For the first time since the 1994 election, Democrats controlled both houses of the Washington legislature. They celebrated by imposing new taxes, most of them regressive.
The Democratic-controlled Legislature pushed through a $481 million package of "sin taxes" and other revenue bills to balance the budget.
Cigarette taxes will shoot up by $6 a carton in July, liquor prices will increase and you'll begin paying sales tax when you sign up for an extended warranty on consumer goods. Estate taxes will be assessed on about 250 large estates each year.
And, with the strong support of Governor Christine Gregoire, the Democrats pushed through an enormous increase in the gas tax.
During the campaign, Gregoire also said she wouldn't push for a gas-tax increase until taxpayers are convinced they are getting their money's worth for the nickel-per-gallon increase lawmakers approved in 2003. She even criticized Rossi for having voted for the 2003 increase.
. . .
After staying on the sidelines throughout most of the session, Gregoire plunged into the transportation debate in the final days, threatening to drag lawmakers into special session if they did not act on a plan to increase the gas tax by 9.5 cents per gallon over the next four years.The new taxes will help raise $8.5 billion, much of which will go toward replacing the viaduct and the 520 bridge.
All of those taxes, except the estate tax, are regressive. They will all tax the poor relatively more than they do the well off. How much more? The data in the chart accompanying this article shows that sales taxes hit families with incomes below $20,000 more than twice as hard as they hit families with incomes above $100,000 (more than 7 percent versus 3 percent or less). I haven't looked at patterns of spending for tobacco, alcohol, and gasoline, but I would expect taxes on them to be at least as regressive as general sales taxes. I would expect, for example, that gasoline would be a far large part of a poor family's budget than it is of a wealthy family's budget — especially if the poor family lives in a rural area.
To be fair, I should add that it would not surprise me to learn that many of the Democrats who voted to soak the poor would have preferred to soak the rich. Many, I suspect, would rather have replaced these new taxes with a state income tax. But voters in this state have not the slightest desire for an income tax, and so the Democrats chose to raise the money in ways that hit the poor.
Why? In general, as far as I can tell, the additional money (except for the gas taxes) will go for payments to unionized public workers. The gas taxes will mostly go to a project entirely in Seattle (the Alaskan Way viaduct) and to a bridge connecting Seattle with the prosperous eastside suburbs (520). Democrats in the legislature judge those payments and those projects worth the regressive burden they are imposing on the entire state, especially the poor who drive to work.
This puts the Washington Democrats at odds with the presidents of both parties for the last two decades; as I explained in this post, thanks to presidents Reagan, Bush 41, Clinton, and Bush 43, the federal tax burden on the poor (especially working poor families with children) has been cut sharply. As much as these four men differed, they agreed that the poor would be better off if they kept more of their own money. Washington Democrats don't seem to agree.
Finally, I should mention, just so there is no confusion on the matter, that I do not oppose regressive taxes in every case. For example, cigarette taxes — at some level — are probably a good way to discourage cigarette smoking. What that level is must be determined empirically. You could summarize my views by saying that regressivity in a tax is a disadvantage, but not, by itself, disqualifying.
Cross posted at Jim Miller on Politics.
Posted by Jim Miller at May 02, 2005
02:20 PM | Email This
Legislature: Pridemore reluctantly casts key tax vote
Sunday, April 24, 2005
By DON JENKINS, Columbian staff writer
OLYMPIA -- State lawmakers appear ready to end the 2005 session today, though for about one minute a Vancouver Democrat had the session derailed.
To protest higher taxes on cigarettes and alcohol, Sen. Craig Pridemore on Friday night originally voted against a $263 million revenue package that supports a two-year spending plan agreed to by House and Senate leaders.
Without Pridemore's vote, the package was one vote short of passing.
Pridemore, however, changed his vote to yes at the end of the roll call and immediately left the floor of the Senate, unhappy with what he helped approve.
"I think the Senate has balanced the budget on the backs of the poor and powerless," he said.
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And then, the simple idiot voted for the budget ANYWAY.
Posted by: Who.... me? on May 2, 2005 03:28 PMThe challenging law suits and initiative writing have already been started as a result of their foolish actions.
People will continue to look elsewhere for the products they purchase, and they will never reach near the 8.5 billion they expect out of this the largest gas tax hike in the history of this state. People will drive less, conserve more, and they will fall far short of this goal.
I guess gas just wasn't expensive enough on the minimum wage worker in this state. I am glad Christine Gregoire and her cronies decided to adopt a regressive massive 12% budget and huge tax increases. I couldn't think of a more stupid start to an already very questionable popularity and support.
Posted by: GS on May 2, 2005 05:20 PMJust look at those drug addicts. Illegality does not keep them from doing it. Prohibitively expensive cost doesn't stop them from doing it. They will become homeless and still do it if they can get their hands on it. Nicotine addiction does the same thing to those addicted to it.
Taxes on tobacco products arguing that high prices encourage the addicts to quit is as lame as the gas taxes they passed will replace the viaduct.
Posted by: C. Oh on May 2, 2005 05:20 PMI don't think the Democrats in our state want to soak the rich. In Washington, more rich people vote for Democrats than for Republicans. The richest and biggest political donors in our state also give most of their money to Democrats.
By contrast, in almost every other state, rich people prefer Republicans at a higher rate than other income classes. Don't expect to see Washington Democrats beating down the door to increase taxes on the richest people in our state.
Posted by: Richard Pope on May 2, 2005 06:05 PMIf I didn't know better, I'd say Stefan was trying to change the subject after a bad day in the Chelan County Courthouse......
Posted by: Unkl Witz on May 2, 2005 06:15 PMOne set of taxes will increase the supply of black markets, and the other will decrease the supply of savings.
Well done! They have once againg transferred the State's wealth from those with the fewest votes to those with the most votes.
Ain't democracy wonderful?
Posted by: Tom Rekdal on May 2, 2005 06:54 PMIt seems you can't read. Unless you think that 'Posted by Jim Miller' actually says 'Posted by Stefan Sharkansky'.
Allow me to point out the obvious:
1. This post is by Stefan, not Jim, so it is illogical to think that Stefan is changing any subject;
2. This post is about the legislature and taxes in Washington State - 'Sounds' relevant to me! (Pun intended).
3. Stefan has a post about Judge Bridges allowing the proportional analysis as admissable evidence already. Perhaps you'd like to enlighten us as to why this was "a bad day in the Chelan County Courthouse" in the RELEVANT forum.
4. There is a also post about Norm Dicks (the Democratic US Representative from the Olympic Peninsula), and how he took a trip paid for by a lobbyist. Perhaps you'd like to comment on that thread about what a terrible ethics violation this is, in much the same way the liberal lemmings posted here about Tom Delay, who has no connection to Washington State nor Puget Sound.
Nice article. Its true. The taxes are regressive.
However, both parties have gleefully taxed tobacco for their own reasons. Both parties believe the poor should be socially engineered against smoking and to offset the health costs from smoking.
The tax gas can be thought of a use fee.
Driving on roads degrades them requiring maintenance and requiring them to be upgraded. Thus, charging a gas tax is pretty libertarian, let the users of the roads pay in proportion to their use.
If you commute to work 60 miles a day, perhaps you should pay more to use the roads than someone who bikes to work. I don't know if I buy it completely but its a theory.
Posted by: Erik on May 2, 2005 07:39 PMWhen sales/gas/sin/property taxes, use fees, levies, etc. all increase to the point of being the most regressive tax structure in the nation, and our state budgets have put us in debt, then tax reform will be the mantra. A state income tax, will be brought forward as the only viable solution that offers the necessary reform.
The sales tax and other taxes will not be eliminated. Sure, they might be reduced with empty promises of not raising them. Soon we will have both an income tax and a sales tax that will both slowly creep upward.
Our state government is simply not willing to adjust what it can and can't do based on economic realities. Sure, there is a time to attract businesses that will bring jobs or keep businesses from leaving the state. But there's also a time to stop doing things that the state can't afford and the public doesn't want to pay for.
Who cares about Christine Gregoires campaign promises about taxes. She wasn't going to keep them anyways. Even if our liberal government owned the golden goose, they wouldn't be satisfied. It really has to do with maintaining power and control over those they govern, for the "good" of the people.
The Democrats chose the taxes they did -- other than the estate tax -- because they could be represented as "sin taxes" or, in the case of the gas tax, user fees.
C. Oh - First, I am glad that you have been able to quit smoking, something that can be terribly hard to do.
Second, the newspaper accounts of the studies of the relationship between tobacco prices and smoking that I have seen say that raising the price had two effects; it reduced the number of young people who started smoking, which is where the main reductions came, and it reduced tobacco use by those who were already smoking, but not by much.
Erik's point about a gas tax being a user fee is a valid one. I am inclined to think that user fees work best when they are most directly tied to use, which is not always true of a general tax on gas.
You've just taxed a gallon of milk 7 times before it gets poured on your cereal and reduced your purchasing power to buy said milk.
It's like reducing the purchasing power of everyone in the state by 5%. I can think of 5-10 things they could have done to raise this money w/out a gas tax. NAMELY START THE TOLLS WHICH ARE GOING TO BE NEEDED ANYWAY BEFORE TAKING BREAD FROM THE MOUTHS OF THE REST OF THE STATE. WHY DOES SEATTLE BELIEVE THEIR PROJECTS ARE MORE SPECIAL THAN EVERY OTHER TOLL PROJECT IN WA STATE HISTORY?
The arrogance of king county never ceases to amaze me. News flash- funding seattle projects is the cost of living/doing business in Seattle. It's way over priced, that's why the rest of don't live there.
Posted by: Andy on May 2, 2005 08:33 PMNice point. But actually it goes in the opposite direction. Milk and farm products are one of the most heaviest subsidized areas of the economy by taxpayers.
Farm subsidies amount to billions of dollars per year. Milk producers are some of the prime recipients.
Desipte all of the rhetoric, the west side of the state pays both a higher rate of tax per person and a higher amount total per capita. All of the studies I have seen on the subject indicate it is the west that subsidizes the east, not the other way around.
Well that settles it, I am taking the family to California for vacation this year. In my New Full Sized Pick-up with a canopy!
Sounds nice. But did you know that California is one of the 42 states which has a state income tax? Be careful what you wish for.
Why should the whole state pay a 9.5 cent gas tax to build or augment I405, the Seattle Viaduct, and the 520 bridge, so residents here can use them for free (other than their gas tax) while Hood canal bridge users pay a toll, I167 Transponders will soon be charging for I167 usage. Why are the outlying areas treated like step children and double taxed. They pay Tolls and they pay gas tax for the roads they use. Plus they pay for the roads in Seattle. Seattle travelers pay no tolls whatsoever.
Posted by: GS on May 2, 2005 09:10 PMKnow your data before you spew off.
I come from a family of dairy farmers. They don't get squat in subsidies. In fact, family farming is possibly the worst business/career choice anyone could make.
The urban west side enjoys an average income significantly higher than the rest of the state. Despite having a higher discretionary spending budget- NO they do not pay a significnatly higher tax per capita- that's what an income tax would do. With the exception of the estate tax, all of these taxes are on the first 15-20k a person makes- including the mortgage because your new home price now has fuel surcharges baked into- yeah a contractor has to drive his heavy trucks to the jobsite every day...hybrids just won't carry a back hoe or job box.
Yeah its real fair an unemployed mill worker in Longview has to pay for the viaduct while he commutes himself to Portland to find work (and be subject to Oregon's income tax).
I'm in a tax bracket that suffers least from these taxes & I'm savy enough that my estate will never be subject to them. I'm against them because it is just plain wrong to force John, Paul and George to pay for Ringos brand new drum set.
Posted by: Andy on May 2, 2005 09:35 PMThen let's talk about that SOB Ron Sim's CAO Land grab with no and I do mean no compensation for stealing up to 65% of your farm land!
Posted by: GS on May 2, 2005 09:47 PM
I try to think state-wide; like buying only WA wines; it helps us all in a small sense--spreading the cash locally;
problem is that no one is holding the state spenders to rules we all practice at home or on your farms; sensible money management and running "lean;" accountability is gone;
Do elected officials REALLY think we will vote them out? Our behavior has said otherwise.
Know your data before you spew off.
Here's the database for farm subsidies:
Dairy subsidies alone amounted to 2.9 Billion in the US from 1995 to 2003.
Washington farmers alone received over 2 Billion during this period.
Then there are rural assistance programs giving subsidized services for the last 70 years including roads, telephone, electicity and mail service.
Posted by: Erik on May 2, 2005 11:24 PMWA Democrats are setting up the pins to knock business out of WA at every opportunity. Taxes such as the gas tax which are euphemetically entitled "user fees" go a long way towards skyrocketing distribution costs, and the cost of doing business in WA.
WA is going to get worse before it gets better, and that's what it's going to take to wake up more WA moderates and get them to stop voting for Democrats.
To be fair, the Republicans can be pretty bad as well when it comes to taxation, but at least there is some sanity to their overall fiscal policy.
Posted by: Jeff B. on May 2, 2005 11:26 PMAs noble as it may sound, taxing something just because one does not care for others doing it is a dangerous position to take. For example, could we not also approve of a regressive tax on food, to curb obesity? Why should we get uspet over a regressive tax on gasoline? Won't it discourage people from driving, thereby improving our air quality?
There are any number of things one could justify someone else paying an outrageous tax on, that others won't be, based on it forcing them to lessen use of it.
Approving of any item being outrageously taxed opens the door for the government to outrageously tax something else, that may be used by the one approving of it's use.
Personally, I felt the tax on latte proposed in King County a couple years ago to be a good idea also. But, I don't live in King County and don't buy lattes. Seems King County residents disagreed with me.
Posted by: DakotaRed on May 2, 2005 11:43 PMAgain- *KNOW* your data before you spew. A few farms get the lion's share; most family dairy farms get squat. Let me break it down for you.
I personally know and worked at several of the farms on that list, went to school with their kids and I know a few on that list are no longer farming as of this year. Better to quit before the bank owns the land. Many of the farms on the west side went under in the 90's, so the remaining after 2000 were quite good operationally. I also know the land, machinery and cattle on any given farm that recieved more than 50k over a 5 year period is worth at least 3+ million dollars (conservatively).
I know of two farms nearly side by side in Pierce county- the guy who stopped farming got as much in earnest money from a land developer as the other got in subsidies. Who's the better businessman?
$50-100k over a 5 year period does not amount to jack when compared to the cash flow, bleeding cash loss and the magnitude that those assets are worth if they were liquidated. What sort of joker sits on 3-5M+ in assets that don't even break even? At best the subsidy keeps the farm in operation 1 more year. This year family farms in Wa will drop like flies- subsidy or not and largely due to indirect fuel costs. When you run a sound operation and go into debt 3 years running- you eventually say this is insane and stop...well unless you are a democrat with the tax payers check book.
But the subsidy discussion was a distraction on your part that I have debunked as subisidizing the price of milk- it doesn't- At best it keeps milk flowing for another year and at worst its a rat hole that shows that the gas tax goes into a gallon of milk 8 times instead 7, since now the fed has to keep the farms above water so we don't get our milk from Canada and Mexico or God knows where else.
Which leads us full circle, again how do you suppose milk gets to the store? How do you suppose feed gets to the farm and how is that price set- geez you reckon a cross state trip on an 18 wheeler plays into a couple of these prices? How do you suppose milk gets from the farm to the plant? How do you suppose the price of milk is set- do you suppose those greedy subsidy driven farmers are out there setting the prices or that your favorite milk company is going to drop the price on farmers to absorb fuel costs...as well as stick it to the consumer? It's a chain of fools doing business in Washington.
*KNOW* your data before you spew.
But what the heck- with your current logic and reasoning, you show the same aptitude for economics as every ambulance chaser in Olympia this last session.
This was a simple analysis of gas tax impact to a gallon of milk, it's tough to name any widget or service outside of Seattle that is not unfairly impacted by this tax (as opposed to 5 other measures that could have been taken first). This session was the most irresponsible soaking of those living paycheck to paycheck that one could envision. There was no reign whatsoever.
Posted by: Andy on May 3, 2005 01:02 AMPlease enlighten me, Erik. How does a bicyclist pay his/her fair share for their special lanes or even their general traffic lane usage?
Posted by: ItTakesAVillageToConveneAGrandJury on May 3, 2005 06:51 AMToll roads cause more traffic.
Politicians will user tax us to death too - and now they will tax us for dying too.
Posted by: Fred on May 3, 2005 07:05 AMOnce again, you don't know what you are talking about.
We do pay our electric and telephone bills.
When we lived on the farm in the 80's and early 90's our average electric bill was $400 a month. We lived in an 800 sq. ft. home. Our phone bill was $57 per month for BASIC service on a FOUR PARTY LINE. Yes, there were actually four families sharing one phone line.
Don't even get me started on the postal service or the condition of our roads.
You just don't have a clue Erik. But what can we expect, you are of the democratic party of the United States of America. You have all the problems, but absolutely none of the solutions.
Posted by: cc on May 3, 2005 07:35 AMFunny how with tolls the project not only gets paid off early, but future maintainance work as well- then voila- no more toll way.
With gas tax, it just funds another 20 holes in the giant government money sieve and never goes away.
Posted by: Andy on May 3, 2005 08:03 AMAlso wasn't there a floating bridge in Seattle in the 70's/80s?
Tolls do go away, unless you have a legislature that keeps soaking a specific population. Rest assured this specific taxation is a good way to keep the project & government honest.
The wonder of wireless makes this a simple drive by. Welcome to the electronic age of taxation.
Posted by: Andy on May 3, 2005 10:19 AM
It can, it depends how it is set up. If there are a lot of tourists and truckers gumming up the works the transponders don't help so much. Also, the Govt can track your location if you are one of those privacy types. I know divorce lawyers have gained access to this information for their clients benefit. Just an FYI.
One of the most striking features of the San Diego Skyline is the San Diego-Coronado Bay Bridge. With its sweeping blue arch flying high above the waters of the San Diego Bay, the bridge is known for its simple design and high arch. Many of the graphical presentations of San Diego's skyline feature the bridge in the artwork. In addition, this is the only bridge to cross San Diego Bay, so part of its beauty lies in its uniqueness. Built as a toll bridge, the tolls were removed in July 2002.
Posted by: FlyingTigress on May 3, 2005 11:43 AMWe also pay for roads through all the special taxes on fuel etc., which some how slithers into general funds. Until the taxes already being raised can be accounted for 100% (that excludes Sims), then why give the politicians more. This is probably a different subject...
Posted by: Fred on May 3, 2005 12:17 PMAs history shows on these projects it's amazing how a cost will go down when it's scrutinized daily by the people paying it.
Note that fraudioire went and held the legislature hostage over the safety of the viaduct...she didn't say- prioritize what get's postponed so we can look at the viaduct or go find some ways to front load the viaduct project.
Any bozo can raise taxes. A leader finds ways to make the best use of funds available.
Posted by: Andy on May 3, 2005 12:45 PMI do think the gas tax (like the sales and B&O taxes) are pretty horrible. At least with a toll people can make a choice of route.
Posted by: ChrisW on May 3, 2005 01:14 PMIn short, liberals who reason as headlice, and Christine G do are in charge of the finance, design, and planning of our transportation solutions – as well as the rest of the current mess in progress. Need I say more?