Placard from a Capitol-steps protest earlier this year.
Looks like there’s a bit of tit-for-tat going on out there in the state-policy blogosphere. No sooner did Erin Shannon of the Washington Policy Center post a piece denouncing a good half-dozen Democratic bills this session as “job-killers” than the House Democratic Caucus pumped out a counter-blog, claiming victory in a recent ranking of cities hospitable to startup companies.
Boasts the House Democratic Advance, “Well, it happened again. As often as our critics try to label our policies as ‘job killers’ and bad for small business, yet another publication has given Washington some pretty good praise on the job front. Entrepreneur.com recently ranked Seattle as the No. 2 startup city in America based on several factors like median tech wages, taxes and housing costs. …A non-existent income tax, housing prices and affordable office space helped Seattle reach the No. 2 spot on the list.”
A non-existent income tax? Listen quietly and you might hear the delighted giggling from the headquarters of the Washington Policy Center, a right-of-center think tank. Shannon’s ‘job-killer’ blog post basically attacked the usual round of progressive-wing proposals you see every year in the Legislature — bills that would have imposed a new family leave insurance tax, mandatory paid sick leave, and so forth. None of them went anywhere. They’re the sort of bills that come up every session and die with a minimum of fuss. The only Democratic proposal Shannon names that had real traction this year was an effort to extend a business and occupations tax surcharge. That died promptly the moment it passed the Democratic House and got to the Republican-dominated Senate. It is safe to say none of the ideas would have stood much chance even if the Democrats had managed to hang on to control of the Senate, due to opposition of moderate Democratic members. But still. The income tax is one of those hardy perennials; there was even a high-earners income tax bill this year, sponsored by state Rep. Marko Liias, D-Edmonds, HB 1545. Now that Shannon has basically been called out by the Ds, she says she is kicking herself that she forgot to attack that one, too. “There are so many tax bills, I can’t keep up with them,” she says.
It gets funnier. Follow the link to the Entrepreneur.com blog post and you’ll find one such business-starter gushing about the advantages of launching in states with no income tax. “Zero state income tax gives them a big advantage,” says Mitch Fox of GoodApril, a San Francisco-based tax-planning startup. Meanwhile, the Policy Center’s Jason Mercier points to a new state-credit-report rating from Standard and Poors, released Monday, which upgraded Washington’s status from negative to stable. One of the reasons? No income tax. It mentions the state has “a sales tax-based revenue structure that exhibits sensitivity to economic cycles but to a lesser degree than those of states that rely primarily on personal and corporate income taxes.”
The fact that Washington doesn’t have an income tax seems to sneak inconveniently into many an Evergreen-state recruitment message. Back in 1990, when the Gardner Administration was touting an income-tax proposal, the governor’s office was embarrassed to learn the absence of an income tax was featured in the state’s official help-wanted advertisements as one of Washington’s charming features. The fact showed up again in Department of Commerce corporate-recruitment literature in 2010, when a high-earners income tax was one of the hottest proposals on the Washington state ballot.
So maybe attacking an income tax is a bit like beating on a straw man. It wasn’t a front-and-center proposal this year for either of the Legislature’s Democratic caucuses, in the House or the Senate. Though Liias introduced his income tax bill, someone always introduces one; more important is the fact that it didn’t get a hearing. In fact, when the idea was debated in a far more serious way during the 2010 campaign for I-1098, a full quarter of Democratic legislative candidates announced their opposition, and a third of them did their best to express no opinion at all. Democrats themselves like to point out there was a time once when the Rs thought an income tax was a good idea, too — though it was some 40-odd years ago, during the Evans Administration. These days, though, what support there is comes entirely from the D side. And now, with tongue planted firmly in cheek, Mercier says he is glad the Ds have changed their minds and see things the Policy Center’s way. “We welcome them on their non-income-tax position to grow Washington’s economy,” he says.
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