Steve Ballmer, Jeff Bezos fund effort to defeat state income tax
techflash.com
techflash.com
Do you want to eliminate the state income tax?
X Yes
_ No
Do you like to drive on paved roads?
X Yes
_ No
Do you want fire fighters to show up if your house is on fire?
X Yes
_ No
In California, it only takes 50.1% of the general populace to decide to spend a bunch of money, but it requires 66.7% of the state legislator to approve a budget to pay for it.
Do you want a motivated and highly educated worforce and otherwise high-infrastructure state?
X Yes _ No
Do you want to pay taxes to support it?
_ Yes X No
But I still believe in taxing the rich, since they feed off society at least as much as they contribute.
Paved roads are really cheap, and are a tiny fraction of the expenses of the state. But they let them go to hell, even though they have plenty of money to keep them up, because people notice broken roads and you can extort more taxes from them this way.
Its the oldest trick in the book.
So, talking about paved roads as a reason to create a whole new tax and remove one of the few decent things about the washington business environment is disingenuous. I'm sure you weren't being disingenuous, but the politicians who bring it up are.
ftp://ftp.dot.state.fl.us/LTS/CO/Estimates/CPM/summary.pdf
The issue in Washington State is:
* Do you want to create a state income income tax where none presently exists? _ Yes X No*
Why not? For the same reason other posters have noted: Seattle has a thriving startup scene, and its comparative advantages over California are a) no income taxes; b) you can live in Seattle and not have a car; c) you can buy a condo on a vaguely normalish salary, unlike in much of L.A. and Silicon Valley. If you remove a), you've mostly got a state where the major city has weather that most people don't especially like and a taxation system that punishes the creation of wealth.
That's bad.
On a more serious note, if you make that kind of money for any significant amount of time, you're going to be a member of the investment class pretty soon (i.e. making your money from capital gains) unless you have poor money management skills (or unusual circumstances, like supporting 10 people, or an expensive gambling habit, etc.).
You want people to save and invest. They're not putting it under their pillows (else it wouldn't be accruing gains). Instead, that money is being put to use in the economy, enabling people to build factories or start companies.
They could have put aside money for a rainy day, or kept services at the level that they were so that when things went back to normal, they wouldn't be so stretched.
But this is not how government works.
Since taxes are set at a percentage, it would seem that they should never need to be raised, right? If it costs 1/10th or 1% of GDP to keep roads in repair, when the economy is booming, there may be more roads but that percentage is more dollars in real terms.
But what governments often do, and what Washington has done here, is just spend money on other things, let the roads get bad, and then claim that they aren't getting enough money to keep the roads up to justify raising the road taxes.
It is a simple game of bait-n-switch.
The big money is in getting people to sell future economic growth to resolve a short term artificial pain-- which is what they're trying to do now. Sure the state income tax will be a "tiny tax only on the rich".... but the federal income tax started out that way, and look what it has become.
Washington state has spent money irresponsibly. They should be forced into financial prudence.
Glad to see some entrepreneurs understand enough economics to oppose these kinds of power grabs and bait-n-switch tactics.
Having said that, I'm opposed to the initiative. WA needs fundamental tax reform including replacing the B&O tax with a value added tax as well as changes to reduce the regressivity of the state tax system. The initiative is a band-aid.
The cost of housing (owner equivalent rent) is included in CPI, BTW.
Whenever you hear someone talk about consumer prices, the CPI, and refer to it as "inflation" you're literally hearing political propaganda being created or repeated.
This is a form of orwellian newspeak that is so common that people will argue about it, because they are certain that inflation is a measure of price increases.
The reason for the newspeak is that it is very easy for government to change the basket of goods, and even to simply exclude important consumer prices from the Index, to make inflation appear less than it is.
You wouldn't claim that nobody uses energy, right? We all use electric power and gasoline in our cars, but these are regularly excluded from CPI because they are quick to reflect the effects of inflation... that is the rise in prices that comes from growth in the money supply.
I know this is tangental to the point you were making, but this misunderstanding of what inflation is causes people to not understand much of the economics in their day to day lives.
The person you were responding to is correct that energy and home costs are generally diminished in CPI to try and make "inflation" look low, and GDP look comparatively better.
Or at least, that's how Austrians would like to redefine it.
As for your claim that CPI excludes energy and housing, you are simply wrong.
Also, representing taxes as a percentage of income obscures the increase in spending due to increased income.
http://www.ofm.wa.gov/economy/longterm/2010/lt10ch4.pdf
Taxes should not grow with income - if anything, they should drop. Richer people require fewer government services - many (though not all) government services are either transfers to the poor or protecting people from them.
Why wouldn't richer people want better schools, better infrastructure, better law enforcement, etc?
I can see the advantage for politicians and public sector unions. But not for taxpayers.
I'm arguing that tax revenue should not grow with income level, they should grow with population [1]. Crime is a part of society, but increasing income levels do not increase crime or increase the cost of road repairs.
Take your favorite progressive tax system. Multiply all tax rates by 1/2. Your new tax system is just as progressive as the old one.
[1] That's my leading order argument. As a second order correction, poor people tend to cost more money than rich people.
I am a liberal and believe that government should provide more social services. But I also agree with many conservatives that there is waste, inefficiency and corruption in government, just like in any other large organization. It would be a better country if Republicans took this passion and tried to make government better, more efficient, more business-like, etc. But instead they only ever want to tear government down and give the money to their rich daddies so John Galt can save us all.
All I did was point out that the cost of paving 1 mile of road does not increase just because a bunch of rich microsofties moved into town. Perhaps you could remind me when I advocated against government providing police protection or road paving?
That doesn't even come close to passing the smell test. An influx of rich Microsofties drive up the price for everything, from roads to radishes. A mile of road costs more to build post-Microsoft because land costs more, labor costs more (they need to be paid enough to live approximately near the Microsofties!), and supplies cost more. And I don't know if you've heard the news, but Bellevue isn't a cheap place to live!
Of course, that's not even counting the indirect costs: rich Microsofties like to live in big McMansions in the suburbs, which require not only many miles of new roads, but also new police departments, firemen, sewers, traffic signals, new highway lanes, gas, water and electric lines, etc. The cost increases created by an influx of rich people are non-linear.
Manhattan has incomes about 3x the national average. By your logic, the salary for fast food workers in Manhattan should be about $30/hour, a burrito costing $3 outside the city should cost $9 and a macbook should cost $3000.
The indirect costs you list are simply the costs of having new people. They indicate that total spending should increase when population does, not per-capita spending. Rich people may require slightly more roads, but they also never use welfare, medicaid, visit the ER under a phony name, and they rarely commit crimes.
And no, it isn't just a matter of per-capita spending: when rich people move into an area, costs go up more rapidly than when poor people move into an area. It's the reason you see cheaper rents in the Mission than you do in Pac Heights.
I believe yfs point was progressive taxation is a bad idea because it costs the rich more but they get less out of it. I don't understand how your comment meshes with yfs. Care to elaborate?
In fact, the US economy is strong because it is relatively low in taxation and regulation, compared to other economies around the world. This shows the benefit of low taxes (for everybody). You guys focus on the rich because you want to pretend like you're just taxing the rich, figuring most voters are not rich. But whether you tax the rich or the poor, taxes lower the standard of living and slow economic growth.
You can see proof of this just by looking at states and the countries and seeing which ones do better than others.
Also, I'd love to see a study that compares the economic effects of unilateral taxes vs. progressive taxes. Given that $X needs to be procured, what is the most cost-effective progression?
[citation needed]
Seriously, where do you get this delusion? Do you mean those low-tax post-war years when the annual growth rate was around 5% and the top marginal tax rate was between 87 and 70%? If you are going to make claims that low taxation and regulation have been a comparative advantage for the US then be prepared to back it up with reputable comparative studies.
If the proof can be found just by looking at tax levels and comparative standards of living then please explain why Norway is kicking our ass.
Denmark 50% of GDP taxed, $56,115 GDP per capita
Sweden 49.7%, $43,986
Belgium 46.8%, $43,533
France 46.1%, 42,747
Norway 43.6, $79,085
Netherlands 39.5, $48,222
US 28.2%, $46,381
PS. I wish I had some statistics chops to see if there's any correlation between these two lists of tax rates and gdp per capita. My hypotheses is that there's not.
Washington benefited from this arrangement and the town of Vancouver wouldnt' be near as big as it is now if it weren't for the tax delta. And it wouldn't be bringing in as much taxes for Washington as it is.
At the same time, Oregon and Portland benefit as well, by having inexpensive housing nearby to supply workers and to facilitate faster growth than would be achievable if every business had to pay their employees more because all their employees were suffering from a state income tax.
In Memphis, where I live, most lower income people can't afford to live outside the bubble of city-provided public transit and/or social services. Even the middle class people live within the city limits, but on the very far outskirts. The wealthier people live outside the city in exclusive, incorporated suburbs where they avoid city taxes. Essentially the incorporated suburbs are designed as tax shelters for the wealthy. The wealthy people almost always work in the city and complain about the crime, poverty, crumbling roads, etc, but will dodge any tax that might help fix these problems.
We also have a pair of large middle class suburbs located just to the south of the city in Mississippi state. The county they're in is now the richest county in Mississippi. All of the income tax and most of the sales tax from these people who undoubtedly work in city is funneled out of the state of TN and into the coffers of MS. Every workday, they use our roads, police/fire protection, and by proxy, most of our other local gov't services. Most of which is paid for by people who are much poorer.
It is honestly a libertarians "see, I told you so" wet dream.
If everyone paid the same percentage taxes, then the rich would pay more than the poor because the rich have more money. You would call this "Regressive" even though the rich pay more.
You cannot make an argument that is logical that rich people should pay a higher percentage of taxes, not without throwing out the entirety of everything we know about economics.
"progressivism" is simply socialism, and the real goal is to eliminate private enterprise. IF you can't do it directly, taxing it until it stops moving is the alternative you choose.
If you're going to make this claim, you have to defend it with facts. Right now, you're just making a very wordy assertion, based on an extremely loose understanding of the situation, and a big helping of ideology.
Here's a history of Washington state spending since 1999:
http://fiscal.wa.gov/FRViewer.aspx?Rpt=Recast%20History%20Ex...
Since you seem very sure of yourself, perhaps you'd like to tell the rest of us which lines are "irresponsible". Be sure to defend your choices.
(As a former resident of Washington, my opinion is that one of the huge problems in state has been the abuse of the initiative process to both lock up tax revenue for particular uses (just like California), and also to knock out important sources of revenue (like property taxes and the vehicle registration tax). In a state that already has no income tax, it becomes extremely difficult to satisfy even reasonable growth in spending when other important sources of revenue are eliminated or capped at arbitrary levels.)
Which is, of course, why you hate the initiative process. About the most democratic process in the state.
Also, someone with a full understanding of the situation would know that the per-capita state tax rate in Washington has barely changed since 1999 (here's one source: http://dor.wa.gov/content/getaformorpublication/publicationb...). The state did not, as you assert, start "raising taxes to keep spending at bubble levels". Perhaps you have a detailed knowledge of the history of taxation in Washington state, but your comment leaves little indication that this is true.
Calling it "Regressive" is just code to let us know you're a socialist and you won't agree with anything that doesn't punish "the rich".
I am disinclined to believe something malicious without evidence.
Your use of the word "socialist" as an excuse to make ad hominem, unsubstantiated attacks against a fellow user is also not appreciated. You are in attack dog mode and discouraging honest discussion about an important and contentious issue.
Others have provided links showing the states spending going up by %50, over a period where the GDP didn't go up by %50, the population didn't go up by %50. I saw no reason to provide the links that others had already provided, yet you dishonestly characterize me as having failed to provide substantiation for facts that aren't even in dispute.
I call that attack dog mode.
Socialism is a real thing, and if we're to have an honest discussion about anything, we must be allowed to speak of them honestly.
You don't get to rule out whole swaths of reality from discussion because a particular ideology has had a checkered history... especially when people are advocating that ideology.