6 ms·

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.h

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 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.

kevin_morrill 16y ago
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 16y ago
  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 16y ago
    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.
    - dhume 16y ago
      "Inflation" is growth in the money supply. Or at least, that's how Austrians would like to redefine it.
    - yummyfajitas 16y ago
      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 http://www.bls.gov/cpi/cpifaq.htm#Question_1
yummyfajitas 16y ago
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 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.
- guelo 16y ago
  > 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 16y ago
    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 16y ago
    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.
    - Bricejm 16y ago
      Crime will always be a part of society. Roads fall apart and need repairs. An increasing marginal tax system maintains stability.
      - 16y ago
koenigdavidmj 16y ago
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 16y ago
  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 16y ago
    This is illegal tax evasion. However... "you wouldn't steal a car, would you?"
    - lzw 16y ago
      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 16y ago
        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 16y ago

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 16y ago
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 16y ago
  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.
  - dhume 16y ago
    "Inflation" is growth in the money supply. Or at least, that's how Austrians would like to redefine it.
  - yummyfajitas 16y ago
    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 http://www.bls.gov/cpi/cpifaq.htm#Question_1

yummyfajitas 16y ago

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 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.

guelo 16y ago
> 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 16y ago
  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 16y ago
  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.
  - Bricejm 16y ago
    Crime will always be a part of society. Roads fall apart and need repairs. An increasing marginal tax system maintains stability.
    - 16y ago

koenigdavidmj 16y ago

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 16y ago
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 16y ago
  This is illegal tax evasion. However... "you wouldn't steal a car, would you?"
  - lzw 16y ago
    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 16y ago
      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.