#Taxes Part 2

In the spirit of not just being critical of inaction - of which I always will be - I do think it is important for Seattle liberals to actually talk about (and work toward) what we do want to see happen on tax policy. As noted yesterday, Transit Riders' Union, along with a bunch of other local groups, is taking one track with their Trump-Proof Seattle campaign. Sen. Reuven Carlyle is a stalwart in Olympia, advocating for closing loopholes that provide no discernible benefit to our state. 

Ultimately, I believe we need to have a full tax overhaul in Washington, including some Constitutional Amendments here and there. Of course, I'm not a Legislator, and am not currently running for any elective office (all three seats in my Legislative District are currently spoken for), but when has that ever stopped a white guy from sharing an opinion? 

Property Taxes. My disdain for property taxes as currently assessed is no secret. Much of my 2015 campaign involved railing against levy after levy after levy without an accompanying attempt to identify and implement more progressive taxation. There are some who don't believe any property should be taxed, ever, and to them I say bollocks. Property is one of the more stable revenue sources, and stability in services is vital to consistency in government. 

But that doesn't mean we don't need changes. Where our Constitution requires uniformity is the problem. However, I do believe that the addition of a homestead exemption for the first, say, $350,000 in assessed value (pegged to rise and fall with inflation), with an increase in the overall rate for everything else, is a smart move. What this would do is exempt a big chunk of the assessed value from the home in which you live. If you own property for the sake of profit, however, or leisure, then you pay taxes on that property. 

There is a concern about impact on tenants and small businesses, but the dramatic rent increases in both the residential and commercial sector we continue to see has less to do with taxes and more to do with market conditions. What this would do is cut into the profits of income coming from just owning more property than someone else, and I'm 100% okay with that. Plus, with the MFTE and (ideally) PTE, residential rental units would have relief if landlords chose to set-aside 20-25% of units for below-market rents. 

Add in raising the senior exemption income restriction, and maybe even throwing in relief for modest homes that get passed down through families, and I believe we can make a more equitable property tax system. 

MFTE and PTE. I'm a fan of incentive programs to create more affordable housing living alongside mandatory programs (such as MHA). My issue is this: a developer can take advantage of MFTE for a new building, then sell it a couple years in, and the new owner can opt-out, with no consequence. I would like to see MFTE modified to be tied to the parcel, and a minimum of 12 years, with an option to go to 24. Maybe even put in different options on the percentage and AMI requirements (so 60% AMI units can be contemplated in the program). 

Structure PTE the same way (allowing for existing property owners to take advantage of the program if they make investments to upgrade and preserve their properties), and BAM, we have a set of programs to help create more affordable units and workforce housing. 

MVET. MVET = Motor Vehicle Excise Tax. Currently it's only in place in the Sound Transit area, thanks to the Tim Eyman's I-695. The big losers from 695 included transit, libraries, and fire departments. Which has led to more special levy lid-lifts, meaning that property taxes have necessarily gone up more and, when coupled with the 1% rule, even further due to this idiot and a Legislature all too willing to capitulate. 

I believe we should bring back the MVET statewide, however. Reducing sales tax in the process, and directing funds directly into communities' needs around transit, light rail, and fire protection, the cumulative impact could well be tax savings for most folks, while those who choose to buy luxury vehicles, or fleets of vehicles, will pay more. Yes, we need to fix the valuation mechanism, but it's not like we can't do both.

Capital Gains. No shocker that I'm in support of the Capital Gains proposal that's been floated around for some time. Levying taxes on unearned income just makes sense. So long as we do so with an additional protection for moderate and low-income retirees, the data shows we can raise more revenue, and help diversify our revenue streams. 

But in addition, I do believe we must extend the ability for municipalities to levy a capital gains tax on property transfers with high values. Currently, the Real Estate Excise Tax (REET) levies up to 1.75% against the entire sale price of any property. Ostensibly this is to be paid by the seller, but if that doesn't happen, the buyer is responsible. Allowing an additional assessment of, say, 15% on the profit from the previous sale price that exceeds, say, $250,000 would help to ensure our communities reap the benefits of speculation in our state. I do think this would necessarily have to be tied to capital investments, only (relying on REET or something like this for operations would be a terrible idea), but would free up other sources, and/or expedite infrastructure investment. 

Loopholes. I'm not opposed to tax loopholes that can spur innovation or job creation. But if they're not doing either (*cough* BOEING *cough*) within a reasonable time frame (3-5 years), then fuck 'em. Close that loophole, clawback that revenue, and move on. Education, post-high-school education, apprenticeship and pre-apprenticeship programs, childcare, healthcare, and so many other things we need in Washington are unfunded in part because of tax breaks that don't actually benefit the state. Shut. It. Down. 

Graduated Income Tax. This may come as a surprise to nobody, but I am a fan of income taxes with margins (not a flat one) over reliance on property and sales taxes. By implementing a modest income tax in Seattle with, say, five brackets, we could significantly reduce the property tax and sales tax burden for the overwhelming majority of Washingtonians. No matter how wealthy you are, or how much you think you're a "job creator," we all pay for your reliance on workers. It is the public education system, public universities, public highways, public sewage systems, public energy grids, so on and so on. People don't get rich without relying on the public to literally pave the way, and I feel no remorse in asking for fair taxes. 

Some would say that maybe we need to have an income cap in the United States. I would rather go back to the Eisenhower tax rates, and be like, "fine - you want to be mega-rich, we'll tax the hell out of it. Or, in the alternative, you can be very rich, and invest more in your workers and community." But we're not there nationally, as greed and "me first" mentalities tend to win the day. So, in the interim, let's make taxes fairer at the local level. 

90-110% Equalization. I actually think this is a terrible idea. However, I think it is also worth exploring and having a conversation with recipient counties. As many folks know, Washington has "donor counties" and "recipient counties." It just so happens that the recipient counties - places that receive more in investment from the State than they pay in taxes - tend to vote against any tax increases. While donor counties - supporters of paying more taxes - get less in return. 

I stole this from the Stranger. It's also an old map, but frighteningly accurate today as it was 7 years ago.

I stole this from the Stranger. It's also an old map, but frighteningly accurate today as it was 7 years ago.

King County is the most lopsided loser in this, receiving about 65% investment for every dollar paid to the State. And we keep voting for taxes. Conversely, Ferry County, a consistent "no" vote on tax increases and "yes" vote on Eyman initiatives, receives over three times what they pay in taxes back in state investment. 

If we put in place a rule that the State must re-invest no less than 90%, and no more than 110%, of what a county pays in taxes back into that county, it would be a major win in King County. And a part of me is like, "hey, screw you, Ferry County!" 

But the problem rests with what that means in reality. Cuts to education, social services, health care access, and so on, for low-income families to spite the parents being shitty voters is kind of a jerk move. At the same time, though, this means we are not providing adequate investment in education, social services, health care access, and so on, for low-income families in King County, which just continues the cycle of institutional racism in spending. 

Either way, taxes are a beast of an issue, but in Washington, we cannot keep going down the same course. Gestational fortitude here in Seattle, combined with a meaningful push in Olympia to do what's right, will set our state up for better financial health. And if we as Democrats can have the courage to do it, the savings that most Washingtonians will see in their tax bill will be something we can point to - as a Statewide message - that we did over the objections of Republicans, and help to turn the tide to make Washington a Blue state not just during Presidential elections, but all the time