When it comes to unfair tax systems, Washington is No. 1

Published in Tacoma’s News Tribune February 1, 2015

tax burdenThe start of the 2015 legislative session has brought stiff competition for the most suitable image of Washington’s tax code. Reuven Carlyle, chairman of the House Finance Committee, called it a Ford Pinto, the automotive jewel once named by Forbes as “The Worst Car of All Time.”

A bit more kindly, Gov. Jay Inslee evoked earlier transportation history, finding the moniker jalopy more fitting to the tax system’s barely functioning condition.

Sticking with the transportation theme, my vote is with the sedan chair, that 17th-centuryWashingtonAll European conveyance in which the rich and royal rode, carted around by bearers.

There is much to dislike about taxes, of course, but those we pay in Washington are especially onerous. Start with the hundreds of tax breaks, each one no doubt enacted some point in the past to encourage a worthwhile pursuit. Or not. Continue reading

More options are needed to bridge the state’s budget gap

Published in The News Tribune, June 5, 2013

Gridlock; a ticking clock; a glacier.

Pick your favorite metaphor to describe the ongoing, seemingly never-ending “negotiations” occurring in Olympia over the state’s budget. So boring, uneventful, and secretive are these purported discussions that even political scribes are finding little of interest to report on.

The Legislature’s 30-day special session, the sole purpose of which is to approve a budget, is now set to expire in less than a week. Continue reading

Lawmakers need to focus on structural problems with budget

Published in The News Tribune, January 5, 2012

As our legislators return to Olympia, they must feel like the Bill Murray character in the movie Groundhog Day.  Each year they show up at Olympia and find that — once again — revenue falls far short of expenditures.  Let’s hope this year they find a way to awaken from this bad dream.

To start, legislators should begin distinguishing short- from long-term budget problems.  Short-term cyclical problems are caused by a weak economy.  Continue reading

Gas tax would aid economy, fund state programs

Published in The News Tribune, October 9, 2011

After what now seems like a thankfully long respite – four months was it? – state budget cuts are once again on the table.  And it’s the same old story.

The state’s chief economist Arun Raha once again erred on the side of optimism.  In truth, it’s more accurate to say that he was not pessimistic enough – no one dares be optimistic these days.  At any rate, the state budget is once again short — this time it is predicted to have $1.4 billion fewer revenues than when Raha last peered into his crystal ball. So back to the drawing board.  Back to negotiating more budget cuts. Continue reading

We need long term and short term debt strategies

Published in The News Tribune, April 29, 2011

When it comes to the economy, it’s hard to know what we should be worried about these days. Not long ago, most everyone agreed that demand –to be precise, a lack of it — was the key concern.  To shore it up, the federal government embarked on a massive spending spree.  The Federal Reserve also enacted a policy of “quantitative easing”, with the hope that this too would help convince us to spend more.

Seemingly overnight, however, the watchword has somehow turned from “demand” to “debt”.   The TNT (4-19) trumpeted this new concern across its headlines recently, referring simultaneously to the growing federal debt as well as the large state debt.    Republicans and Democrats in Washington, DC are now sparring over whose debt-reducing package is better.  Continue reading

Unions not to blame for problems with pension mess

Published in The News Tribune, April 15, 2011

Paying public employee pensions is costly, and will become more so. So we
better learn the right lesson.

In this state, two public pension programs are running out of money.  Unless
it changes current contracts, the state will have to significantly dip into
the general fund to meet its obligations.

The recent House budget addresses this problem by reducing future payouts to
retired workers. Yet even if approved, the changes still leave the two
programs billions of dollars short over the coming years. Continue reading

State revenue picture is better than you might think

Published in The News Tribune December 2, 2010

Despite front page doom and gloom on the state budget front, my column last week argued that things aren’t quite so bad.  Sure in the weeks ahead, we’ll suffer more budget cuts as the projected revenue for the rest of the fiscal year is once again falling short of what was previously forecast. .

But looking ahead, the Office of Financial Management (OFM) is forecasting record revenue for the next biennium – a full 16 percent above revenue expected this biennium.   By comparison with these last two years, the next biennium sounds like a piece of cake.  Perhaps with the exception of Tacoma’s City Manager, who among us wouldn’t  leap for joy if told that our income was going up 16 percent? Continue reading

I-1098 neither targets nor discourages innovation

Published in The News Tribune October 27, 2010

It’s the Innovation Era!  Creativity and ideas are what drive economic growth these days, not strong backs and the luck of geography.

So we should be especially interested in knowing what promotes “innovation” — and conversely what inhibits it.  If you listen to many opponents of the state’s income tax initiative (I-1098), an income tax on the wealthiest Washingtonians will do the latter.   

 “I-1098 would significantly harm the state’s ability to attract new businesses” is a common complaint.  Another critic writes that I-1098 harms firms “at the heart of the ‘innovation economy’”.

There may be good reasons for opposing I-1098, but that it will stifle innovation is not one of them. Continue reading

Ballot measure gives us chance to fix budget for good

Published in The News Tribune August 15, 2010

Should we be upset that Congress has just promised Washington an extra $526 million?  Not I nor, I think, will others whose kids go to our public schools, who use Medicaid for health insurance or have a parent in a nursing home, or who otherwise support the wide range of services the state provides:  This money will help assure their continuation.

According to Richard Davis, however, we would be better off without this additional federal dollars (“We missed a chance to really fix the state budget”, TNT 8/11).  Basically, Davis believes this windfall has allowed elected officials to temporarily avoid the hard choices ahead. Continue reading

In economic terms, raising taxes better than budget cuts”

Published in The News Tribune, March 9, 2010

Peter Callaghan noted in his column (“Instead of guessing, we could ask our economist about tax increases”, 2/21/10) that elected officials in Olympia are throwing out dueling claims over the effect new state taxes will have on the economy.  He asks “Would it cripple a halting economic recovery? Would deeper budget cuts do the same?”

The truth is, neither cuts in public spending nor tax increases are ideal in a recession as both reduce demand for goods and services (and hence employment) in the economy. However unlike the federal government – which can rely on deficit spending during recessions – the state government must choose cuts, new taxes, or a combination of both.  Given this choice, deeper cuts in spending on investments to education, health care and infrastructure improvements would be the worst option. Continue reading