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What would make our fair city fairer?

We asked entrepreneur Nick Hanauer. He said rich people should pay more state taxes.
Seattle entrepreneur and venture capitalist Nick Hanauer.

Seattle entrepreneur and venture capitalist Nick Hanauer. Photo: Nick-Hanauer.com

With the $15-and-hour legislation passed by the city council and signed into law by mayor Ed Murray, I couldn't resist asking one of the new minimum wage's architects — entrepreneur Nick Hanauer — a "what's next" question: If $15 moves us toward a more equitable city, what should the next move be? What new bold initiative would make us a fairer place?

Hanauer was clear that fairness and compassion were not his primary motivations in the $15 campaign. Better capitalism was. In other words, his support for the minimum wage hike was based on his belief that it would create a righteous cycle between business owners and employees by turning workers into good customers. Prosperity and growth are the point, not fairness per se, though presumably some fairness flows from folks making better wages.

Still, he went on to answer the question saying that rich people like him do not pay their fair share of taxes in Washington. Hanauer believes we need a much more progressive tax system. An early Amazon investor, he backed the last income tax push (I-1098), along with Bill Gates Sr. The initiative, opposed by the likes of Steve Ballmer and Jeff Bezos, was handily defeated at the polls. Hanauer describes I-1098 campaign as "ridiculously unsuccessful."

Still, he says, on the equity front, getting the rich to pay more is the next Big Thing. "No high-functioning capitalist democracy has ever survived long if rich people don't pay their fair share of taxes,” says Hanauer. “There's no example of that… And Washington State stands out among the other [sic] 50 states as a place where rich people don't pay their fare share."

Seattle is stuck with a dilemma: Many of our answers to "equity" or "social justice" issues make things more expensive for the people we're purportedly trying to help.

The Metro transit measure Proposition 1, or Plan B as proponents called it, raised sales taxes and car license fees to keep service levels from being cut. Prop. 1 was sold as an essential-but-flawed must-do for low-income, working class and disabled riders who would take the brunt of service cuts. It was soundly rejected by King County voters, and did less well than the Seattle norm in some of the city’s low-income bastions. Cuts in service were apparently more popular than hikes in unpopular taxes.

Another tax request coming up in August will be asking Seattle voters to create a new parks district. Proponents rightly point out that our park system is under-funded and has a significant maintenance backlog. Because of tax limits on what it can ask for in property tax levies, the new parks district will be able to get substantially more money through its own property tax assessments. One argument former Seattle parks boss Ken Bounds made at a recent Crosscut editorial meeting was that it was really no problem because Seattleites pay less in property tax than citizens do in many other cities. In other words, there's capacity (i.e. money) there that can be tapped. The district would add roughly $200 a year in taxes for homeowners, based on a $450,000 home, about double what people pay now.

That might be a perfectly reasonable price to pay. Or not. But Bounds' argument that Seattleites are effectively under-taxed doesn't take into account the fact that the city is increasingly unaffordable for many residents already; from skyrocketing rents, for one thing, which will likely be boosted as landlords adjust for higher taxes.

Plus, the parks plan includes some hefty new line items. One of the biggest that jumps out is $3 million per year for maintenance and "activation" of the new waterfront park, a project which doesn't have final approval or a final budget (new estimates are due soon). But one thing is clear: The parks department is anticipating that the waterfront park will be a very expensive addition to the system. Downtown parks are the most expensive to run.


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Comments:

Posted Fri, Jun 13, 5:41 a.m. Inappropriate

Did you follow up with Nick and ask him if he has been sending in the difference between what he thinks he should have been paying ( under his I-1098 initiative) and what he is currently legally obligated to pay? He would be far more credible if he has been cutting a check to the Washington State Department of Revenue if he has been...but he hasn't, has he Knute?

To complete the circle of hypocrisy, a brief discussion of his own company not paying the $15.00 an hour "living" wage to employees should shine a light on how devoted he is to the causes he supports publicly.

Cameron

Posted Fri, Jun 13, 7:07 a.m. Inappropriate

Sorry Knute, but once they politicians and SEIU get their hands on the 1%'s income, next it will be the top 5%, then top 10%, then top 20% etc etc.

WA state voters know once Olympia gets their hands on our incomes there will be no stopping them.

Simon

Posted Fri, Jun 13, 7:09 a.m. Inappropriate

"Cuts in service were apparently more popular than hikes in unpopular taxes."

Unless of course we saw that threat from Metro for what it was: a lie. That's why Dembrowski is being attacked, he dared speak the truth.

Simon

Posted Fri, Jun 13, 7:11 a.m. Inappropriate

"Proponents rightly point out that our park system is under-funded"

Seattle parks have the some of the highest per capita spending in the US. 40% higher than Portland. So how right are they Knute?

Simon

Posted Fri, Jun 13, 7:24 a.m. Inappropriate

Parking spending per capita: San Diego ($83) San Francisco ($95), Portland ($108), and Seattle ($153).

Seattle also has more park employees per capita than any big city in the country. We rank behind only Washington, D.C., in spending on parks.

"Proponents rightly point out that our park system is under-funded"

Maybe we need better proponents?

Simon

Posted Fri, Jun 13, 8:26 a.m. Inappropriate

Simon: And less propaganda via Crosscut.

Posted Fri, Jun 13, 9:51 a.m. Inappropriate

The city's marketing people are really good at saying, "Hey, it's just the price of a few lattes per month" every time they want to increase taxes or utility rates. But they aren't very good about saying how many tax increases they are proposing across the board for the year. And they aren't very good at looking at other places to cut expenses in favor of the year's new pet project. They just keep coming to us for more money every time they want a shiny new bauble and they don't seem to be willing to make sacrifices in other areas. Instead, they expect the city's residents to make the sacrifices.

Is the city willing to transfer $15 million a year from other departments or programs to pay for universal Pre-K? The city's budget is $4.4 billion a year - surely they can find $15 million in there somewhere. The city makes more than $8 million a year on school zone cameras - install twice as many and you have your money. Make the "1% for Art" program a "1% for Kids" program instead. Start selling cycle licenses to pay for the Bicycle Master Plan so a certain percentage of the money earmarked for those projects are paid for by the cyclists(the more compliance there is with paying license fees, the faster the network gets built.) Shift money from SDOT to early education.

These are good and valid programs and great ideas, but the city needs to prioritize its spending. The money is there, but we don't seem to be spending it in the areas that we think are important.

talisker

Posted Fri, Jun 13, 10:25 a.m. Inappropriate

No matter how snide the comments above and elsewhere, I think everyone can agree that our tax system has become wildly Byzantine and inefficient. Most states came earlier to a state-wide income tax -- we've all seen how badly we've managed current attempts. But that does not mean that the goal is flawed. Our current system does not treat citizens equitably, and does not manage to fund basic needs (safety, transportation, education, infrastructure) in our communities. Alas, this is going to be like living in the house while you're remodeling -- how can we overhaul this structure without everything grinding to a halt while we yammer over the details?

sandik

Posted Sat, Jun 14, 4:47 a.m. Inappropriate

" how can we overhaul this structure without everything grinding to a halt while we yammer over the details?"

How about we get rid of the useless Democrat contractors who have been on the job for three decades in Olympia and use subs like Hanauer to try and overhaul the structure? Unless you are saying that the State just doesn't have enough Democrats to impose an Income Tax...is that what you want Sandeep? I know that is who you work for, but shouldn't you be honest enough to come out and say it as a part of every campaign you work on? Instead of using buzz words like "sustainable funding source" for every program.

Cameron

Posted Tue, Jul 8, 9:30 a.m. Inappropriate

I'm sorry -- who do you think I am?

sandi kurtz

sandik

Posted Fri, Jun 13, 10:50 a.m. Inappropriate

Gee Knute, I'll bet you didn't see that one coming. A committed liberal is in favor of an income tax? admit it, you just like to shock us.

kieth

Posted Fri, Jun 13, 10:50 a.m. Inappropriate

"No matter how snide the comments above"

When 64% of the good people of Washington State voted against an income tax, you might want to be careful about what and who you call 'snide'.

Simon

Posted Tue, Jul 8, 9:44 a.m. Inappropriate

I apologize if you feel personally disrespected, but the tone of the commentary, here and elsewhere, has become fairly nasty on all sides, regardless of election results. I think we might accomplish more if both the majority and the minority were a bit less snappy.

My opinion -- your mileage may vary!

sandik

Posted Fri, Jun 13, 10:58 a.m. Inappropriate

I thought it was Eli Sanders who had the income tax obsession, and Knute was hung up on the Bubbleator?

Without the Week in review this week, it's hard to remember.

Simon

Posted Fri, Jun 13, 5:08 p.m. Inappropriate

Interesting that you seem to be so overjoyed by the demise of KUOW's "Week in Review," Simon. It seems like it should make you sad because you now have one less way to spend your time -- which, as far as I can tell, is mostly spent reading Crosscut and trying to find ways to insult its writers and readers. I hope you're donating to Crosscut during the membership drive -- seems like without it you'd have nothing to do. I can only hope that you do something positive for the city and your community when you're not trolling.

small_d

Posted Fri, Jun 13, 1:45 p.m. Inappropriate

"better capitalism.... prosperity and growth,"... not fairness per se" —euphemism for saving neoliberalism facing its biggest challenge since its 1970s installation, not to mention capitalism itself.

"Room to Grow—Making Life Work," the new populist phrasing on the other side of the aisle had the same aim until outed this week by the House Majority Leader's removal with Mr Brat's "we need to take free markets seriously, that means we have to put an end to all these [crony] tax credits and tax deductions and loopholes," same aim, by the way, just sounder sounding economics.

"Seattle is stuck with a dilemma: Many of our answers to "equity" or "social justice" issues make things more expensive for the people we're purportedly trying to help." A true dilemma, but the source of the assumption of being stuck with it is as much key to its resolution as it is the biggest dilemma of all.

afreeman

Posted Fri, Jun 13, 4:14 p.m. Inappropriate

To Simon: I recognize some of your data re per capita spending on Parks (second highest in the country) comes from the Trust for Public Lands, but could you point readers to the source for "Parking spending per capita: San Diego ($83) San Francisco ($95), Portland ($108), and Seattle ($153)." It's so important in these debates to be accurate. Thanks.

Posted Fri, Jun 13, 4:16 p.m. Inappropriate

Sorry, I see that data as well comes from the Trust for Public Lands. It's spending per capita--some readers have interpreted your comment as "taxes per capita," a misreading.

Posted Fri, Jun 13, 5:23 p.m. Inappropriate

Speaking of better capitalism being euphemism for saving neoliberalism from its biggest challenge to date:

Crosscut's B. Anderson just called our attention to this from the Guardian:

"Another project awarded this year to the University of Washington "seeks to uncover the conditions under which political movements aimed at large-scale political and economic change originate," along with their "characteristics and consequences."
http://www.theguardian.com/environment/earth-insight/2014/jun/12/pentagon-mass-civil-breakdown

Thanks Berit.

afreeman

Posted Fri, Jun 13, 10:16 p.m. Inappropriate

Characterizing Seattleites’ desire for a world class park system, universal access to great education, and effective public transportation as items on a “pastry cart” undercuts the larger point of this piece, which is that we have a tax system in Washington that favors people of extraordinary wealth and undermines our ability to make the public sector investment we need to be 1) the city we want to live in and 2) credible on the world stage.

It is troubling that Mr. Berger compares Seattleite’s willingness to tax themselves to support something as fundamental and democratic as great public space to snarfing a chocolate éclair. Yes, our existing tax code places the burden of creating and sustaining a world class city too much on the shoulders of an economically stressed middle class. But he should not demean our aspirations. Rather he should celebrate our willingness to step up--even while our wealthier neighbors step aside--to fund the city we want to be.

ptb

Posted Fri, Jun 13, 11:22 p.m. Inappropriate

In my dream world, we would determine what goods and services are best served by the expenditure of public funds, and then set the tax rates to pay for them. I know it's a dream, but why not?

However, in the real world we set the tax rate first, which leads to conflict as the various publics try to get their perceived share of the pie. Liberals and conservatives argue about the system being regressive vs progressive, they're wrong. What it really is, is a caricature of Procrustes's Bed.

Djinn

Posted Sat, Jun 14, 7:23 a.m. Inappropriate

B&O; tax. Does anyone know why this is based on gross income, not net income? This is a huge part of what makes it unfair. There's some accommodation made for different levels of overhead by setting the tax rate based on type of business, but that is a pretty crude mechanism.

pragmatic

Posted Sat, Jun 14, 7:29 a.m. Inappropriate

State income tax. A push for a state income tax failed last time, but why? Are people principally opposed to that tax or are there other reasons?

The sales tax by itself, as it works in Wash. is not so regressive since it exempts so many basic things - food, rent, medical, most services. However, most of the other state taxes are regressive - property tax, vehicle licenses.

Another hesitation to add an income tax is the result of an overall increase in taxation. I think people fear that if the income tax is added, it's too easy to creep the rates up on both income and sales taxes, resulting in higher taxation than we have now (whether that's desirable or not is another topic).

If a new income tax is proposed, I think it would have a much greater chance of acceptance if it complete replaced some of the regressive taxes. As well, it could complete replace the sales tax - more like the Oregon model. I, for one, would be much more confident of the changes if these two points were part of the change.

pragmatic

Posted Sat, Jun 14, 4:39 p.m. Inappropriate

Another exemption from the sales tax is public transit. So the "most regressive" tax exempts food, rent and transportation for those who, presumably, would be most needful. The claim that we have the most regressive tax system in the USA is a canard utilized most enthusiastically by income tax advocates.

kieth

Posted Sat, Jun 14, 10:04 a.m. Inappropriate

One way to make Seattle fairer is to not pay Wall Street Salaries to its department heads. Please sign and share this petition: http://www.change.org/petitions/seattle-city-council-don-t-give-city-light-chief-a-45-raise

City council is voting on it Monday at 2pm.

Posted Sat, Jun 14, 10:40 a.m. Inappropriate

Seattle, with urbanization extending far beyond our boundaries, can only do so much on its own. Prop 1 showed we live in two counties. Likewise we live in two states, one hyper-liberal, the other hyper-conservative.

Splitting the state, jettisoning the Luddite eastern half, could be a solution. Let them form their own state ("Columbia"?) or join up with Idaho.

We'd no longer be subsidizing the "leastside" with our tax dollars and could keep tech-generated tax dollars for ourselves. The barrier to getting a more progressive state tax regime (including an income tax) would be much lower. We'd get a state transportation bill (supporting both roads and transit), more money for affordable housing, help in tackling the problem of homelessness, etc. Money now going west to east to subsidize dryside schools could stay home, helping to fund universal pre-K, K-12 basic education, and lower college tuition.

Posted Sat, Jun 14, 8:09 p.m. Inappropriate

"The barrier to getting a more progressive state tax regime (including an income tax) would be much lower. "

I-1098 lost in every county in the state. It lost by 10 points in King County. But don't let facts get in your way.

Simon

Posted Sat, Jun 14, 8:10 p.m. Inappropriate

...or maybe you can just let Fremont vote to impose an income tax on itself?

Simon

Posted Sat, Jun 14, 11:24 a.m. Inappropriate

That's right CrazyDonkey, there are those to the immediate East,South and North of Seattle City Limits that would love to cut Seattle loose. As far as Prop 1 goes, the "Luddites" In King County that voted against it, finally looked at the numbers and decided to vote in their best interests.

Cameron

Posted Sat, Jun 14, 3:38 p.m. Inappropriate

Splitting Seattle or any part of the west side into a separate state to satisfy liberal concerns is, well, crazy. It won't solve problems any better than the similar moves by "oppressed" residents of Cedar County (East King County), State of Jefferson (No Cal and So OR), or any other area. Polarization in the U.S. is bad enough. (http://www.pewresearch.org/fact-tank/2014/06/13/big-houses-art-museums-and-in-laws-how-the-most-ideologically-polarized-americans-live-different-lives/)

Cameron's got the real solution--get people to actually vote in their own best interests. We'd have less moron in legislative bodies if people did so instead of voting based on fear and xenophobia. Or not voting at all.

louploup

Posted Sat, Jun 14, 3:43 p.m. Inappropriate

The democrats here could do what their peers do: employ progressive revenue-raisers. Progressive taxes would make sense. Those would include corporate and high-earner income taxes (the latter could be limited by a constitutional provision providing a high kick-in level that is linked to inflation -- key flaws with I-1098), business payroll taxes, capital gains taxes (over an appropriate threshold, with gains from personal residences exempted), taxes on commercial property development and sales, taxes on wholesale petroleum transactions, etc.

Sales taxes should be reduced -- we have the most regressive taxing structure in the country and that's one of the main reasons. Problem is, the democrats running the show have spent their careers pimping higher sales taxes. Doing that takes them to their "happy place".

crossrip

Posted Sat, Jun 14, 8:12 p.m. Inappropriate

Why do we need bigger and more government in WA State? Our economy is booming, unemployment low.

What exactly is the problem? A few hobos in the park upsetting you? Guess what, they'd be there even if you confiscated every millionaires' entire bank accounts.

Simon

Posted Fri, Jun 20, 9:58 p.m. Inappropriate

When will the idiot "progressives" ever comprehend that the income tax lost in all but five of this state's senatorial districts? Look, if you want to pay income taxes, go around to the people in those five districts and tell the suckers to write checks.

NotFan

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