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
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 Tacoma’s News Tribune February 1, 2015
The 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-century 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
Published in The News Tribune, September 21, 2012
A colleague of mine bought a cup of coffee at the local coffee joint this week. A moment later, cup in hand, she left the shop only to return a minute later to pay for three more. She’d seen some contract workers outside cleaning up campus in anticipation of the pending arrival of our students. On the spot she somehow decided that these newcomers to campus would appreciate some coffee. After paying for their three cups, she informed them coffee would await them during their break, and then off she went to put in a day’s work.
Now I don’t know if Jeannie is among the 47 percent of Americans who don’t owe income taxes. But I do know that paying taxes is only one of many ways that citizens make valuable contributions to our society. 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, 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, 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
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 January 25, 2011
Budget woes are coming home to roost in Tacoma. First came the announcement from Governor Gregoire that she wants to close the State History Museum in order to save $3 million. Then, Tacoma Public Library announced it is closing two of its branch libraries. The latest news comes from the Tacoma School District – Foss High School is being placed on the chopping block in order to save $2 million.
Given that all of these government entities are required by law to balance their budgets, cuts are inevitable. But are these the right ones to make? I won’t pretend to know the answer to that; but I think we can agree on two priorities. Continue reading
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
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
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
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