Yes, no surprise. But today's article in the P-I on reality rearing its head in Olympia does nevertheless contain some worthwhile nuggets:
Gone are the halcyon days of a skyrocketing real estate market and a ballooning economy that had led to back-to-back-to-back upward adjustments in the state's revenue forecasts.And gone is the free and easy feeling about spending, the unflinching commitment to "targeted investments" that Democrats have enjoyed for the past three years.
Should government ever have a "free and easy feeling about spending"? One would think not, though the following quote speaks more directly to the tardy arrival of prudence in the state capitol:
"Better late than never," said Sen. Joe Zarelli, R-Ridgefield. "Over the last four years, we've increased spending by a full third, 33 percent, several billion dollars. It was way too much too quick."
Calling a 33% spike in the state budget "too much too quick" is a gracious understatement from Sen. Zarelli.
Posted by Eric Earling at January 28, 2008 08:25 PM | Email ThisOh, never mind...
Posted by: Independent Voter on January 28, 2008 08:28 PMAn income tax that replaced the sales tax, the B&O tax(another volatile tax), and the state portion of the property tax would make revenue more constant, help business, and make us more competitive.
Posted by: Giffy on January 28, 2008 09:50 PMI expect that the Government, as full of professionals as it is, can manage a volatile income stream as well as anyone who is self-employed.
They just don't care to.
-Ian
Posted by: Ian on January 28, 2008 10:38 PMAnd they can and do manage it, states have to have balanced budgets, its just doesn't work all that well.
Posted by: Giffy on January 28, 2008 10:50 PMThat's why you always have to love Progressives, they are so damn arrogant and filled with entitlement, that they always manage to trip themselves up. Both Gore and Kerry managed to steal defeat from victory, and we can expect more of the same.
Think about Marlyn Chase D-Shoreline and her timely bag-banning legislation. That's an election year gift almost as good as Darcy Burner skipping Pierce County in 2006. If Progressives were smarter, they might actually be dangerous.
Posted by: Jeff B. on January 29, 2008 12:01 AM#6: Giffy, obviously you aren't paying the service co. rate B&O tax of 1.5 cents on every single dollar you take in. ON TOP OF ALL THE OTHER TAXES EVERYONE PAYS.
Are you even paying any B&O tax at all? I'm guessing not. It's so easy for someone who isn't paying the heaviest freight charges to run this state to say "Gee, taxes are great around here. At least--I'm not paying much so they must be!" You're not paying much because some of the rest of us are holding this state up financially with B&O tax, etc. And the service B&O rate is a giant rip-off. I'd be happy to let you write the checks for it instead of us, if you think it's so low.
Giffy, are you self-employed and paying your own health insurance premiums plus everyone else's at your company and paying B&O taxes, etc? I'd really like to know.If you don't sign the front of a paycheck, then maybe you don't really "get it."
Posted by: Michele on January 29, 2008 12:13 AMYour statement that "Income is a highly predictive tranfer that tends to increase at par with inflation making it ideal for taxation." is also incorrect. Just look at the mid-90's through mid 2000's, many years income growth (in this state) was half or less than the inflation rates, then in other years it was 3 or 4 times the inflation rate. Some areas like Puget Sound would be hit at different times. Good luck getting revenue to the counties or cities in a manageable fashion.
However, Sales tax and the B&O tax tend to be more consistent with inflation, smaller fluctuations.
Posted by: Doug on January 29, 2008 12:15 AM$9,202,516,936,166.24.
Hint: that includes Jan 25.
Posted by: Jim on January 29, 2008 06:11 AMThe point is that Gregoire, as is her MO, hired people like she were drunk (with power, that is a true statement). Spending needs to be reined in.
Posted by: swatter on January 29, 2008 06:52 AMYeah that's working for them alright.
Posted by: Army Medic/Vet on January 29, 2008 06:55 AMWhat they are is leftist Homocrats.
Posted by: Independent Voter on January 29, 2008 07:20 AMI doubt Giffy signs the "back side" of a paycheck either.
Posted by: Saltherring on January 29, 2008 07:29 AMAnd I have been self employed and many of my family members currently are. The B&O tax is screwed up. Thats why I think it should be replaced with an income tax. Much simpler to handle, and honestly pretty easy to avoid for savvy small corporations and can not be an issue at all for S corps and partnerships as they have pass through taxation (though of course the owners will be taxed).
Instead of having to figure out a complicated multi-rate tax one simply figures out their profits, something business generally do anyways and then apply a fixed percent. Depending on how far you go in replacing taxes the income tax would probably be in the 3-6% range on incomes over 30k.
@10, I will try and find the report from the panel that looked at this issue. If memory serves they looked are revenue variations between various states and while all did fluctuate, income tax revenues fluctuated the least.
No system of taxation is perfect, but I think we can agree that regardless of the amount of taxation, simplicity and predictability should be at least goals.
Posted by: Giffy on January 29, 2008 08:05 AMIndeed, this may be the greatest reason why the Republicans lost in 2006: because Republican voters were angry at the spending of the Republicans in DC. In my experience, this was a far greater factor than the war or anything else.
Passing laws that require more entitlements before anyone has put a cost on the entitlement, let alone determined where the revenue will come from is stupid, incompetent, and shows a total disregard for the taxpayers.
It's time to rein in the spending and even produce spending cuts - the easiest spending cuts should be to cut out the wasteful spending that is known to exist.
Posted by: SouthernRoots on January 29, 2008 10:00 AMYes, California has an income tax and they are a financial basket base. Giffy, you forgot to tell California how wonderfully well your ideas work. Maybe they need you to come in and tell them how to do things? But that shouldn't be necessary---they're already being run by a heavily democrat legislature and a governor who's decided to act like a democrat these days. So why are they so messed up???? They're doing it your way (even though it's not working)
Posted by: Michele on January 29, 2008 10:09 AMAnother reason income tax is bad is that leftists will start to do what the federal income tax does and start hugely increasing it for certain income levels, shrieking "The rich don't pay their fair share!!" Never mind that top 1% are paying 38% of all federal taxes and the top 50% of taxpayers are paying 96% of all taxes. Somebody isn't paying their "fair share" but it looks like it isn't "the rich".
Giffy, I don't think we'll be taking your advice on how to tax WA, especially in light of California's current situation.
Posted by: Michele on January 29, 2008 10:23 AMAll we need to do now is patch up the cracks and keep the thing shipshape.
An email with the analysis, along with required information about sponsors, committee members and legislators' voting records, will be sent out through the TAX-AND-FEE-PROPOSALS email list when a bill is introduced, when a public hearing for the bill is scheduled, and when a bill is passed by a legislative committee or either house of the Legislature."
Subscribe to the email list: http://www.ofm.wa.gov/tax/default.asp
I was amazed at the number of email alerts I got. Dozens, many each day. Overwhelming. I had to go back and resubscribe under the Digest format.
They are busy down there, squeezing out more money everywhere they can.
In theory, I agree with Giffy that an income tax is the way to go.
The B&O tax is unfriendly to start-ups, as they have to pay it even if they are losing money.
Property (real estate) taxes are evil, as they impose an unconstitutional condition on owning property, which is having income (no income = tax not paid = confiscation by State).
The income tax is the easiest to plan for and pay.
Unfortunately, in practice, the simplicity of the income tax makes it the easiest to abuse.
It's easy to dial up an income tax to get more revenue to pay for two programs; it's hard to choose one program over the other and live within the budget.
In practice, since the legislators in this state have failed so miserably at the latter, it would be utterly foolish to trust them with an income tax.
Posted by: ewaggin on January 29, 2008 12:31 PMIf you want to pay income taxes, move to Massachusetts!!
Posted by: Politically Incorrect on January 29, 2008 01:42 PMThe B&O tax is the single most regressive thing this state can do to businesses. Not just small businesses, but ALL businesses. It was also the straw that broke my camel's back in my decision to leave...
The State will charge the highest B&O rate it possibly can; in my case, because I custom designed product for clients, I was a service industry. Never mind we then built, warehoused, and sold that product.
And it is NOT just 1.5% as applied to services; on the contrary it is closer to 13%. Why, when the rate is so plainly written as 1.5%? It is on GROSS receipts.
Assume I sell you a product for $100. I pay the state $1.50 for that transaction. All good, right? Just 1.5%...
HOWEVER, this is before my costs are covered. In my industry (consumer electronics), I made in the top 25% of net profit (8.5% averaged over 4 years). Before federal taxes, after all expenses were paid (rent, materials, utilities, salaries, benefits, depreciation, etc.) I had a gross profit around 13%. Then the federal 35% would kick in, and reduce that to around 8.5%. Meaning that after that $100 transaction, my corporate profits were 8.5% - my company made $8.50 on average for every $100 we sold (rather high, actually).
So the effective federal corporate tax rate on that $100 transaction? It was $4.20 or so, or 4.2% of the gross receipts.
That $1.50? It would end up being equivalent to a 12.5% to 13% tax on gross income. Not the "it's just 1.5%!" that the State loves to trumpet.
And that was distributed to the owners of the company, who then would pay capital gains taxes (15%) on the earnings, which means what made it into the pockets of the owners (split), at the end of everything was $7.22. Meaning that the B&O ends up being 17.2% of the net income of the corporation.
And this happened whether we made money or not.
Simply put, taxing gross receipts is a burden that is way beyond that of any other government. Because it is on gross receipts. Add in the US' insanely high corporate tax rate (second only to Japan), and very quickly corporations in the state of WA end up with an effective corporate tax rate close to 50% of their gross income.
So few people really understand how repressive the B&O tax really is. Hopefully this enlightens a few folks.
It's quite refreshing to be located overseas, where my HK based company has a flat 16% tax on income earned inside HK (0% on income earned elsewhere). Thankfully at least I can reduce the personal income taxes I pay in China by what I am forced to pay to the US (as a US citizen, income earned anywhere in the world is taxable). Regardless of where I physically live.
Washington state's business economy is surviving on the strengths of 3 things:
1. It's hard to relocate an orchard or farm, so agriculture is stuck here.
2. Boeing has such a massive infrastructure (literally tens of billions of dollars of value) that to relocate would bankrupt the company. They have moved out what they can, but manufacturing will stay here until the company closes simply because it cannot be moved because it is so big.
3. Microsoft is in the same boat as Boeing, but because of people. Microsoft is adding a LOT more positions outside of WA than it is inside the state, but it has such a large labor force here (65,000 and counting) that it simply cannot effectively relocate even a significant percentage of those employees.
Eliminate any one of those 3 legs - which power the entire WA state economy - and WA would be a basket case beyond Venezuela or North Korea.
Seeing the State's budget ballon by 33% over 3 years is simply disgraceful. In HK or China, there's literally calls for heads when budgets increase by 5%, or there's an overrun of 10% (you should have seen the blowback from the 16% cost overrun of the Hangzhou bay bridge - several managers and politicians not only lost their jobs, but ended up in prison). Most places in the world explode when government spending increases by 5% a year...
The leftists on this board would be the first to decry President Bush's irresponsible increase in the federal budget by 30% over his terms; yet these same folks give a free pass to the Governor who increases the budget faster in less than half the time... Politics over reality.
Now excuse me while I take a shower, get some sleep, and focus on keeping more of my own money that I live, breathe, and bleed for...
Posted by: Shanghai Dan on January 29, 2008 02:22 PMProperty taxes. Absolutely wrong. You don't own your land - try not paying the taxation on it and you'll quickly find out you're just leasing the land from the government for a rate they can increase as desired. Private land ownership does not exist as long as the government can force you to continually pay for the "right" to occupy the land.
In China, I bought a house, outright. Property tax is applied at the time of purchase at a rate of 0.5% of the value; both sides (buyer and seller) pay the same amount, so the net tax is 1% of the transaction.
Ongoing rate? 0%. You buy it, you pay the tax once, you're done. No more. No annual fees, no increases in assessed value. Keep it vacant, build a house doesn't matter. Add on to your house no concerns about the increase in taxation.
Sure, I have a 70 year renewable lease on the land (much like in the restricted zone in Mexico, or on tribal lands, or like land laws in most other countries). But for those 70 years I pay zero property taxes. None. Regardless of how the value appreciates.
Considering I'm saving $3,000+ per year in taxes (the new place is about the same size, and the yard is a bit bigger than what I had in Edmonds - and it's a very upscale neighborhood in the Wester suburbs of Shanghai), I think I'll take a one-time hit when I buy the place and effectively never have to worry about property taxation again.
Posted by: Shanghai Dan on January 29, 2008 02:33 PMIf WA state had an income tax, we would be out of here so fast it's would be laughable. It's one reason we moved to WA from OR. We would probably go to Nevada next time.
States like California are taxing their citizens to the limit of their resources & still they want to add more programs. People who work in government look for ways to enhance their work & income, so they come up with these programs & services that no one knew they wanted or needed.
I won't vote for any new taxes nor will I vote to raise taxes. I think all government should be lean & hungry all the time & have to justify every single increase to the voters.
Posted by: Clean House on January 29, 2008 06:32 PMSixty days of this legislature is about 60 days too D much.
Posted by: GS on January 29, 2008 07:53 PMStupid is as stupid does....and there are no shortage of stupid people in the Western half of the Evergreen state.
Posted by: Space Junk on January 29, 2008 08:17 PMAs of Jan 28.
Posted by: Jim on January 30, 2008 03:53 AM