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.
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
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
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
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
Published in The News Tribune, March 2, 2012
The Obama Administration’s recently-proposed budget continues what has become a troubling trend in federal policy. And it isn’t the growing debt I’m referring to.
What is is the large number of citizens who we seem to have given up on. In fact, so forsaken are they, and dire the consequences to us of this abandonment, that I’ll use my next two columns to pick up where this one leaves off.
The trend is this: We’re supplying our most vulnerable and low-skill citizens with fewer and fewer public dollars. Instead, our nation’s “safety net” increasingly targets the rest of us, particularly those with jobs and a working- or middle-class income. I’m all for helping the gainfully employed – especially those with low income — but when public dollars are scarce, the marginalized are the least capable of competing for them because few advocate on their behalf. Not surprisingly, they’re losing out in the competition for public dollars. Continue reading
Published in The News Tribune, February 14, 2012
In my last column (TNT 2-1) I contended that Mitt Romney and others like him should pay more taxes, and that capital gains should be taxed at the same rate as income from work.
Many readers took issue with these claims. Given the topic’s controversial and divisive nature — and more importantly the extent to which readers objected — I’m devoting this column to a more extended discussion of the subject.
A number of readers wrote in support of low taxes on capital gains on the grounds that lower tax rates are fair. Continue reading
Published in The News Tribune, February 1, 2012
It shouldn’t be surprising that Mitt Romney pays only 15 percent of his income in federal incomes taxes. After all, he benefits from the fact that his income comes mostly in the form of capital gains – income from selling assets that have increased in value. Capital gains are taxed at a top rate of 15 percent, which compares with a top rate of 35 percent on wage income.
This provision in the income tax code explains why Mitt Romney, Warren Buffett and most other super-rich Americans, pay less as a share of their income than do many working Americans. Continue reading
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
Published in The News Tribune, December 2, 2011
It’s an extraordinary world we live in when a country 6,000 miles away and the size of Washington threatens America’s economy.
But so it is. Even Olympia’s latest revenue forecast identifies evolving events in Greece as the wild card in its predictions. How much our state government will have to cut services to our most vulnerable citizens hangs on the fate of Greek bonds – as well as on bonds of other European nations caught up in Greece’s contagion effect. It goes to show how interconnected we’ve all become. Continue reading
Published in The News Tribune, November 8, 2011
Many things are predictable this time of the year. Earlier commercial appeals to our Christmastime splurges; twilight that sets in seemingly when lunch is over; and proposals for a flat tax, such as we now have from both Cain and Perry.
Actually, three out of every four years, we’re spared the last. For that we should count our blessings. Continue reading
Published in The News Tribune, August 31, 2011
No matter what poll you believe, the consensus is that Congress is not doing its job. In fact, only about one in seven of us think it is. People express mildly more favorable opinions of the Democrat’s Congressional leadership than of the Republican’s. But overall the blame for this summer’s fiasco seems to be pretty evenly spread around.
Yet blaming all of Congress for the mess it created while dealing with what should have been the relatively straightforward task of raising the debt ceiling doesn’t spread the blame far enough.
That’s because we’re all a part of a larger problem. Yep. You and me. Continue reading
Published in The News Tribune, August 4, 2011
Which is better for our country do you think, low taxes or big government?
According to Republicans in Congress, this question captures the essence of our national financial dilemma.
The suggestion that each of us must choose between more money in our pockets on the one hand, and a bloated unresponsive government on the other is politically astute, but also deceptive and irresponsible. Continue reading
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
Published in The News Tribune, March 30, 2011
Like many others, until recently I was a reluctant fan of nuclear energy. I’d become convinced that it was a safe way of producing electricity. The fact that one ton of uranium can be used to replace the burning of 16,000 tons of coal or 80,000 barrels of oil is still a strong selling point. Yet that a nuclear disaster of the magnitude Japan is now facing could happen — in Japan of all places –is surely putting nuclear power’s future on ice.
This reduces the options for meeting our energy needs down to essentially three choices, one of which would be the far better one. Continue reading
Published in The News Tribune, March 15, 2011
In theory, local, state and federal governments operate like layers on a cake, each making separate and distinct contributions to the overall cake. The federal government defends us from foreign enemies, state governments build roads, and local governments quench fires. In practice, governments are related in ways making the analogy of a marble cake more apt. For instance each state administers a distinct unemployment insurance program, but federal law and tax dollars make this a state-federal partnership.
Despite complicated relationships among our governments, the fiscal problems that each government now faces is addressed without considering the collective impact of all the budget cuts. And so, almost no attention is being paid to how our collective responses to governments’ fiscal problems are disproportionately harming children. Continue reading
Published in The News Tribune February 9, 2011
Published in The News Tribune Sept 16, 2010
Published in The News Tribune, March 27, 2005
Much of the rhetoric about the threatened failure of Social Security is designed to alarm rather than inform, and detracts from the real issues that we should be discussing. This tactic is most evident in the claim, such as made by Krauthammer (TNT, 3-18), that the Social Security trust fund is fictitious.
The trust fund is Social Security’s “rainy day” account. It has been accumulating funds since around 1983, when Social Security tax revenue started exceeding its payments.
The purpose of this trust fund is to help pay pension and disability checks when tax revenues fall below payouts – currently anticipated to occur in 2018. Continue reading