An income tax on the 38,400 wealthiest Washingtonians would solve our state's budget crisis. That's people who make over $200,000 a year as individuals or over $400,000 as couples—you know, people who won't feel it all that much. Bill Gates Sr. proposed this very idea, in the form of Initiative 1098, last year. Voters kicked it aside in November—the lizard-brain reaction to any form of tax increases on anyone scares the bejesus out of voters, and Jeff Bezos, Steve Ballmer, Paul Allen, and other greedy billionaires financed a mighty opposition campaign—but maybe voters will feel differently now that they see how fiscally fucked we are.
We need $4.6 billion over the next two-year budgeting cycle, and the income tax proposed under I-1098 would bring in exactly that amount over two years, according to estimates. A respected Washington pollster recently found that 58 percent of Washington voters would now support a high-earners income tax, provided it came with a constitutional guarantee that it wouldn't be extended to people at lower incomes. What are state legislators waiting for?
Last session, 10 state legislators signed on to a bill that would have legalized, regulated, and taxed marijuana. It didn't get very far in Olympia, but it did get far enough to generate a fiscal note—that's an official state estimate of how much revenue a particular measure might bring in. The fiscal note for this particular bill was quite interesting. By our state's own estimates, if we'd begun legalizing and taxing marijuana last year, Washington State would now be poised to bring in more than $380 million over the next two-year funding cycle. That's more than enough to save, say, Basic Health.
Yes, true: There are huge hurdles to legalizing pot, the feds among them. But the point is, there are ways to ease our financial pain, provided the political will is there.
Here's how this one would go: First, abandon the idea that the $2.4 billion in dedicated state funds for building the downtown Seattle tunnel are sacred and can't be touched. Next: Touch those funds. Specifically, touch the $1.8 billion in state funds that come from the gas tax.
If you take about $1 billion from that $1.8 billion in gas tax money and use it to protect state services that are currently on the chopping block, you'll still have plenty left over for tearing down the viaduct and implementing surface/transit. Win and win.
Yes, yes—since 1944, the use of gas tax revenue has been restricted by a state constitutional amendment that says gas tax money can only be used "for highway purposes." So pass a constitutional amendment providing more flexibility in how gas tax money can be used in this state. We currently have the highest gas tax in the nation. We should be able to spend that revenue on the things we need most.
No one agrees on exactly how much money is being sucked away from the state through tax loopholes each year, but the estimates range from $90 million to $65 billion. (That's $65 billion—14 times our current budget shortfall.)
Why should out-of-state banks, cosmetic surgeons, stockbrokers, and software manufacturers—to take just a few examples—enjoy perpetual tax holidays via these loopholes while poor Washingtonians are struggling with service cuts and, due to our state's highly regressive tax system, paying a much higher percentage of their income than the wealthy in sales taxes?
Just closing loopholes for out-of-state banks alone gets the state $168 million over two years.
Governor Chris Gregoire proposed it last year, the state legislature passed it, and in July it went into effect: a two-cent tax on every 12-ounce can or bottle of soda sold in this state. Nothing much happened when the soda tax took hold (Diet Coke addicts didn't riot), except that the state got some badly needed money while the soda lobby and initiative kingpin Tim Eyman got pissed. In November, Eyman and the soda lobby convinced voters to repeal the soda tax, and now the state is out $34 million this year.
Legislators: Bring back the damn soda tax. People can afford to pay two cents more for unhealthy bottles of high-fructose corn syrup. Hell, they can afford to pay four cents more—which would bring in $68 million for the state this year if people keep buying just as much soda.
This is the ugly way and, unfortunately, the most likely way. There will be enormous cuts, because—thanks to the passage of Eyman's Initiative 1053 in November, which imposed a requirement on the legislature that any tax increase on anything ever would require a two-thirds majority—cuts are the one thing legislators can easily do.
Perhaps, to get around the two-thirds problem, legislators will ask the public to vote in the fall on whether to lose specific state programs entirely or raise specific taxes to pay for them. Maybe the voters will be in a generous mood.
But if the last election is any indication, they probably won't be.