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.
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.
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.
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.
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
Sources
http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu...
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nom...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.
[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.
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?
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 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'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.
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.
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.
As for your claim that CPI excludes energy and housing, you are simply wrong.
Or at least, that's how Austrians would like to redefine it.