Taxes Redux
Looks like I underestimated our city’s voters. Let’s hope my electoral pessimism is just as wrong in November!
While I was crabbing about Washington’s over-reliance on the sales tax, events in our alternate universe, Oregon, were sounding even more dire. Oregon has an income tax, but no sales tax, and the refrain coming from there is eerily familiar to the one you hear here in Washington - that revenue shortfalls are overaccentuated during recessions. Oregon had an income-tax increase measure on its ballot yesterday, and it went down in flames. Because the measure’s failure automatically triggers $545 million in budget cuts, Oregon is left with some hard choices about cuts in education, health care and other social spending.
The mirror-image between Washington and Oregon is illustrated thusly:
From the Portland Oregonian:
No state relies more heavily on income taxes, which tend to rise and fall even faster than the economy. As a result, the state tends to bring in much more than it expects in good times and much less during downturns.
From the Seattle P-I
Since Washington has no income tax and relies heavily on sales taxes for its revenues, our state government goes quickly and deeply into the red during hard times. That is not true in other states with more balanced tax systems. Our reliance on sales taxes, moreover, is regressive, hitting hardest the lower- and middle-income citizens least able to pay.
Is there an echo in here? Which statement above is right? I presume that the problem is the total reliance on one or the other instead of a balanced menu of taxes. It appears that neither state will move toward that balanced approach any time soon, as any mention of even the slightest change in taxation (unless it’s a tax giveaway) brings forth hyena-like howls of protest, not to mention a shitstorm of initiatives and referenda.
