Slow going in tax talks

The coalition doing behind-the-scenes work on a tax solution lost key labor players. Now what?

Editor's note: The content of this article was first reported on Public Radio Northwest News Network.

For several weeks now a coalition of labor, health care, education and environmental groups have been working on a tax-hike proposal for Washington state. But now three major members of that coalition have walked away from the table.

The Washington State Labor Council, Washington Federation of State Employees and United Food and Commercial Workers Local 21 are the three labor groups that in recent days parted ways with the coalition that’s been working behind-the-scenes to put a tax package on Washington’s ballot.

Tom Geiger is Communications Director for UFCW 21. He says his union left the fold because the proposals under discussion would further a state tax system that he believes burdens working families.

Geiger says his union tried to broaden the discussion to include proposals for longer-term structural changes to Washington's tax structure. "One of the reasons why we got into this mess is because we have a fundamentally flawed tax system in the state of Washington," says Geiger. But he says the coalition wasn't interested in tackling that broader issue.

Geiger won't go into specifics about what alternatives UFCW would support. But he says closing tax loopholes and looking for a way to tax high-income earners should be on the table. An income tax has long been the third rail of Washington politics, but there are certainly reformers — including Bill Gates Sr. — who have recently been re-upping their call for an tax on income (perhaps paired with a reduction in sales and property tax).

The UFCW's frustration with the "coalition" seems to support what many in the legislature are hinting - that the leading contender for a tax hike package is a temporary increase in the state sales tax.

The Washington State Labor Council, an umbrella organization, says it left the coalition because its affiliates began bowing out and it wanted to show support for them. In an email, the Labor Council’s Kathy Cummings adds her group isn’t confident the tax effort will succeed.

Cummings also says the Labor Council is unhappy with how the 2009 Legislative session is progressing.

The relationship between labor and majority Democrats has been strained lately. Democratic leaders and Governor Chris Gregoire recently killed labor’s top priority bill — the so-called Worker Privacy Act — over a controversial email that seemed to tie the success of the bill to campaign contributions.

The three breakaway groups have not yet indicated whether they plan to pursue a separate tax proposal. Their departure could prove a major financial blow to the coalition when the time comes to mount a public campaign to pass a tax measure.

Meanwhile the remaining members of the tax coalition — including the Washington Education Association, SEIU and the Washington State Hospital Association — are currently preparing a second round of polling to get a better sense of what kinds of taxes the public might be open to and what programs voters would want to buy back with those taxes.

In response to the three groups pulling out, Cassie Sauer with the Hospital Association says: "I think it is worth keeping our eye on a longer-term issue, but to ignore the current crisis would be absolutely irresponsible and would cause incredible pain to thousands of people in Washington. I mean this is not minor pain, this is huge," says Sauer.

Austin Jenkins is the Olympia-based political reporter for Northwest News Network, a consortium of public radio stations in Washington, Oregon, and Idaho. He is host of "Inside Olympia" on TVW, and he blogs at WALedge.com. You can e-mail him at ajenkins@kuow.com.


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Comments:

Posted Sun, Mar 22, 10:26 a.m. Inappropriate

This article appears to be in direct conflict with the statements made by Mr. Pridemore and Mr. Hunter during last Thursdays Economic Forecast Council
press conference. "For several weeks now" These groups have been meeting. Whereas the Democratic Majority said there have been no formal discussions of any tax packages to come before the voters. Who is lying? and more importantly why lie about the obvious?

Cameron

Posted Sun, Mar 22, 1:23 p.m. Inappropriate

Scenantics, formal, informal

Mr Baker

Posted Sun, Mar 22, 1:34 p.m. Inappropriate

It is getting late in the session to be doing this, unless they want to spend money on a special session, killing support by voters.

What happens if they go on as if voters would approve something only to have us vote no?

Mr Baker

Posted Sun, Mar 22, 3:03 p.m. Inappropriate

one only has to look at the supposed participants in this phantom discussion to see the 'it's all about me' and 'give me my benefits' motivation behind them. the dems in this state will do ANYTHING to keep their power and anything comes at the expense of responsibility and fiscal restraint.

thanks gov - you certainly are a gem !

Posted Sun, Mar 22, 3:42 p.m. Inappropriate

I hadn’t even finished the first sentence of this article when my blood ran cold and I began to shake uncontrollably. Tax hikes? Are you serious? What we need are tax and spending cuts. Cut taxes, starve the beast. We can do more with less if only we had some intelligent people in Olympia.

Posted Sun, Mar 22, 3:52 p.m. Inappropriate

So, Lady, who would you choose to harm when you "starve the beast?" Children and adults who will have no health care? Families who will have no housing> Mentally ill people who will have no care?

Possibly you might have some family members or friends who might be harmed. But no, I assume you and everyone you know will be just fine, no matter what.

Let's hear from you in six months about that, when the beast is a little more starved.

sarah

Posted Sun, Mar 22, 4:54 p.m. Inappropriate

Sarah, what we need is a completely different set of eyes on the budget process guided by a different set of fiscal values. Obviously the current power structure, that has been in control of the Governors mansion for the last 25 years ignored all of the warning signs both internal and external about the up coming budget deficit. Instead of dealing with the problem in the early stages, they allowed the problem to grow to it's current purportions. Never let a good crisis ( Even if you had a hand in making it worse) go to waste. What we are seeing now is the manipulation of the electorate, pure and simple.

Cameron

Posted Sun, Mar 22, 6:28 p.m. Inappropriate

I have to agree with steptoe.fan; these interest groups overwhelmingly rely on public funds and stand to take a serious hit with budget cuts. I'd also like to note Jenkin's reporting: it draws a clear picture of the legal corruption that regularly takes place in Olympia. These groups are active in drawing up proposals and manipulating public opinion. In fact, the ability of the Democrats to push their social agenda--wonderfully illustrated by Sarah--would be limited without the help of these groups. I do expect, however, the "tax the rich" sentiment to grow stronger--code for an income tax in Washington. The current fixation on Wall-Street bankers as a distraction from D.C. mismanagement--after all, D.C.'s been enabling Wall Street for decades--suggests this approach might gain traction.

Posted Sun, Mar 22, 9:48 p.m. Inappropriate

Yep, cut funding for medical insurance - if your illegal, you get no benefits. If your 'poor' you will suffer, and just maybe the poor will learn that getting out of poverty is NOT about making more babies.

If your a mental case, they perhaps you have enough faculties to find the man and woman who created you, they then can start paying your bills. If not, let the state find your parents and then give you back to them.

If your a poor child, with some luck, if your parents are sticking around and are not meth heads or alcoholics or gang bangers then just maybe you won't need lots of med or dental care. If your parents are responsible then you win, if not then in the short term there will be a separate problem to deal with, BUT IT IS A SEPARATE PROBLEM !

Putting off the day of reckon with respect to responsible behavior is only digging the hole that 'sarah' is in, deeper. She will never get it !

And yes, education will have to be cut also !

And yes, state employees will have to be cut and pay more for their benefits !

Posted Sun, Mar 22, 10:16 p.m. Inappropriate

Wade: "These groups are active in drawing up proposals and manipulating public opinion."

The other way of phrasing that is that the legislature has a big job to do and the cost of information is high. Private sources of "sound" research easily tempt legislators to favor concentrated, better organized interests against a greater public interest diffused among a large number of people each with a small individual stake.

What's the alternative? Make use of the little keypad of the Obamanation and if it comes to it drive all the way to Olympia when an issue really moves you (if nothing else you will hunger for rapid transit). Pick one a session. If we never even introduce ourselves, how else are they to learn --diffused we may be --we are watching.

afreeman

Posted Mon, Mar 23, 4:32 a.m. Inappropriate

Though Bill Gates should be thanked for calling for high income taxes it's kind of like Al Capone making a $50,000 contribution to MADD.

Or, or that matter, a Divorce lawyer filing suit against a Seattle business person....

Posted Mon, Mar 23, 8:01 a.m. Inappropriate

sarah,

Of course I don’t want to harm anyone. Your clumsy straw man is as artless as it is untruthful.

Posted Mon, Mar 23, 11:46 a.m. Inappropriate

How about we just keep spending at the levels they are in the current fiscal year?

Remember people --- we don't have a revenue problem. TAX REVENUES ARE PROJECTED TO INCREASE IN THE NEXT FISCAL CYCLE.

The only problem is that our politicians want to inrease spending even faster. If we don't increase spending, we don't have a problem.

PJS

Posted Mon, Mar 23, 4:57 p.m. Inappropriate

A simple Cut, Hold, Target and Change Plan:

1. Don't Cut Jobs, Cut Salaries & Benefits.
Let's immediately cut salaries and benefit packages across the board. Each union would have the opportunity to decide the ratio of salary cuts to benefit cuts. It's preferable to have everyone paid less, than cutting many, many jobs. In the future, we should put provisos in all union contracts for automatic cuts if the economy goes South. Then unions finally have some skin in the game. Their failure to budge on their "legally mandated" requirements means that our legislators never have any wiggle room for negotiating. The auto makers have legal contracts too. But when you strangle the mission of your enterprise with your salary and benefit requirements, you're fighting a losing battle. That's the problem of the teachers right now.

2. Hold the Line on Taxes: Don't Add Taxes to the Average Taxpayer.
Creating a greater tax burden is a non starter. As PJS points out, we have increased revenues, but our fiscal obesity is out of control.

3. Impose an Education Tax Targeted at the Educated
Tax the incomes of all those holding undergraduate and graduate degrees. This would help out funding at both the K12 and university levels. Although the purpose of an income tax is obviously to raise taxes from personal income, the point is that those who benefit most from an education should pay more for it directly. These costs will get passed on, but not without first paying for our education system.

4. Impose a Justice System Tax Targeted at Lawyers
Tax all lawyers to help pay for the legal system they use every day. Certainly a lot of these costs will get passed on, but courts and public defenders won't be beggars as they are now. By the way, this is a good way to make sure that justice is truly the purpose of our justice system and not producing billable hours.

5. Change the System: Phase Out All Special Interest Tax Exceptions to Boeing, Microsoft, etc.
Probably best to amend the state constitution to prevent these sort of give-aways in the future and to grandfather existing exceptions for a while so that the transition isn't too abrupt.

6. Change the System: Dump the B&O; tax.
The B&O; tax is a monstrosity that taxes small businesses to death before they even get started, because it taxes revenues rather than profits. If this evil monster isn't killed, then out of fairness, other businesses should be taxed at a similar level, especially professional services and software services.

7. Change the System Now.
I don't expect the legislature or the special interests to agree on much of anything. Certainly, a crisis is a terrible thing to waste (by the way Rahm wasn't the first to say this), but this is the ONLY time in my lifetime that I can recall that putting in place some sort of structural reform including an income tax might actually be possible. Look at what they're trying to do in California. So making long term changes now is absolutely the right thing, just as Obama and Geithner have to fix the immediate mess, but also put in a long term plan at the same time. Fixing only the immediate mess would be a huge mistake.

This isn't nearly the crisis that people think it is. We have to live within our budget, so choices have to be made. The stupid choices are ones where we make unthinking draconian cuts. The smart choices are ones where we share the burden and make strategic changes in our tax system that help us transform it from something that looks like it was jointly designed by Rube Goldberg and Bernie Madoff to something that makes it generally applicable and specifically fair.

Generally applicable means that we don't have rules that are dominated by exceptions for special interests. Insofar as the current system is one in which every segment of it is "gamed", the games have to be stopped across the board.

Specifically fair means that, for example, those who benefit from an education over a lifetime pay the most for education in general, that those who use and benefit from cars pay for the cost of cars (and those who use and benefit from Sound Transit, e.g., unions, real estate interests, riders, pay for the cost of Sound Transit).

To summarize the CHiTC Plan:
- Cut salaries and benefits to balance the budget,
- Hold the line so that the tax burden on the average taxpayer doesn't go up,
- Target educated taxpayers and lawyers with new education and justice system taxes, and
- Change the existing tax system to get rid of special interest exceptions and the troglodytic B&O; tax.

Stuka

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