You have to be a subscriber to read it, but this editorial from the Wall Street Journal ($) is well worth digesting. Called "The Gates of Confiscation," it takes on Bill Gates Sr. and his union allies for pushing an income-tax initiative in Washington state.
Worth reading to see the main lines of attack from business interests on I-1098. And worth pondering for the way the Evergreen State is positioning itself in the coming wars for economic recovery. Seen through the distant binoculars of Wall Street, this Washington looks a lot like California and Oregon — high tax, high deficit, high business flight.
The distorting lens even prompts the Journal to refer to "the liberal Seattle Times," in quoting with admiration the Times' observation that Washington's lack of an income tax is "a selling point. An asset. And more than that: It's a bonus for living here." Why, the editorial asks, would Washington want to kick away one of "its main comparative advantages"?
The editorial lays out the basic attack on I-1098 and this particular version of a state income tax. "Washington would move overnight from one of the nine states with no income tax to having the eighth highest rate in the country." States without an income tax (others are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming) had an average 18.2 percent growth rate in jobs over the past decade, compared to the 8.4 percent job growth of the nine states with the highest income tax rates. Offsetting tax relief in I-1098 is tiny, and businesses that get some relief from these tax cuts in property tax and B&O "are also hit with a whopper of a new tax: a personal income tax paid out of their profits."
Lastly, the editorial argues that income taxes are sold as ways to reduce deficits but turn into engines for greater spending, which leads to deeper deficits, which leads to pressure to expand the tax to the middle class, and so on.
Lots of business influentials take their cues from the Journal's conservative editorial page. That's enough to make one worry that positioning Washington state as playing tax catchup, right as the politics are turning to redefining the balance of taxpayers and government programs and their unions, may not be the best economic messaging. The leading states in the next few years may be those such as Texas and New Jersey that focus on smart austerity measures rather than band-aids, new taxes, and crossed fingers.
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