Microsoft founder and billionaire Bill Gates says he should pay more in taxes and that the government should require other superwealthy people like him to contribute “significantly higher” amounts.
“I need to pay higher taxes,” Gates, who is worth over $90 billion, said in an interview with CNN’s Fareed Zakaria on Sunday.
“I’ve paid more taxes, over $10 billion, than anyone else, but the government should require the people in my position to pay significantly higher taxes,” he said…
Last June, Gov. Jay Inslee made headlines when he signed a state budget totaling $43.4 billion in spending for 2017-19. Which of the following statements about that budget is true?
A. State spending will grow 15.3% by 2019.
B. State spending will grow 6.1% by 2019.
C. State spending will grow 3.2% by 2019.
D. State spending will grow 0.27% by 2019.
If you chose any answer, congratulations: you’re right (technically)! Let me tell you why – and what you can do with the often-contradictory things you hear about the state budget.
A. “State spending will grow 15.3% by 2019”
Washington’s Fiscal Year (FY) 2017 budget was $19.6 billion, and the FY 2019 budget is $22.6 billion, which is a 15.3% increase. A “double-digit increase” isn’t only helpful for writing catchy headlines – it’s also useful rhetorical bait for conservative and anti-tax (well, anti-tax for the wealthy) activists. But this easy-to-understand calculation is also a pretty misleading one, as we’ll see below.
B. “State spending will grow 6.1% by 2019”
This figure takes inflation into account. Like every market, the amount the state pays for workers and goods changes from year-to-year – usually upward. So unless we account for inflation, simply comparing one budget year to another isn’t “apples-to-apples”.
Here’s an illustration of the difference – in the graph below, the “nominal” line shows spending in current dollars, while the “real” line show the equivalent amounts in 2017 dollars: 
Adjusted for inflation, FY 2019 spending ($20.8 billion) will be 6.1% higher than FY 2017 ($19.6 billion) – less than half the increase shown in answer A). But some important information is still missing.
C. “State spending will grow 3.2% by 2019”
Since Washington is a growing state – with just over 6 million people residing here in 2002, and more than 7.6 million projected in 2019 – our budget and spending comparisons also need to account for the fact that the cost of public structures and services goes up as population increases.
To account for population change, we can use the same nominal and real numbers from above and divide by the state’s population for the corresponding year to get spending per capita:
So: adjusted for both population and inflation, the state spent $2,643 per capita in 2017, and will spend $2,728 in 2019 – an increase of just 3.2% ($85/person). You won’t see that figure in many headlines, let alone hear it in talking points from conservative legislators and activists advocating for budget cuts.
This particular chart also highlights why it’s important to know how a reference year fits into the bigger picture. Even using these population- and inflation-adjusted numbers, you could truthfully say that in 2019, Washington is a) budgeted to spend 12.6% less ($395/resident) than it did 17 years ago; or b) spend 14.9% more ($355/resident) than it did 5 years ago.
It all depends on the story you want to tell.
D. “State spending will grow 0.27% by 2019”
Political rhetoric commonly cites spending as evidence government is “too big” – but what exactly is the ruler used to make this judgement? Compared to Washington’s economy (Gross Domestic Product), state spending is well below what it was 10 years ago, and will rise just one-quarter of 1% (0.27%) from 2017 to 2019 :
It’s the same story when you measure by state total personal income – state spending is at historically low levels, and is projected to rise a mere 0.16% from 2017 to 2019 :
Why It Matters and What You Can Do
The old adage that “statistics can be made to prove anything – even the truth” seems applicable here, if a touch too cynical for my taste. And media coverage of Washington’s budget too often revolves around political wrangling, last-minute deal making, or short-term analysis, which doesn’t help.
The case I’m making is not to ignore the numbers or the news, but to remember: without the context of inflation, population, and historical perspective, budget numbers don’t tell us nearly enough about what our government is doing.
So the first thing you should do when you encounter news or opinions on the state (or any other government) budget – whether from a legislator, media outlet, or other source – yes, I’m looking at you, sketchy Facebook meme! – is pause to find out:
- Are the numbers adjusted for inflation?
- Does it account for population (or change in enrollment, number of people served, etc.)?
- What’s the time period of reference for a particular percentage/dollar change? What happens if you use a different year for comparison?
- Who came up with the source data, and is it public so I can I see it for myself?
If your source can’t or won’t give you those answers, they haven’t done their homework (or they don’t want to tell you the results), and you really can’t rely on them to provide a useful perspective.
Second, remember that Washington’s budget is really a list of public values. For example:
- In our current society and economy, every child needs a lot more education than they did 50 or even 30 years ago – starting before they’re 5 and continuing after they’re 18. So we fund pre-K, K-12 and higher education.
- A healthy community and environment are essential not just for our health, but for our quality of life and economic development – so we fund the Department of Ecology, Department of Health, and similar agencies.
- We consider beautiful natural spaces a birthright for current and future generations to enjoy – so we fund State Parks and the Department of Natural Resources.
When you read or hear someone opine that “the budget” for something is too big or too small – or that some unit of government is spending too much or too little on something – they’re actually telling you something else: that it’s a lower (or higher) priority than it ought to be.
Now, there’s nothing wrong with that – just don’t get bogged down in their numbers (unless they haven’t given any, which ought to be a red flag!). Instead, think about the needs and priorities of the wide variety of families, neighborhoods, and communities in (as the case may be) your city, state or nation.
Then ask that person to explain exactly how their proposal will affect the structures and services necessary to deliver on the public values you care about. See what they have to say for themselves. You’ll learn more from that conversation than any graph or spreadsheet can tell you.
 Nominal budget data provided by fiscal.wa.gov, Historical Spending (annual), “Near General Fund – State” (NGFS). NGFS includes the General Fund, Education Legacy Trust Account, Pension Funding Stabilization Account, and Opportunity Pathways Account. The largest of these is the state general fund, which is the fund in which most general revenues are deposited; the other funds have more specific purposes. Washington receives additional federal funding (not shown here) that is reserved for specific services, such as Food Stamps, Medicaid, and children’s health. The state legislature also adopts separate budgets for transportation (using the gas tax and other dedicated revenue) and capital projects.
 Real (inflation-adjusted) numbers calculated by the author using the Implicit Price Deflator (IPD) provided by the Bureau of Economic Analysis and economic estimates from the Washington State Economic and Revenue Forecast Council. The IPD is a measure of inflation, similar to the Consumer Price Index – however, the IPD includes a measure of inflation specifically for state and local governments, which is used here.
 Yes, I hear you there in the back, and I get that not every person uses everything our state has to offer, and different public structures/services cost different amounts. Here’s the thing: in general, everybody benefits, directly or indirectly, when our state government delivers on widely shared/supported public values. Think of it like going to a buffet dinner. Everyone pays at the door, and everyone has access to the entire buffet (in this case, our state’s public structures/services). Maybe you may only eat salad and jello, while others enjoy turkey and potatoes.
 State Gross Domestic Product data through 2017 via U.S. Bureau of Economic Analysis, “Annual Gross Domestic Product by State”; 2018-2019 are author’s estimates, based on 3-year rolling average of prior years.
 Per Capita Income data through 2017 via U.S. Bureau of Economic Analysis, “Annual State Personal Income and Employment”; 2017 data based on Q1-Q3 average of same year, 2018-2019 data are author’s estimates based on WA Economic and Revenue Forecast Council reports.
Originally published at Economic Opportunity Institute
The Official Local Voters’ Pamphlet for the primary election in King County includes statements for and against Proposition 1, which would impose a 0.1% increase in the sales tax in order to fund arts, science and cultural enrichment programs.
The statement against Proposition 1 states, “it is unwise and inequitable to impose another $500 million regressive sales tax increase on overburdened King County taxpayers.”
The interesting thing about this statement is that one of the co-authors is state Senator Dino Rossi (45th LD), a Republican who ran for governor. Republicans are, with few exceptions, adamantly opposed to fixing our regressive tax system. In the latest session of the legislature, they refused to agree to a capital gains tax and instead insisted on raising real estate taxes to fund education. Real estate taxes are more regressive than a capital gains tax, though not as regressive as a sales tax.
It’s disingenuous for politicians who oppose progressive taxation to use an argument about regressivity to attack a ballot initiative that increases the sales or real estate tax.
At least they acknowledge that the problem exists.
I note, by the way, that the legislature, including Republicans, voted, in 2015 to raise the regressive gas tax by 11.9 cents. See http://www.thenewstribune.com/news/politics-government/article43025553.html and Gas tax increases by 7 cents in Washington state.
In 2009 I voted against an “education reform” bill that, amidst devastating cuts, promised fully-funding K-12 education by 2018. As I asked then, how could we expect future Legislatures to possess the courage of our convictions if even we didn’t possess that courage?
The 2009 bill’s promise was to avoid litigation, now known as the “McCleary case,” over K-12 funding inadequacy. The Washington state Supreme Court saw through the smokescreen and, in August 2015, began imposing a $100,000 daily contempt-of-court fine upon the Legislature for not progressing toward its self-imposed goal.
This year’s never-ending legislative process produced what Gov. Jay Inslee proclaimed “a historic budget that fully funds our schools for the first time in more than 30 years.” Other Democrats echoed his exultations, labeling “Democratic” a budget borne out of a Republican Senate, a claim that ignores nine Senate Democratic no votes, and frothing in a press release that it “adds $7.3 billion to Washington schools.”
Not so fast: Education isn’t fully-funded.
The $7.3 billion figure reportedly fails to subtract billions lost from local property tax revenues. The Legislature has added by subtraction before, as it did in 2013 by shamelessly counting $295.5 million in denied K-12 cost-of-living increases toward a “$1 billion funding increase.” It’s doubtful the high court will be fooled.
Political triumphalism is inevitable. But Carter McCleary was 7 years old when the McCleary litigation was filed. He graduated from high school last month. My son starts high school this fall. Am I wrong to feel impatient about the state meeting its constitutional “paramount duty”?
I also worry about the budget’s unsustainability. As a House member, I voted against budgets on that basis.
The 2007 budget, for example, was “balanced” by breaking a 1998 pension promise — largely for teachers. The state reacted to the Great Recession by decimating programs and denying state workers’ wage increases for eight years. It was heart-wrenching.
Washington continues to use baling wire and volatile revenue sources for budgets, and we are only ever a volatile president’s actions (perhaps tweets) away from another recession. The Washington state Supreme Court has, rightly, insisted on “dependable revenue sources” for K-12.
You can’t separate a budget from its shaky revenue foundation. So why should the public demand progressive tax reform if even Democrats claim progressive aims were “fully” achieved by regressive means? Settling for less is learned helplessness.
It happened in 2009, when I opposed cuts initially characterized as “cuts that will kill” — in a half-hearted case for new revenue — that rhetorically transformed into “cuts with a conscience.” The next year, Democratic super-majorities mustered courage and finally raised taxes upon … candy. Budget secrecy — culminating this year in voting on a budget no one had read — hardly helps make the tax reform case, either.
The public can handle honesty. While it might not serve the aims of political rhetoric, it would be honest to admit trying hard, as I know many legislators did, but falling short in key respects. The public must, again, hope for that honesty from the state Supreme Court.
Originally published at HeraldNet
70% of low income people in King County are going to see a tax increase.
There is a perception that this is about taxing rich folk in the big cities [but it’s not so].
There is not one business in this state that does not win in terms of lower taxes in this deal. And the middle class is going to feel it deeply and seriously.
The entire weight, the entire obligation, the entire bill is being sent to the middle class, seniors, working folk, renters, and so many others. We have lots of people who are, effectively, house rich and cash poor because we’ve had an explosion in the past 10, 15 years of value in homes.
To put all of that burden, in a state with the most regressive tax system in the nation, all of the burden, exclusively on the middle class . We’re better than this. We could have made it fair, we could have made it equitable, and we could have made it widespread.
We haven’t closed any tax breaks of meaningful size. We haven’t done anything. We haven’t asked anyone else [other than the middle class] to contribute. Hundreds of millions of dollars in business taxes will be reduced. Hundreds of millions in this deal. And yet a retired grandma in Ballard will see 100s of dollars of increase for a home she’s lived in for 20 years.
To put that entire bill on that grandma in the middle class is just not right.
This middle class property tax increase is just too much, too high, too unfair, and too narrowly applied.
The perennial brinkmanship that the Republican State Senate engages in on the State Budget can best be seen as a concerted effort to maintain the most regressive state system in the United States. Please see the chart from Money Magazine, hardly a progressive publication. Essentially, every two years, the Republicans fight to maintain a system where the middle 60 percent of us pay four times the percentage of our income in state taxes that the top one percent pay and the poorest Washingtonians pay almost seven times the percentage of their income in state taxes that the top one percent pay.
If you earn $379,000 a year or more in Washington State, you are in the top one percent of earners (source: Economics Policy Institute) and the regressive status quo that Republicans fight so hard to maintain means you pay lower taxes. If you earn LESS than $379,000 a year, the Republican efforts to maintain the regressive tax system in Washington State mean you pay higher taxes than you should.
Let me repeat that: If you earn LESS than $379,000 a year, the Republican efforts to maintain the regressive tax system in Washington State mean you pay higher taxes than you should. Perhaps it is time that Washington voters sent Republicans and tax breaks for the One Percent at the expense of everyone else state tax system packing.
(April 20, 2017) — The Legislature is wrapped up in discussions about how to fund (or not fund) K-12 education. But if you look under the covers, you will see that these very same elected representatives and senators are intent on defunding Sound Transit 3. Instead of simply abiding by the voters’ approval of the tax increases necessary to fund mass transit in the Puget Sound area, they are engaging in a bipartisan attack on the election results.
Last November, we approved Sound Transit 3, with more than 54 percent support for the taxes necessary to build out our light rail system. To finance this, voters ratified Sound Transit’s financing plan, which increases property taxes by $25 per $100,000 in assessed value, hikes sales taxes by one half of one percent, and increases annual car-tab fees by about $80 for a vehicle valued at $10,000.
That money will enable Sound Transit to complete a 108-mile light rail network from Everett to Tacoma. By 2040, Sound Transit and its regional transit partners, including Community Transit, will carry more than 200 million passengers, with seven out of 10 trips made by rail, most of those by light rail. That is the key, because light rail is dependable, doesn’t get stuck in traffic, and takes you to where you want to go, or at least close by!
During the campaign, Sound Transit was completely transparent about the taxes. We all knew that our car tabs would increase a lot in 2017 to help fund Sound Transit. So when the first invoices arrived, the vast majority of people just paid their tabs. But a vocal minority, with big tabs from expensive cars, took their displeasure to Olympia, hoping that the Legislature would listen to their stories and disregard the will of the people.
Now we have a bipartisan attack on Sound Transit, with both Republicans and Democrats offering proposals for defunding. The Republicans in the Senate are straightforward. One bill, sponsored by Sen. Dino Rossi (R-Sammamish), would allow cities and counties to opt out of all Sound Transit taxes. With this one bill, the Republicans enable any city to pull itself out of Sound Transit, regardless of how its citizens benefit. Free rides for all! This bill also appears to be a moneymaker for Tim Eyman, as it enables local initiatives to void all taxes paying for Sound Transit.
In this context, the Democrats’ proposal in the House of Representatives doesn’t look so bad. But it is not good. It, too, undermines the vote of the people last year and the financing necessary for building out Sound Transit. Twenty Democrats in the House of Representatives endorsed the Sound Transit 3 ballot initiative. Now they are proposing to lower car tabs for motorists who have bought cars recently, and especially for those who have bought the most expensive cars. This is what is considered “providing fair tax relief for motorists.”
Do Democrats think they can win votes from the complainers who do not want to pay their car tabs for Sound Transit? The Democratic proposal does not roll back car tabs to where they were last year. So if you are going to complain, you will complain about your car tab increase whether it is $100 or $200 or $300.
One owner stated that he was billed three times as much as what he paid last year. His total bill was $406. Under the Democrats’ bill, it will be around $275. He won’t like that either.
But let’s stick with the law as approved by the voters. $406 sounds like a lot. Now consider his vehicle: a 2010 Range Rover, with a sticker price of more than $76,000. If he can afford a car that is valued at twice the total annual earnings of typical workers in our state, then he can afford his car tabs. They cost him $1.11 a day.
Under the Democrats’ bill, if passed, car tabs for this fellow would be 75 cents a day. He would save 36 cents a day and Sound Transit would lose 36 cents a day. That’s not much, but you add together all these reductions, and Sound Transit loses $780 million in car tab fees. This will result in a total loss of $2 billion over 25 years, a loss of 4 percent of the total budget for Sound Transit 3, worth about four miles of light rail track.
Perhaps the light rail to Everett would end at Paine Field. You could take a taxi to downtown!
Originally published at The Stand.
Well-made videos about our regressive, backwards tax system: Washingtonians Talk Awkwardly About Taxes
Here’s the first of the videos from that page:
Here’s a headline that should make us happy: “Trump, Battered in Washington, Is Buoyed at Boeing Rally.” That was from the New York Times, last Friday.
But the funny thing is, there was no Boeing rally in our state, where the vast majority of Boeing workers live and work, making the vast majority of Boeing’s airplanes. And it wasn’t “fake news.” Trump just decamped to Charleston, South Carolina, to have a love fest with Boeing management. Those are the same people who funded and masterminded an all-out multi-million-dollar anti-union campaign to blackmail workers in South Carolina not to join the Machinists union.
The backdrop for this love fest between the billionaire and the mere millionaires of Boeing’s management was the latest new Boeing 787-10 Dreamliner in production in South Carolina. South Carolina wasn’t even called out in Boeing’s employment statistics in 2012. Now it is touted as the jewel in the crown. Is something wrong with this picture? A lot of things.
How did Boeing get all the billions of dollars to invest in South Carolina? Well, it could be seen as a direct transfer of tax money from our state, to Boeing, to South Carolina. Just in 2014 and 2015, Boeing got more than $521 million in tax breaks from the state of Washington. Did that go to ramping up Boeing employment in our state? No, employment has actually fallen, from 87,000 in October 2012 to 71,000 now. That is a loss of 16,000 jobs, or almost 1 out of 5 jobs disappeared.
Adding up the tax exemptions that Boeing rammed through the Legislature in 2003 ($3.2 billion) and 2013 ($8.7 billion) and even a top executive can figure out that’s how to invest in South Carolina. Which Boeing has done, to the tune of at least $2 billion, so far. These tax breaks have also enabled Boeing to pay over $41 million in fines in 2014 and 2015 for falsifying claims for the maintenance of military aircraft. No skin off Boeing’s profits!
Why is Boeing so anxious to rob the state of Washington and starve education funding, with these tax breaks? Is it because the workers in Washington, organized together in the Machinists Union and SPEEA, saved Boeing from its disastrous outsourcing of initial production of the 787 to other state, countries and companies? Is it because the 737 plant is going full-tilt as Boeing’s cash cow in Renton? Is it because we have the biggest concentration of aerospace-related production, manufacturing, and brain power in the world right here. Is it because the state of Washington has invested in community college workforce training and degrees tailored specifically to “supply” skilled workers for Boeing?
OK, so none of these reasons makes sense. How about this one: Washington workers are organized into unions at Boeing. Because of this, they don’t have to forfeit their constitutional rights when they walk into the plant. They get some respect from the company. They have some power to negotiate with the company to determine their wages and benefits. They cannot be fired at the arbitrary whim of a supervisor. They cannot be fired by Donald Trump, like he loved to do on “The Apprentice.”
Are there ways to stop the hemorrhaging of Boeing jobs from our state? Last year, state Rep. June Robinson, D-Everett, proposed a simple equation: Boeing, if you want your tax break, you keep jobs in Washington; if you reduce employment by 5,000 jobs or more, you lose your tax break and that money goes into education funding.
Really, what do we have to lose? Our state is just getting played by Boeing. We give Boeing tax breaks, they invest in other states and countries. We don’t, and Boeing invests in other states and countries, but they will have less money to do so. And of course, whenever these Boeing off-sites like the joint Boeing-Russian operation for titanium machining in the Ural Mountains of Russia, or the Charleston, South Carolina, site for the 787-E or the Boeing technology center in Moscow, whenever any one of them fail the exact quality assurance we all need for aircraft, Boeing will always fall back on the workers, the machinists, the engineers and the aerospace infrastructure of Washington state. So rather than encouraging Boeing to go, let’s just tell them they should stay!
It’s time for policymakers in Washington state to take steps to reverse decades of widening economic disparities that threaten broad prosperity, now that it has again been shown that all income growth since 2009 continues to flow to the wealthiest Washingtonians.
An updated report from the Economic Policy Institute (EPI) shows that the richest 1 percent of households – those making over $388,000 a year – captured all of the new income generated in Washington state between 2009 and 2013 (see graph). By contrast, and in a stark reversal from past decades, average incomes among the remaining 99 percent of Washingtonians declined during this period, causing far too many hardworking families to fall even further behind.