Published in the Puget Sound Business Journal           July 22, 2024

This November, Washingtonians will directly vote on state policy. Alas, the three initiatives on the ballot all address tax policy, and few among us relish the thought of mulling over the details of various tax proposals.

Typically tax policy is voted on by our representatives in Olympia, after what can feel like endless study sessions, hearings, floor debates and amendments. This is what happened when finally in 2021, the Washington Legislature passed a capital gains tax to support early learning, child care and schools. Initiative-2109 now asks voters to reject this commonsense policy.

In 2023, the state began collecting a 7% tax on the sales of long-term capital assets. Due to extensive exemptions (on real estate transactions, retirement assets, and more), and very sizeable deductions, only a tiny fraction of very rich Washingtonians actually pay this tax. Yet in the tax’s first year, this small number of people collectively provided almost $1 billion in revenue to the state budget — a testament, indeed, to the enormous amount of income very wealthy residents acquire each year from selling stocks and bonds.

Published Jan 16, 2023 in Puget Sound Business Journal

On January 26, the Washington State Supreme Court will hear arguments about whether to uphold the state’s new 7% tax on stock profits larger than $250,000. Foremost, the Court should let the tax stand because it is constitutional. But the tax will also allow Washington’s small towns, especially those that are struggling, to see outsized benefits as it will help fund the new child care services that so many of our state’s rural communities desperately need.

As an economist, I’ve joined numerous rural leaders, including Pullman small business owner Nick Pitsilionis, in an amicus brief urging the State Supreme Court to help rural economies by upholding the tax. 

Nick Pitsilionis owns a restaurant where his employees sometimes miss their shifts, or bring their children to work, because they cannot find affordable child care. He does what he can to accommodate them, sometimes even allowing their children to sit in the restaurant’s office while their parents work. He says the lack of adequate child care in Pullman puts a strain on the rest of his crew, who must pick up the slack when an employee misses work because they lack good child care options. Continue reading →

Published October 26, 2020 in Puget Sound Business Journal

The coronavirus is not just a health disaster, but an economic one as well.  There are, of course, the steep declines in income and consumption we are experiencing. But in addition, the economic tumble has translated into reduced state revenue and a gaping budget deficit.

Washington State’s budget problem is of course not unique.  All other states across the nation are equally challenged, and most are responding by cutting spending and shutting down programs.  Yet the case for finding new revenue sources instead has never been stronger. Especially here in Washington.

According to the most recent state forecast, Washington State’s current biennial budget is $2.4 billion below pre-Covid19 projections, an amount equaling about 5 percent of general state revenue. Meeting this shortfall with cuts only would be devastating.  

Continue reading →

With Cynthia Stewart, Published in Tacoma’s The News Tribune December 7, 2019

Few topics are less understood or more quickly put the public to sleep than tax policy. Yet especially in our state, it’s essential knowledge.

And not just because public oversight of government depends on it. If you care about redressing our nation’s racially biased past, it is necessary to recognize how tax policy furthers our regrettable history of disparate treatment for different races.

The inequalities in our state’s tax code are well known, and have gained us the ignoble designation of “the most unfair state and local tax system in the country.”

This medal of dishonor from the Institute of Taxation and Economic Policy is based on ITEP’s assessment of how fairly the tax burden is spread among residents in the 50 states. Washington ranks dead last.

The problem is that our state and local governments rely heavily on sales and excise taxes, which fall disproportionately on the poor. Meanwhile, Washington lacks the income or wealth taxes to rebalance the burden towards those with the means to carry it. Continue reading →