The Working Families Tax Credit is an investment in Washington’s recovery

Published, Washington State Wire, April 5, 2021 (With Aaron Katz)

We all know the massive toll that COVID-19 pandemic and its economic fallout have taken on us all. But at long last, we are starting to see hopeful signs of better days ahead – increased vaccinations, restrictions lifted, and plans for kids to return to school. So now – right now – is when Washington state needs to invest in proven strategies that will ensure our state’s long-term health and economic recovery.

House Bill 1297, which funds an updated Working Families Tax Credit, is just that kind of proven strategy. It puts direct, flexible cash into the hands of those who need it most. In our respective fields of economics and public health, we know that this kind of direct cash is a powerful tool for getting our economy on track and improving the collective health and well-being of people in our state.

Modeled after the highly successful federal Earned Income Tax Credit (EITC), this policy would provide working families with an annual base credit of $500 to $950, depending on family size, with the credit phasing down as incomes rise. Because nearly a half-million Washington state families would qualify for the credit, it would reach one in four kids. This type of direct, flexible cash can be the lifeline that helps someone start a microbusiness, or allows them to pay for needed medical care or unexpected car repairs. Continue reading

It’s time for Olympia to impose new taxes on the rich

Published October 26, 2020 in Puget Sound Business Journal

The coronavirus is not just a health disaster, but an economic one as well.  There are, of course, the steep declines in income and consumption we are experiencing. But in addition, the economic tumble has translated into reduced state revenue and a gaping budget deficit.

Washington State’s budget problem is of course not unique.  All other states across the nation are equally challenged, and most are responding by cutting spending and shutting down programs.  Yet the case for finding new revenue sources instead has never been stronger. Especially here in Washington.

According to the most recent state forecast, Washington State’s current biennial budget is $2.4 billion below pre-Covid19 projections, an amount equaling about 5 percent of general state revenue. Meeting this shortfall with cuts only would be devastating.  

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Reacting to fear with hatred is a plague as old as pandemics themselves

With Turan Kayaoglu, Published May 31, 2020 in Tacoma’s News Tribune

Since Covid-19’s arrival, prejudice and fear may be spreading more rapidly than the virus itself.  As healthcare workers around the world bravely toil against Covid-19, we must pitch in to combat this disturbing side effect.

In the U.S., discriminatory practices in the face of this disease may be traced to President Trump’s regrettable labelling of Covid-19 as “The Chinese virus.’’ Nationwide, Asians are reporting surges in racist treatment. Just a few days ago the TNT (5/25) reported numerous incidences where Asian residents of Seattle were harassed, spit on, chased down and threatened, with a man yelling “Chinese disease!” after them.

Such responses are not new: Unknown and unfamiliar diseases, especially deadly ones, often leave us searching for outsiders to blame.

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Washington state leaders must tax the way to a just society

With Cynthia Stewart, Published in Tacoma’s The News Tribune December 7, 2019

Few topics are less understood or more quickly put the public to sleep than tax policy. Yet especially in our state, it’s essential knowledge.

And not just because public oversight of government depends on it. If you care about redressing our nation’s racially biased past, it is necessary to recognize how tax policy furthers our regrettable history of disparate treatment for different races.

The inequalities in our state’s tax code are well known, and have gained us the ignoble designation of “the most unfair state and local tax system in the country.”

This medal of dishonor from the Institute of Taxation and Economic Policy is based on ITEP’s assessment of how fairly the tax burden is spread among residents in the 50 states. Washington ranks dead last.

The problem is that our state and local governments rely heavily on sales and excise taxes, which fall disproportionately on the poor. Meanwhile, Washington lacks the income or wealth taxes to rebalance the burden towards those with the means to carry it. Continue reading

Washington should invest in Child Savings Accounts to help bridge income gaps

Published March 5, 2019 in the Seattle Times

“The Fleecing of the Millennials.” This is the provocative headline of a recent opinion piece by a New York Times columnist. David Leonhardt convincingly makes the case that the income gap between younger and older generations has been widening.

There’s nothing alarming about an older generation having more income and wealth than a younger one, of course. But Leonhardt investigates trends in this gap over time. He found that, on average, today’s young adults between the ages of 25 and 34 earn the same now as they did nearly half a century ago. Meanwhile over this same time period, the income of those between 55 and 64 grew by a quarter; and it grew by 75 percent among the retired population.

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The outdated way we measure poverty hurts those in need

Published in the Seattle Times Dec. 3, 2017

This fall the U.S. Census Bureau brought good news when it informed us that the nation’s poverty rate had fallen from 13.2 to 12.7 percent.

But now more than ever, we should be suspicious of this news.

To calculate a poverty rate requires first setting the threshold income below which someone is poor. The U.S.’s threshold, three times the cost of a minimum food diet, is more than 60-years-old and was set when food was families’ most costly expense. No wonder a family of four today with $25,000 in income is not officially poor: Our threshold doesn’t match the reality facing low-income households.
Next comes the challenge of defining income. As conservatives point out, we underestimate income by omitting the value of many cash and noncash government benefits. This practice dates to a time long past when government expenditures on tax credits, food stamps and housing subsidies weren’t that significant.

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Yes to universal health care, and Switzerland

Published September 27, 2017 in The Hill

Linda Gorman, director of the Independence Institute’s Health Care Policy Center, recently argued on these pages for a repeal of ObamaCare. Gorman claims that the movement toward a more European-style health care system, such as Obamacare steers us toward, leads us in the wrong direction.  For support, she compares our health care system with Switzerland’s.

I’ll address that comparison toward the end of this article.  Before getting there, though, I want to engage Gorman’s broader argument, both because it draws for support on my research comparing health care financing in the US with other countries, and because it misses basic health care economics.

To tackle the essence of Gorman’s argument that Americans are better off with a health care system leaving some uninsured, let’s step back from the specifics of Switzerland’s health care system.  Let’s instead examine the “European (or Asian)” model of health care.  Continue reading

Ballot drop boxes: Will convenience get you to vote?

Published in the Seattle Times, July 18, 2017

Last year, King County sought to improve turnout by increasing the number of its drop boxes from 10 to 43. In the words of King County’s Director of Elections Julie Wise, the purpose was to “make it as easy as possible to exercise the right to vote.”

Interest in the use of drop boxes as alternatives to the U.S. Postal Service peaked last month when Gov. Jay Inslee signed a bill requiring counties to install 250 to 275 additional boxes throughout the state.

 Drop boxes are preferred by some voters, and this new law will make them more popular still. In King County, one-fourth of all voters used a drop box before last summer’s expansion; after it, more than half did. Under our state’s new law, King County will now double the number of drop- Continue reading

Is Free Tuition Europe’s Message to America?

Published November 15, 2015 in Tacoma’s News Tribune.

grad capsBERGEN, Norway.  Should college be free for students, as Bernie Sanders contends?

Those who take this position usually support it with two claims: We need the best-educated workforce in the world, and cost should not deter young people from developing their talent.

In other words, free tuition would lead to a more prosperous and equitable America. And since college in countries such as Denmark and Norway is free, why can’t it also be free for Americans?

Yet if we follow Sanders’ suggestion and look abroad for inspiration, it’s not so clear that “free tuition” is the take-home message. Look closely at other nations, and it is apparent that we almost excessively invest in college. Continue reading

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

PISA provides Turkey with good news, bad news, and lessons

Published in Today’s Zaman December  22, 2013 (with Turan Kayaoğlu)

Two weeks ago, the Organisation for Economic Co-operation and Development (OECD) released country-level results from its 2012 Programme for International Student Assessment (PISA). What typically follows in most news coverage is handwringing and awkward explanations, as few receive the hoped-for good news. Continue reading

Profit motive drives US health-care cost disparities

Published in The News Tribune, June 19, 2013

Back when he was president, Ronald Reagan famously (or infamously) reduced complex concepts to simple ones he thought the public could understand.

To explain the size of our nation’s debt, which in 1981 had just topped $1 trillion, he summoned the image of one trillion dollar bills stacked one on top of the other. My mind’s eye still can see that tower of bills reaching up beyond the stratosphere, extending one-quarter of the way to the moon. 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

Efforts boost college success for low-income and minority students

Published in The News Tribune, May 22, 2013.

Critics of the United States like to single out our large disparities in life outcomes as evidence of our country’s moral failures. As disturbing as differences in income and wealth are, we Americans remain wedded to our foundational story: With hard work and a large dose of determination, even the poorest among us can climb the social ladder.

We probably each can recite such a Horatio Alger story. I see them each year in my classroom, where sit immigrants who have fled poverty and conflict, having exchanged it for the security and success our country offers them. Continue reading

Praising math successes part of fostering big change

Published in The News Tribune, April 24, 2013.

There’s an increasing drumbeat around making sure all high school students graduate with solid math skills.

You could hear it in News Tribune articles this month. One (“Math problems are a problem for job-seekers, employers say,”, 4-4) described how some local employers require their employees to have a basic grasp of math, but were finding that most high school graduates did not.

In another we learned that 16,000 of the state’s high school seniors have yet to pass the state math test, and thus may not graduate (“Thousands might not graduate because of WA math test,” 4-15).

It so happens that between the publication of these two articles, I found myself in Yakima attending the Washington State Math Council’s annual State Mathematics Contests. Continue reading

Higher education exploits its athletes

Published in The News Tribune, April 10, 2013.

When employers gain the lion’s share of the value created in the workplace, we commonly call this economic exploitation. Slavery is the extreme example, but exploitation can occur when workers gain something more than zero percent of what is produced.

A nation’s “wage share” provides a rough approximation of how the value of what a country produces is split between workers and employers. In the United States, the wage share is about 58 percent.

Bear with me a minute, because I’m now going to relate this to March Madness. Continue reading

As inequality in the US grows, the rest of the world progesses

Published in The News Tribune, March 27, 2013

Two months ago, economists from around the world converged in San Diego for their annual convention. Dozens presented papers on the hot topic of growing income inequality in the United States.

These papers led to lively and at times heated debates, some of which have subsequently spilled over onto blogs as well as the nation’s opinion pages.

The tendency to focus on the U.S. and our troubling upward trend in inequality is a natural one. But it also misses astonishing progress on the inequality front. Continue reading

That rising tide seems to be missing a lot of boats

Published in The News Tribune, March 14, 2013.

Another encouraging sign of slow economic recovery came last week from the Bureau of Labor Statistics (BLS). It reported that nationwide, February experienced a net increase of 236,000 new jobs.

A year ago, unemploy-ment sat at 8.3 percent; today it is 7.7 percent. A painfully slow improvement, for sure, but at least the labor market is headed in the right direction.

Or is it? Continue reading

We can save much grief by getting ahead of social problems

Published in The News Tribune, February 27, 2013.

Each year as a nation, we spend more than $150 billion on research to find health-improving products. Such research has led to spectacular advancements in the health of those born prematurely or afflicted with heart disease, diabetes or cancer.

Yet when it comes to promoting a healthy population, we shouldn’t be so quick to congratulate ourselves. Continue reading

State’s future tuition program caught in conundrum

Published in The News Tribune, February 13, 2013

Only make promises you can keep.

That’s good, solid advice.  In light of what we now know about Washington’s embattled Guaranteed Education Tuition (GET) program, we might modify that to something along the lines of “Only make promises you won’t regret keeping.”

The good thing about GET is that it reduces the financial uncertainty associated with college by allowing anyone to pay for tuition at a set price today, and receive the value of tuition — whatever that might be — tomorrow.  In this way GET has helped many Washingtonians plan for the expense of college. Continue reading

Congress needs to engage in some real tax reform

Published in The News Tribune, January 3, 2013

This week we avoided that plunge over the fiscal cliff.  Not only did Democrats and Republicans reach a consensus that taxes must increase, but in a final dramatic hour they even agreed on the specifics.

But it’s not yet time to breathe easy as the parachute we’re on is only half opened.  The tax code changes Congress agreed to are meager and a far cry from the true tax reform we need.

Recall that our “fiscal cliff” dilemma was created to give Congress a hard deadline for getting our fiscal house in order.  But ironically, the deadline caused both Democrats and Republicans to focus exclusively on the deadline itself and its repercussions, rather than on our fiscal house. Continue reading

Untreated mental illness raises the risk factors for violence

Published in The News Tribune, December 19, 2012

The news from Newtown, Connecticut has many of us revisiting recent horrors where unstable citizens in our own communities committed the unspeakable crime of killing off-duty police officers, a sleeping father, a park ranger, and far too many others.  Yet even these senseless crimes pale in comparison with the terrifying violence visited last week on children at Sandy Hook Elementary School.

New York Times columnist Nicholas Kristof passionately, predictably — and correctly – has called for stricter control and regulation of our nation’s guns.  Continue reading

Leaders need to take a long-term look at budget crisis

Published in The News Tribune, December 5, 2012

As just about everyone knows, Republicans and Democrats are squaring off to decide whether to take the nation on a plunge over a so-called fiscal cliff, or come to a screeching halt at the rim by agreeing to sizable spending cuts and tax increases.  If reached, such an agreement could allow us gently to glide down our huge mountain of national debt in a more painless fashion than would the alternative.

While the latter hurl-ourselves-over-the-edge option would quite dramatically reduce our budget deficits — at least temporarily — the consequent “splat” at the bottom (sharp declines in spending) would likely set off a recession. Continue reading

It’s unfair to group the ‘welfare state’ into single lump

Published in The News Tribune, November 22, 2012

Often, holiday meals like those at my house consist of a range of separate contributions which collectively add up to the Thanksgiving Dinner.  As we sit down to partake of the varied assortment of dishes, no one would think of criticizing the turkey because the mushroom soup dish contained more fried onion rings than green beans, or because someone insisted on adding a bag of marshmellows to the sweet potatoes.

The fact that different dishes are on the same table doesn’t somehow turn them into one “Dish” called “Thanksgiving Dinner” that deserves a singular judgment.   Instead, we pass judgment on the successful (and quietly perhaps, the less successful) features of each individual dish.  Continue reading

Misguided drug policies can create tragic, unintended consequences

Published in The News Tribune, November 8, 2012

As part of an introductory course in economics, I used to teach my students about the unintended consequences that usually accompany well-intentioned attempts to make particular transactions illegal.  I would draw on current drug policy to link theory with reality.

One thing that I learned from these conversations was that many students felt that discussing the pros and cons of drug legalization was immoral.  This sort of belief is one of the challenges we’ve faced in confronting failures in our drug policies.

Tuesday’s passage of initiatives in Washington (I-502) and Colorado to legalize recreational marijuana usage offer promising signs that change is now in the air.  Continue reading