[antpicnic]

The data doesn't seem to agree with your supposition of runaway state spending. According to the Tax Foundation (http://www.taxfoundation.org/taxdata/show/486.html), state and local spending as a percentage of income has trended downward since 1994. The overall state and local tax burden as a percentage of income was 10.4% in 1994 and 8.9% in 2008 (the last year shown in the table).

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.

[yummyfajitas]

First, your chart represents taxes, not spending. Spending may be considerably higher than taxes - for instance, Washington may be incurring debt to pensions.

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.

[Bricejm]

"Richer people require fewer government services" They do require less government services but they probably became rich because of the U.S. economy and the opportunities that it presents. You can be smart and ambitious, but if you're born/live in a third world country your chances of success are significantly lower.

[aharrison]

I don't understand your comment. You agree with yummyfajitas assertion, you appear to make a separate and mostly orthogonal assertion which borders on a refutation (I think the subtext being "the rich should help others pull themselves up") but perhaps I am misinterpreting.

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?

[Bricejm]

What I'm saying is without the U.S. economy most successfull people wouldn't be successful. There's a price to participate in our economy. Lowering taxes on the rich is the basis of supply side economics, which has been proven wrong time and time again.

[benmccann]

I don't believe that yummyfajitas was arguing that we should lower taxes on the rich, but rather that if society as a whole becomes wealthier it is possible that the government may need to spend less to support a relatively smaller number of poor.

[Bricejm]

A marginal/progressive tax rate works.

[lzw]

You've got cause and effect reversed. The economy is strong because people are successful, and they are successful because previously there hasn't been a heavy burden of taxation. This does not justify increasing the burden of taxation. "Supply side economics" is a political term, not a school of economics and it has not been "proven wrong".

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.

[guelo]

This is factually wrong. Many of the richest economies in the world have much higher taxes than the US. Some data,

  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.

[evgen]

> The economy is strong because people are successful, and they are successful because previously there hasn't been a heavy burden of taxation.

[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.

[just_a_someone]

I'm not sure how you can claim that the US economy is strong. Seems like all I've been hearing for the last year or so is about how weak it is.

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?

[guelo]

> Taxes should not grow with income - if anything, they should drop.

Why wouldn't richer people want better schools, better infrastructure, better law enforcement, etc?

[Bricejm]

The marginal tax system that we have works, and is probably the best way to maintain stability and distribute burden. What needs fixing is the rates on cap gains and dividends. Needs to be a marginal rate too.

[yummyfajitas]

Because once these services become good enough, there is little advantage to spending more on them. If you already have virtually no crime, why bother spending more money on police? If the roads get you where you want to go, what is the advantage of building more?

I can see the advantage for politicians and public sector unions. But not for taxpayers.

[guelo]

Right, your ideology prevents you from seeing any good ever coming from government. You don't want better government, only less. In the real world adults realize that government is a necessary part of a functioning civil society and like anything else you get what you pay for.

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.

[yummyfajitas]

You seem to have confused me with some kind of anarchist, or perhaps Glenn Beck. I didn't make any point about what services should be provided, one way or the other.

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?

[timr]

"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."

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.

[guelo]

It was when you implied that any government spending beyond some picked-by-you minimum level of service can only ever be waste for corrupt politicians and government employees.

[Bricejm]

Crime will always be a part of society. Roads fall apart and need repairs. An increasing marginal tax system maintains stability.

[yummyfajitas]

Try to pay attention. I'm not arguing against an increasing marginal tax system.

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.

[Bricejm]

So what you're saying is as the average income increases, we should decrease the tax rate to maintain a level amount of tax revenue? Then as population grows their taxes should offset their cost? Maybe in a perfect world, but you can't compare our population to a fixed cost.

[koenigdavidmj]

The Washington sales tax alone is 8.9 percent (including city and county sales tax in Seattle), so obviously property taxes are not included at all in those numbers.

[indiejade]

The interesting thing about this, though, it that Washington State borders both Canada (foreign country) and Oregon, which has no sales tax. I lived in the Portland/Vancouver area for a while, and some people were able to live / work in Vancouver never paying income tax, and do all their shopping in Portland (right over the bridge!), thus actually paying no sales tax.

[rbranson]

This is illegal tax evasion. However... "you wouldn't steal a car, would you?"

[lzw]

However you want to characterize it, the thing that those who want to raise taxes need to understand is that there is a global economy, and if you punish success, you'll get less of it.

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.

[rbranson]

Historically cities lose out big time when they are situated up against state lines. Usually the suburbs located in other other cities with lesser service requirements will entice the tax income over the state line using incentives. They work in the city, therefore benefiting from a strong (and usually expensive) city government, and commute out into the other state. It's like a more extreme version of white flight, because it pushes taxes completely out of the state. The "inexpensive housing" you talk about is located in the inner city, not the suburbs.

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.

[kevin_morrill]

You have to be very skeptical of government statistics on GDP and inflation. They have every motivation to downplay inflation (e.g. let's not count real estate and oil) and play up GDP.

[yummyfajitas]

Of course real estate is not included in inflation. Neither is the stock price of Berkshire Hathaway or Amazon. Why should investment goods be included in a price index representing consumer goods?

The cost of housing (owner equivalent rent) is included in CPI, BTW.

[lzw]

This is an area of deliberate misinformation that trips people up. "Inflation" is growth in the money supply. This is why you hear people say things like "washington is cranking up the printing presses" when they talk about inflation.

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.

[yummyfajitas]

Inflation is typically defined as a rise in the general price of goods and services. Growth in the money supply is one possible cause for inflation. If you wish to use an alternate definition, go ahead.

As for your claim that CPI excludes energy and housing, you are simply wrong.

http://www.bls.gov/cpi/cpifaq.htm#Question_1

[dhume]

"Inflation" is growth in the money supply.

Or at least, that's how Austrians would like to redefine it.