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Edited on Sun Nov-21-10 02:20 AM by OlympicBrian
No "Green Shoots" in the Evergreen State - Take 2
Citizens Turn Down Rare Progressive Tax Opportunity
By Dan, Seattle
11/20/2010
Washington State is the home of Microsoft, with $58.437 billion in revenue last year, and is near the top in US stock market capitalization. Microsoft has 93,000 employees (it is unknown how many of these are offshore.) Washington is also the manufacturing home of Boeing, with $67.00 billion in revenue last year, and 157,000 employees, many of which are in Washington State. Seattle, Washington's largest city, also has a major port. In addition, Washington State is a beautiful place to live.
You would think with all this going for Washington State, its economic house might really be in order, and should be showing some advanced progress, as compared to some other states. According to the US government, we are out of the recession. Yet here are some interesting facts:
1) Washington State ranks about halfway down in unemployment, relative to other states (number 26.) Not too bad, right?
Well, things in the Evergreen State aren't that hot...
2) Seattle's largest downtown office building, the Columbia Tower, is around 40 percent vacant. Its owners have missed a mortgage payment. The buildings owner paid $621 million, the building is worth only $330 million.
3) Seattle recently recorded the highest year-over-year increase in foreclosure rate in the country, comparing third quarter of 2009 to third quarter of 2010.
4) Washington State median income fell from 2008 to 2009, and is projected to fall again for 2010.
In another series of related events, Washington State seems headed for fiscal disaster:
5) A state ballot initiative I-1098, promoted by Bill Gates' father to implement income taxes on the rich--and lower other taxes on just about everyone else--failed at the polls. There was a lot of pressure and campaigning by wealthy interests against it. The fear tactic parroted by those who were bought out by the opposition was some variant of, "The state might later expand the income tax to include lower incomes." Well sure, the state legislature can do a lot of things. Ultimately, the tax was entirely justified, given growth in Washington State's education and health care budget, if you examine the actual state records.
6) A state tax on candy and pop was repealed by ballot initiative, apparently under pressure of an industry group, the National Confectioners Association--who were quite pleased. There is no replacement for this lost revenue.
7) The state budget picture has worsened beyond the loss of the two possible tax measures mentioned above--there is a sharp tax revenue decline--and the shortfall for the next two years has grown to a whopping $5.7 billion. As a result, the governor has been scrambling to make cuts in programs to the poor. The state's chief economist says he could not point to a specific reason for a recent drop in tax receipts.
Let's get real, something is very wrong in Seattle and Washington State (and yes, this reflects what is going on in the rest of the country.) With everything Seattle and Washington State has going for it, you might expect to see some leading signs of recovery, other than the fact that unemployment is down slightly from its peak.
Clearly there are structural problems, and problems with people's basic understanding and attitudes. The average citizen does not accept that revenues have to be raised somewhere, for the state to stay afloat--$5.7 billion is a lot of ground to make up for. Washington State just dug itself into a deep hole by nixing the I-1098 and the candy and pop taxes.
On I-1098, citizens let a progressive tax measure drop dead, and such are few and far between (for some contrast, look at the regressive new federal tax proposals.) A whopping $6.3 million was spent by the rich to scare the public out of I-1098; now the rich don't have to pay higher taxes. Ultimately, the failure of the initiative makes Washington State citizens look like foolish, bought-out children. On the candy and pop tax, citizens gave in easily to an industry special interest group--and it will be laughable if the proposed Rivlin-Domenici federal pop tax is enacted to replace the repealed state pop tax! Moreover, what people are not thinking about is that the federal government will be tightening its purse strings to the state over the next few years. Hence, Washington State will bear the full consequences of its shortfalls.
The rich won't bear any responsibility--they pressured against I-1098. And Steve Ballmer, Microsoft's CEO, has threatened to move Microsoft jobs out of the country if federal tax loopholes are closed--not to mention, he spent $425,000 to defeat I-1098 himself (personally, I'd love to see Steve try to drag away many of his employees--who mostly like their jobs and love the beautiful area.)
With sparse federal revenues likely, will the Washington State legislature raise the state sales tax or some other tax to make up for the gap, since the voters didn't want a progressive tax? Seems like that's the signal being sent.
So no "green shoots" even in the Evergreen State, the home of two of America's top companies...
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