignored by the people charged with negotiating our state budget, just as the recommendations of the state’s Tax Structure Study Committee were thirteen years ago.

Without a new budget, the state won’t have authority to pay the bills come July 1. Two years ago, the legislature waited until layoff notices had already been issued to most state employees to break the ideological logjam and send a new budget to the Governor’s desk.

Teachers across the state have taken to the streets in a series of one day rolling strikes, to try to put some pressure on legislators to act. On May 20th, many state employees used their lunch break to rally. It’s time for the rest of us to step up, too. Let’s assure our elected representatives that we’re willing to pay our share of the bills to educate our kids and keep our communities strong – but we’d like the wealthy and profitable corporations to pay their fair share, too.

Via South Seattle Emerald

Eyman’s I-1366 is a Con Job on Most Washington State Taxpayers

Washington State has a tax problem but it is not one Eyman’s Initiative 1366 will help. Requiring a 2/3 vote by Legislators to raise taxes would make Washington’s tax situation worse and would put special interests, the wealthy and corporations in charge of  running Washington State by giving them the ability to dictate our tax structure by having to only control the votes from 1/3 of the members of either the House or the Senate.

No longer would a majority or even up to 66% of Washington Legislators be able to decide how we would fund state services like educating our children. Seventeen State Senators out of 49 or 33 House Member out of 98 would  be able to overrule a majority in both Houses.

The problem is that requiring a 2/3 vote to raise taxes is a con job by those benefiting most – corporations and the very wealthy. Those less well off are paying the greatest proportion of their income in taxes – the rich pay much less -that’s why we are labeled the most regressive tax state in the nation.

From Mother Jones

“The nation’s most regressive tax code belongs to Washington, a state that was ranked by The Hill last year as the bluest in the country based on its voting patterns and Democratic dominance. The poorest 20 percent of Washingtonians pay an effective state tax rate of 16.8 percent, while the wealthiest 1 percent effectively pay just 2.4 percent of their income in taxes.

There’s a clear explanation for that: Washington has no income tax and thus heavily relies on a sales tax that disproportionately affects the poor. What’s harder to grasp is why Washington’s liberals put up with it.”

The 2/3 vote prevents repealing tax loopholes that are giveaways to special interests like oil companies. It prevents even revenue neutral tax reform to make our taxes less regressive because any increase in a tax, even if revenue neutral, requires a 2/3 vote.

And ever since I-601 in 1993 the Legislature has, except for a few years, had the 2/3 requirement as state law. When it was ruled unconstitutional in 2013 by the Washington State Supreme Court, Republicans controlled the Senate preventing even a majority vote to make changes.

Big oil companies like BP and Conoco Phillips gave Eyman money to support the 2/3 vote in the past – not to help low income folks with their taxes but to prevent the legislature increasing a tax on cleaning up toxic substances like oil spills. The 2/3 vote requirement would allow 1/3 of the Legislators in one House to block any tax increase. That is why it is a con game. It would transfer the cleanup costs to taxpayers.

Do not sign I-1366.  If it gets on the ballot because Eyman is using paid signature gathers paid for by a few wealthy contributors like developer Clyde Holland and Kemper Freeman who owns Bellevue Square, vote NO!