Recent Stories with tag taxes

Several months ago, writes the Seattle Chamber's Christine Donegan, Seattle employers issued a joint appeal to Mayor McGinn and City Council to avoid raising taxes to balance the 2010 and 2011 budgets. As a follow up, twenty-two business organizations have issued a letter to the mayor and council with specific suggestions for balancing the budget without negatively impacting employers or essential city services.

Mayor Mike McGinn, introducing The Maldives at Bumbershoot

Dear Mayor McGinn,

In April, over two dozen representatives of Seattle employers wrote to urge you to refrain from increasing existing taxes and proposing new taxes to balance the City’s 2010 and 2011 budgets. We believe that burdening employers with additional taxes will slow economic recovery in Seattle. As a follow up to that letter, we write to offer specific suggestions for balancing the City’s 2011 budget that will preserve jobs and critical City services.

As you are well aware, the City of Seattle faces a projected $67 million shortfall between planned expenditures and anticipated revenues in 2011, with $11 million less in revenues than previously predicted. However, the City is projected to collect more General Fund revenue in 2010 than was collected in 2009 and this trend is anticipated to continue through 2012.

Between the year 2001 and 2011, General Fund revenues will have grown by 45 percent, 18 percent when adjusting for inflation. The City’s budget shortfall is not driven by decreasing revenues, but rather as a result of expenses that are increasing at a rate greater than revenues and a rate greater than Seattle’s Consumer Price Index (CPI).... (more)

That BoingBoing headline--"Broke-ass Washington state set to give MSFT $100M annual tax cut and amnesty for $1B in evasion"--should make the people (well, Jeff Reifman) at Microsoft Tax Dodge happy--they've been wondering where the Seattle Times has been on this issue. Who needs old media? BoingBoing is here.

To catch you up, many people have long known about Microsoft's bid to avoid paying Washington state's B&O royalty tax by setting up Microsoft Licensing Incorporated in Reno, Nevada. Jeff Reifman has been reporting on that story since 2004, as he will be the first to mention, in a slightly incredulous, "Has it been that long?" way. (Reifman has worked at both Microsoft and Seattle Weekly.)

Although Microsoft makes no secret of producing its software in Washington state, the idea is that since the sales "location" is domiciled in Nevada, they're not subject to Washington state taxes. Notes Reifman:

Nevada's tax rate for licensed software is zero. Washington's is .484%, lowered in 1998 from 1.5% by lobbying from...the software industry.... (more)

A joyful "Gum Wall" courtesy of SunBreak Flickr pool member lwestcoat

Governor Gregoire has come up with a few ways to raise an easy $605 million: sin taxes. The Olympian says she'd put "new levies on toxic materials that include refined oil, and on bottled-water, carbonated beverages, cigarettes, candy, and gum."

I suppose the tax on toxics like oil qualifies as a sin tax. (We're getting very moral about the environment these days.) In any event, it brings in the most money, about $215 million, mostly from Washington refineries. Putting a sales tax on candy and gum, the Seattle Times says, brings in just $28 million.

You'd think $600 million added up to real money, but the state has a $2.8 billion deficit forecast for 2010 and 2011. Gov. Gregoire is hoping to talk the federal government out of over $400 million, but that still leaves quite a shortfall.

Visiting family in Portland over the weekend, I got to witness firsthand the difference between how Oregon and Washington are handling their budget crises in the midst of a recession. On Tuesday, Jan. 26, Oregon voters look set to approve ballot Measures 66 and 67, reasonable tax increases on wealthy individuals and businesses, to help fund their budget shortfall and support crucial public services.

Measure 66 raises the state income tax (Oregon has an income tax but no sales tax) 1.8 percent on individuals making over $125,000, and households making over $250,000. The measure also lowers taxes on the unemployed by exempting the first $2,400 of unemployment benefits. Measure 67 raises the minimum business tax for the first time since 1931, from $10 to $150, and adds a 1.3 percent tax on corporate profits over $250,000. The measures are public referendums on bills passed by the legislature last year, and pollsters show both passing.... (more)

As the AP reported yesterday, the state is predicting "weak revenue" for the next year and a half (weak to the tune of $760 million), and so the deficit for that time period has grown to $2.6 billion. That said, Publicola is using $11.6 billion--the cumulative deficit amount for the state's budget from 2009 through 2011 so far--as a way of reminding everyone of how far we are from where budget forecasts started. (It's the same story as at the county and city budget level, writ large.)

With the series of cuts necessary to retire last year's $9-billion deficit, the state sliced past fat and into the meat of its social services. Much of the budget is mandatory, "protected" funding, so the legislature can only cut about one-third of the $33-billion biennial budget total. To make up the new $2.6 billion, Washington Budget & Policy Center says, the state would need to cut that one-third by about one-third.

With unemployment across the state at 9.3 percent (it's actually higher in Seattle), and projected to rise, not many people will greet the idea of higher taxes with delight. "The economic downturn has forced more than 60 percent of Puget Sound area residents to delay their retirement plans," says the PSBJ. If slumping consumer spending is driving most of the state's deficit, look for that to continue.

But taxes are what Democratic leadership is suggesting, though since they are looking for options that include their reelection, one likely suspect is sin taxes. Actually, higher liquor taxes prices just went into effect last August, when the Liquor Control Board raised its markup to just over 50 percent.

What we have here is both a failure of leadership and imagination. State and local government spending is hugely important to the economy--one study says that one lost government dollar equates to $1.41 in lost economic activity. Simply put, slashing government spending makes a recession worse, at precisely the time when people need government programs most.

Yet closing "tax loopholes" and soaking the remnants of our middle class isn't going to get the job done, either. I am a long way from knowing what the solution to this particular dilemma might be, but one thing is clear: The current plan--implementing destabilizing cuts in the hopes that the economy is "just taking a break" and will be back soon--is the option of people who have government jobs. And if things worsen, plenty of people now in Olympia may not have them.

Tucked at the bottom of Jon Talton's recap of the latest census update (median household income declined over the past ten years, "for the first time in modern American history") is a kicker: "Another gift from the 'recovery' is rising oil prices.The International Energy Agency says it expects a rise in global demand next year, especially in China, the rest of Asia and the U.S."

That reminded me of Eric de Place of Sightline's post about gas selling for $2.64. What's so amazing about that? Nothing, except that in 2005 when gas hit $2.31 everyone's head exploded. The President begged us all to avoid "non-essential" driving, and every other headline screamed about "pain at the pump." Today, not so much.

De Place brings this up because it's conventional wisdom that higher gas prices are political death. But the reality is, people adapt. Even people who shout really loudly run out of steam. And sometimes they get distracted by something else they feel indicates the end of the world.

Now, I am not "for" higher gas... (more)