Tag: Washington state (Page 1 of 11)

The Lyrics Have Changed, But the Song Remains the Same: Dems’ New Spin on Income Tax Should be Cast Aside

A broken clock will be correct twice a day, but a broken record will be flawed every time you play it.

House Democrats in Olympia have dropped the needle once more on a tired old loser of a song, a ballad of yearning for a tax on income. They’re banking that this time around they’ll have a hit, but it seems the vinyl is more warped than ever.

One obstacle that proponents of an income tax face is the prohibition in Washington state law against taxes on income. Another is white-hot voter antipathy for the whole idea.

Democrats have orchestrated a cynical workaround that bends language and cudgels logic into submission. House Bill 2186 is the first pressing of that mix, in which – through the magic of word substitution – a tax on capital gains income becomes an excise tax.

Sorry, Democrats. The lyrics may have changed, but the song remains the same. In taxes, just as in biology, there are objective truths that no amount of creative renaming can avoid. I may desire to fly, but I can’t expect to get airborne just by calling my arms wings. Neither can an income tax be called an excise tax just because politicians want a soaring spending plan fueled from a newly tapped well of revenue.

Nevertheless, as the current legislative session winds down, the Democrats are moving forward with a disciplined effort to blur definitions and disorient voters.

On Tuesday, Rep. Laurie Jinkins (D-Tacoma) spoke with radio talk show host and veteran political analyst John Carlson on KVI 570 AM. (The entire podcast is also embedded at the bottom of this post. It’s well worth listening to the whole interview.)

Jinkins, now serving a fourth term representing the 27th legislative district, tried to walk Carlson and his listeners through her reasoning about why capital gains aren’t income. Not surprising, her logic was discordant and nonfunctioning.

Rep. Laurie Jinkins: Something qualifies to be an excise tax when you sell something voluntarily and you get revenue from the sale of that. So, the primary example is actually stocks and bonds.

You might buy a stock for $100 and sell it for $1,000. The capital gain is the $900 that you make as income just for selling something. …

It’s a transactional… An excise tax is a transactional tax.

So far, Jinkins isn’t wrong about what a capital gain or an excise tax are, but excise taxes are assessed on gross revenue, not net. It’s a meaningful distinction. Nonetheless, Jinkins strains to lay down a bridge between these disjointed ideas and justify how a tax on capital gains income can be defined as an excise.

Carlson: However, when you sell property or when you sell equity – stocks, bond, etc. – precious metals, whatever – the money that you gain from that that is taxed, that’s income. So, why isn’t this an income tax? You’re taxing me on what I’ve gained in income from selling that investment.

Jinkins: Well that’s, I mean, really this is kind of technical-legal, a technical/legal issue…

Carlson: (interjecting) It shouldn’t be.

Jinkins: If folks are going to argue that the capital gains tax is an income tax, then they’re going to argue that all sorts of things like the real estate excise tax, which the courts have long held is an excise tax and not an income tax under the Washington State…

If you’re still not feeling Jinkins’ groove here, you’re not alone. In fact, using the example of a real estate transaction makes it even clearer that an excise tax is assessed on a transaction, but not on any gain the seller receives. Real estate excise tax is calculated, generally, on the selling price, not the seller’s net proceeds. There’s a reason for that. If it were assessed on net proceeds, it would be a capital gains tax and capital gains are, legally and in common understanding, income.

A key feature of excise taxes is that they apply to the gross amount of a transaction. With capital gains, there can be no tax without gain, but with an excise tax a seller of a good or service would pay the tax even if they lose money. This is simply not true of an income tax.

This creature the Democrats are conjuring – the capital gains excise tax – is an impossibility. Once you realize a gain on the sale of property, you have more than you started with and everyone understands that intuitively as income. Yes, there was technically a transaction that occurred, but a capital gains tax isn’t triggered until a gain is received as income.

Carlson digs into that point further and prompts a backlash from the representative.

Jinkins: The issue of whether or not something is an income tax or an excise tax is really based on long-standing Washington state court decision that define the difference between what’s an income tax and an excise tax. And so this is an excise tax which is based again on the sale of something and the money that you earn on the sale of something and the money that you earn as the result of a sale of something…

Carlson: Or is an excise tax a consumption tax?

Jinkins: That’s what you want to call it because you think that people who hate an income tax will therefore hate a capital gains tax.

Jinkins swipe is ironic. It is obvious that the entire purpose for the Democrats’s word-swapping strategy is to ditch politically radioactive labels while also create confusion with voters. (The idea of an income tax is almost universally understood. Excise, not so much, as is further evidence by Jinkins’ struggle.) The notion of a capital gains excise tax is a chimera born of liberal desperation, but that won’t stop Democrats from attempting to bend reality to suit their needs.

Opponents of an income tax on capital gains are would be wise to aggressively smother this effort now, not only in Olympia, but among the voters at large who are not paying close attention. Once this hungry camel gets its nose under the tent, the odds of getting a favorable interpretation from the state Supreme Court are miniscule and it becomes a matter of tweaking the percentages, caps and exemptions to squeeze more tax out of more Washingtonians.

Many Washingtonians might think to themselves, “This isn’t something I have to deal with anyway.” That could be initially true, but time has a way of turning the tables when it comes to creeping taxation. Even in the initial implementation of such a plan, Washington residents should be consider that in order for state government to know that you did or did not receive any capital gains subject to the tax, a return filing would likely be necessary. Welcome to your newly christened state income tax mechanism.

Voters may yet have a chance to reject (again) an income tax in this newly repackaged form. There’s a good chance that Democrats will queue it up onto the playlist for the spotlight dance later this year in the 45th legislative district special election to decide who will permanently replace the late Sen. Andy Hill.

[Featured image credit: Adobe Stock]

Guest Contributor | Open Letter to Washington State Republican Party Leadership: There’s Still Time to Rescue Our Party

Dear Washington State Republican Party Chairwoman Susan Hutchison, National Committeeman Jeff Kent, National Committeewoman Fredi Simpson, and Washington delegates (and by extension all delegates to the Republican National Convention),

I am writing in advance of the Convention to implore you to do your duty to the Party and to do everything within your power to preserve it. Donald Trump must not be the nominee!

For over the past decade I have volunteered my time and money supporting the Republican Party and its candidates on a local, state and national level, because I understood that the Republican Party is the only way to promote conservativism in American governance. But now I am alarmed that nominating Donald Trump risks closing this last avenue for conservatives.

I am not asking that Trump be blocked from getting the nomination just because I consider him to be a despicable person. Or his long history of misogyny, shady business deals, racist statements and questionable behavior. Or because the media that gave him an overwhelming share of fawning coverage in the primary is poised to do its best to destroy him from now until November. Or because he polled the weakest of all our primary candidates, has no proficiency in campaign fundraising or establishing a ground operation or running a campaign, has the highest unfavorable ratings in history, and will almost surely lose in a landslide. Or because that landslide loss will cost us control of the Senate, perhaps the House and many other offices down ballot. Or because he is not a conservative, having shown during the debates that he literally does not know the meaning of the word! Or because he has had so little involvement with the Republican Party (and much more so with the Democrat Party) before asking for its highest nomination.

The main reason why a Trump nomination would be so disastrous and so poisonous to the continued existence of the Republican Party is this: The core message of his campaign is that our Republicans in Congress have all been bought out by the “special interests”, and are not capable of making “good” deals with the Democrats. How exactly do we campaign for other Republicans when the top of the tickets maintains that Republicans are corrupt and incompetent and is actively running against the Republican brand?

It’s not news to anyone that a sizable portion of America is deeply unhappy with the state of affairs in Washington DC. They are angry and blame Republican majorities in Congress as unwilling and unable to stop President Obama’s liberal agenda and unconstitutional executive orders (even more so than they blame Democrats for supporting them). They are not interested in hearing explanations about the separation of power and the messy business of compromise legislation in a divided government. Educating them on how American democracy works and the Republican Party’s role in it is a difficult task, one we need to improve at. But the solution is not to give up all efforts to inform them and instead agree with them that the Republican Party is the problem!

As the presumptive nominee, Donald Trump has already made statements indicating his willingness to “negotiate” away from Republican positions on taxes and minimum wage. Once the Republican Party has irreversibly committed to make him our nominee, he will be free to moderate his positions in a rush to the center for the general election. Can you name a single plank in our party platform that you are sure Trump won’t suggest breaking in the name of being “flexible”? And what if our nominee insists on selecting a Democrat as his Vice President in the name of bipartisanship? Once nominated, we are chained to a man who has exhibited no particular loyalty or affection to the Republican Party or its principles, and are bound to support whatever he says or does.

Yes, the Presidency is just one office. But we have seen in the past five years how a non-conservative President can not only block all reforms from a conservative Congress, but advance liberalism and the power of the state through the use of executive orders and the Federal bureaucracy. A President Clinton would be no different than Obama. But if by some miracle Donald Trump actually wins in November, how can we have any confidence that he will be any less of a liberal than Hillary Clinton? When Democrats oppose his judicial nominee, or building the border wall, or repealing Obamacare, what makes you believe he won’t simply cave in to them, twist a minority of Republican arms for support, and declare it “the best deal ever”? Trump is not a conservative, he is a populist, and a President Trump would do whatever he thought would make him popular. I have no faith that he would undertake the difficult conservative reforms so needed by this country, and every reason to believe he would continue the liberal practice of buying popularity with public funds.

And yes, Donald Trump is just one man, and he will be gone and forgotten in a cycle or two. But the image of the Republican Party casting aside its core values and endorsing a media-created populist will haunt us for decades. Trump is the embodiment and confirmation of all the standard liberal libels against the Republican Party. He is a rich, old white guy whose sole motivation is to make himself lots of money and pay less taxes. He’s a corporate CEO that will sell out American workers by using cheap legal and illegal alien labor, and by outsourcing jobs to Mexico and China. He’s a chauvinist who views women as little more than sexual objects. His statements on keeping Latinos and Muslims out of the country reveals his bigotry. And, as Trump himself has claimed, Republican politicians are bought and paid for by the moneyed “Establishment” with campaign contributions – which includes himself now that he has dropped the pretense of “self-funding”.

And what will we have achieved by catering to the whims of primary voters who have lost faith in both the Republican Party and American democracy? After four disappointing years of Trump or Clinton, will they be any more likely to vote for Republican Party candidates in 2020? Will they vote again at all? Will we be left with selecting another rich liberal celebrity know-it-all saying populist and vaguely conservative things long enough to win the primary (Maybe Mark Cuban or Kanye West)?

The first and only obligation of delegates to the National Convention is to select a nominee that can be supported by a majority of Republicans. While Donald Trump has won a small majority of bound delegates in the primary, he has only received about 40% of the vote, even less if you exclude the vote of those who do not have the best interests of  the Republican Party in mind. His support among delegates like you, made up of those with a history and a loyalty to the Party, is even lower. While it is possible to get a majority of the Republican Party to coalesce around Donald Trump in the name of unity, the same is true of any of the other 16 primary candidates. The difference is that, while conservative Republicans were able to fully support less conservative candidates like John McCain and Mitt Romney, we cannot support a nominee that is not a conservative at all.

Pressuring Republicans to support a candidate opposed by a majority of the Party in order to “stop Hillary” will only fracture the Party. A sizable number of good Republicans like myself will conclude that a Republican Party that has given up on advancing conservative principles and instead stands only for being “Not a Democrat”, is no longer worth supporting. Whether that number ends up being 1 million, or 5 million or 10 million I can’t say – and I don’t know if those millions of missing votes will make a difference in the likely Trump defeat. The real damage will be the long term loss of untold hundreds of millions of dollars and hours volunteered by those formerly reliable Republicans, and it is foolish to believe that they will be replaced by Trump supporters who are largely apathetic to the political process.

The current path we are on is clear: nominate Trump, and Republicans will be humiliated by his actions in the campaign, and crushed by his loss in the election. The Party will lose millions of its most faithful supporters, and gain nothing from the Trump supporters, who by and large already dislike the Party. The Party will have missed an opportunity against a historically weak Democrat opponent, and four more years of liberal policies may forever close the window on winning the Presidency.

There exists a different path, though. Convention delegates are not bound to the candidate picked by the MSM, nor are they bound by the rules written four years ago at the last convention; they are obligated to select a nominee that a majority feels would be best for the Party. When they adopt the rules for the 2016 Convention, a simple majority can vote for a rule (such as requiring a super-majority on the first ballot) to prevent Trump from winning on the first ballot. Then we will find out which candidate is truly acceptable to a majority of Republicans. It might be Ted Cruz, or John Kasich, or Marco Rubio, or one of the other candidates that dropped out earlier, or even a non-candidate. It may be long, it may be messy, but in the end we will have a nominee that the Party can in good conscious support and who has a chance of victory in November. Even in the best of election years, a Republican faces a narrow path to a White House victory, but we simply could not do worse than the current “presumptive nominee”: an unprincipled, unethical, unreliable, uncouth, un-conservative, un-Republican, unpopular populist.

-Brett Malin

Public campaign financing could be headed for the ballot in Washington state

 

By now, Washington state voters are familiar with the Seattle Process:

  1. A policy proposal is sketched out on the whiteboard at Democratic HQ.
  2. A beta test commences on the hustings — the Seattle electorate is a test group for determining how to get the public to approve the experimental idea.
  3. Having used Seattle as a proving ground, the idea is pushed in Olympia, then a statewide initiative (if legislative efforts are not successful), and even exported to other states.

Now, another Seattle-hatched idea — socialized financing of political campaigns — is being uploaded into the statewide mainframe.  The current piece of political malware is Initiative 1464, a sleeper measure headed for the November 2016 ballot that may pose a real threat to balanced elections and informed policy in Washington state.

Also known as the Washington Government Accountability Act, I-1464 is a near-clone of the Honest Elections Act passed in Seattle last year and is being promoted as a necessary measure to curb the influence of mysterious ‘dark money’ in state politics.

“It’s going to transform how we do elections in Washington state in a way that brings more focus back on the little guy.” That’s what political consultant and I-1464 co-sponsor Alex Hays told KING 5 political reporter Natalie Brand in a recent interview.

In reality, I-1464 appears to be little more than a new way for Democrats to game political campaign financing rules to their favor, neutralize the input of the business community and activist groups in the formation of public policy, and possibly even lay the tracks for taxpayer subsidization of non-citizen non-voter political contributions.

What would I-1464 do?

The surface appeal of I-1464 is obvious.  In the words of its sponsors is that it would “restore public trust and confidence by requiring greater transparency and increasing political accountability, limiting the influence of lobbyists, strengthening enforcement of campaign-finance and ethics laws, and empowering small donors to ensure everyone in Washington has a voice.”

The real implications of I-1464 are something quite different than those progressive platitudes.  On closer inspection, the measure seems to be little more than a Trojan horse designed to capture the interest of disaffected voters across the political spectrum to enact rules that would provide an almost permanent advantage to interests with a stake in procuring Democratic control over state politics.

No lobbying for you

Many of I-1464’s provisions lay a minefield of “gotcha” rules between informed lobbyists and public officials.  The proponents don’t shy away from disclosing their intent; they want to make it harder for to lobbyists to operate.  In reality, some of the teeth in I-1464 would come as close to criminalizing lobbying — a constitutionally protected right — as any law has tried to do in recent memory.

Although the lobbying profession is a favorite scapegoat and rare stories of abuse are highly public, the positive role that the lobbying community plays in providing informed testimony and insight on proposed legislation is woefully underreported.  Sometimes when an association representing small grocers sits down with the governor, it’s part of an effort to save jobs and keep consumer prices low.  In fact, it’s not popular to say it, but much of the time that’s the outcome, if not the objective, of lobbying efforts.

The bad news in I-1464’s anti-lobbyist provisions is compounded because of evidence that the measure also appears to carve out exemptions for unions.  It’s hard to see how the public will be more confident in government when the laws and regulations are developed from only the half of the facts that prejudice to he union’s benefit.

Maybe some reform of how lobbying is done would be helpful, but I-1464 is too extreme and would have the unintended consequence of making our public officials less informed.

Spreading the political wealth around

The feature of I-1464 that is likely to get the most attention though is its provision to set up a system for public financing of some political campaigns.

Under the proposal, qualified register voters would be eligible to receive $150 per election cycle in “democracy credits” to be spent on qualified election campaigns.  It would require mandatory mailings from the state to registered voters to notify them of available credits.  The entire process would be administered by the Washington State Public Disclosure Commission.

Although the proposal for using one person’s money to pay for another person’s political speech would initially be restricted to legislative races in even-numbered years, I-1464 explicitly makes provisions to expand the program as early as 2021.  The Legislature would have the ability to amend the initiative even sooner than that, as we know from experience.

But most alarming is a portion of the law that appears to require the PDC to develop a program for distributing democracy credits to permanent resident aliens living in Washington state as early as 2019.  Read carefully from the text of the Act:

By December 1, 2019, the commission shall develop and adopt regulations to allow any adult natural person who is a bona fide resident of the state, not eligible to register to vote under state law, but eligible under state and federal law to donate to a candidate campaign, to request to be verified by the commission as an eligible individual for participation in the program in the year 2020 and thereafter.

That section appears to be crafted to require the state government to give foreign nationals with permanent residency status (read that as possessing a green card) publicly funded vouchers to make contributions to political campaigns.

Who’s backing I-1464?

Integrity Washington is the campaign committee formed to get I-1464 on the Washington ballot.  Who is Integrity Washington?  As with most things, that’s a matter of who’s paying the bills.

As of the end of March, Integrity Washington has received $337,402 in cash contributions, according to filings made to the PDC.  More than two-thirds of the campaign cash — $225,000 — has come from Every Voice, a next-generation progressive political org born out of a 2014 merger that absorbed a super PAC funded by Jonathan Soros.  (Yes, that Soros family.)  The next largest contributor to I-1464 so far is Represent Us, at $100,300.

Modeled on ballot-proven Seattle-grade socialism

Every Voice and Represent Us also played big in the passage of Seattle Initiative Measure I-122, the Honest Elections Act passed by voters of Washington’s most populous city in 2015.  Represent Us lists I-122 as one of the group’s “wins” on their website.

What did the measure do?  In part it required some property owners in Seattle to pay higher taxes to finance “democracy vouchers” for public financing of political campaign contributions.

It will surprise no one that the same city that elected a self-described socialist to its city council also passed I-122 by a 27-point margin.

A total of more than $1.4 million was spent by the proponents of I-122, $390,860.23 of which came from Every Voice.

(Some might suspect that the overkill funding of I-122, a slam dunk measure, was really an early investment in the statewide effort to be named later, now known as I-1464.)

Although the evolution from I-122 to I-1464 has shuffled the cast of characters — I-1464 co-sponsor Alex Hays is a political consultant with a large number of Republican legislators on his past and current client list — Every Voice and its funders are calling the tune.ScreenCap ntegritywashington_org_who-we-ar

(As of this posting, Hays’ picture and bio are still featured on the Integrity Washington website.  Click image to right to view a screen capture.)

In order for Washington voters to weigh in on the proposal, Integrity Washington will need to collect enough signatures to put it on the ballot — just a few thousand less than 250,000.  In mid-February, only weeks before a half dozen Bernie Sanders rallies occurred in Washington, a $100,000 deposit was paid to a California-based signature gathering firm.  Petitions have already been sighted in Seattle.

Washington state charter school fix will become law without Gov. Jay Inslee’s signature

On Friday, Gov. Jay Inslee ended speculation on whether he might veto a bill passed by the Legislature to restore the state’s public charter school system to legal status.

Instead of taking an action that would have closed schools for thousands of students for the second time in a few months, Inslee chose not to sign the bill, which under state law allows its enactment.

Washington state voters narrowly approved permitting a publicly funded charter school system in 2012, but legal challenges resulted in the state Supreme Court ruling the law unconstitutional the Friday before Labor Day of last year, only days before most enrolled students were to begin classes.

Inslee’s only Republican challenger in this year’s election, Bill Bryant, has been a vocal supporter of charter schools and made a statement on Facebook regarding the governor’s non-signing of a major piece of education legislation:

https://www.facebook.com/billbryantwashington/posts/540942949410944

In a letter sent to Secretary of State Kim Wyman, Inslee laid out his reservations regarding the bill and his reasons for stepping aside to let it become law.

“I am not interested in closing schools in a manner that disrupts the education of hundreds of students and their affected families,” Inslee wrote.

He went on to reiterate his belief that the new law will not resolve his concerns that charter schools lack accountability to the public.

“… I remain deeply concerned about the public accountability and oversight provisions of this bill. At its foundation, our public school system relies upon locally elected boards to oversee expenditures of taxpayer money,” the governor wrote.

Some might say that the fact that the voluntary nature of enrollment in charter schools provides an incentive to provide quality instruction that generates a quicker and more powerful response to the needs of students.  Others might be skeptical of Inslee’s implication that traditional public schools are publicly accountable either.

The 106-year-old state Supreme Court decision that formed the crux of the decision ruling charters unconstitutional last year used language to establish a standard for accountability that most traditional public schools would have a hard time meeting.  From School District No. 20 v. Bryan:

“The complete control of the schools is a most important feature, for it carries with it the right of the voters, through their chosen agents, to select qualified teachers, with powers to discharge them if they are incompetent.”

In the present day, contracts negotiated between elected school officials and teacher’s unions have severed the chain of accountability to voters the Bryan decision sought to protect.  In fact, charter schools are more apt to operate in the spirit of Bryan in this regard.

If Gov. Inslee is truly interested in preserving public accountability — and there’s no reason to suspect that he is not —  then voters should ask him to move forward from his non-signing of this bill and propose major reforms to ensure real accountability in all of our schools.

Click to read Inslee’s letter to Secretary of State Kim Wyman.

Editor's note: After first publication, this article was updated to include a statement made by Bill Bryant on the governor's action.

Holding Washington and other Western states hostage over water | Op-Ed

A dominant theme washing over Capitol Hill in the waning days of the session centers on how Congress can effectively address the diverse and legitimate needs of the many Western States confronting historic drought and water issues. There are nearly two-dozen legislative proposals from both Democrats and Republicans tackling everything from the EPA’s “Waters of the U.S” regulations and carbon-reduction rules to drought relief for farmers and ranchers affecting many Western states.

Drought in Washington and across the West have caused billions of dollars in impacts and are predicted to cost billions more in the coming years.

Our elected officials have taken notice.

Rep. Dan Newhouse (R-WA-4) is making it his priority to facilitate the construction of new dams and reservoirs to increase Washington’s water storage capacity by introducing the Bureau of Reclamation Surface Water Storage Streamlining Act of 2015.

Senator Maria Cantwell (D-WA) is pushing the Yakima River Basin Water Enhancement Project Phase III Act, which provides an integrated approach to addressing water management in Washington’s Yakima Basin. As the Yakima Basin faces continued drought and climate impacts, the federal government has a responsibility to act now to prevent future impacts and costs in meeting its legal responsibilities in the basin.

This summer California Rep. David Valadao (R-CA-21) and 25 bipartisan co-sponsors — including Newhouse and Rep. Scott Tipton (R-CO-3) — introduced HR 2898, a drought relief bill that would benefit Washington, as well as California and our other Western states. It passed in the House, but was coldly received by the Senate, even though many knew that California senator Dianne Feinstein contributed to its provisions.

California Senators Feinstein and Barbara Boxer responded with an alternative, a bill that would grab $1.3 billion in federal funds for California; 12 environmental activist groups helped Feinstein and Boxer draft their measure. While these senators command respect, their bill would do little for Washington and other Western states. Rather, it would simply help expand California’s environmental mandates to our state and many others.

We need much more than that.

By some estimates more than 93 million Americans are now impacted by the Western drought. At least twelve western states are falling victim to drought conditions and receiving USDA drought relief: Arizona, California, Colorado, Idaho, Kansas, Nevada, New Mexico, Oklahoma, Oregon, Texas, Utah and Washington. The impact of the drought ripples across the nation, which has a vested interest in food prices, the security of our food supply and the economy at large.

With over 92% of all federally owned lands located in the West, Americans are growing concerned about impacts on national parks and national forests. After all, issues concerning water, air and other natural resources cross state lines from coast to coast.

The U.S. House of Representatives’ response was to sensibly bundle its Western States package of measures into a comprehensive regional plan to address drought rather than dedicate federal funds to a single state’s crisis. A comprehensive package solves many states’ problems rather than dealing with them piecemeal.

As important as California is, and despite its historic drought crisis, a California-centric approach is myopic and unfair. The federal government must take ownership and responsibility for untangling the unwieldy web of local, state and federal government regulations that control the West’s water.

The drought is regional; it’s bigger than California and any fix should address the needs of the West, not just one state. Senators Feinstein and Boxer know that. The sooner congressional delegations across the West all band together and start treating the water crisis as an American issue of national importance, it helps our state of Washington, the West, and the nation — and that includes California.

Cap-and Trade is a Stealth Tax—Don’t Let Inslee Or Anyone Else Tell You Otherwise | Op-Ed

In a previous post, I wrote about two of Gov. Inslee’s highly ironic tax hike proposals. In this post, I’ll write about a third: His de facto tax wrapped up in his cap-and-trade proposal.

The objective of this plan is allegedly to get organizations emitting more than 25,000 tons of CO2 to rein in their carbon dioxide output. In reality, like most things progressives do that increases revenue, the objective is really the revenue bump, but never mind that. Let’s pretend that this is all about what Inslee says it is about, and nothing more. Would you be surprised to know that one of the companies set to see a huge bump in its tax bill is REC Silicon Solar, which makes Solar Polysilicon for use in solar applications?

According to data analyzed by the Washington Policy Center, REC will be forking over in excess of $4 million a year if this plan goes through.

Would you also be surprised to know that Wafertech, owned by Taiwan Semiconductor, which appears also to be in the solar business, would be hit?

According to the analysis, Wafertech will be forking over about $3.5 million a year, if the plan passes.

Others that would be getting a big tax bill include facilities that appear to be generating hydrogen, which is what a lot of environmentalists would like to see power our cars in future, because it’s greener than gas.

These aren’t the types of entity that a lot of progressives think of when they think about corporate polluters that need to be made to pay up for emitting too much CO2. In fact, they seem like the kind of businesses that progressives usually want to promote, stimulate and see more of because they are tied into the green energy economy and provide those famed green-collar jobs. So this is another respect in which Inslee’s proposed tax package is rife with irony.

Also set to be hit with a big cap-and-trade bill under the Inslee proposal are the University of Washington and Washington State University. Could that mean higher fees for students? If so, that’s another ironic, anti-progressive aspect of what Inslee is pushing. Aren’t progressives supposed to be for making college cheaper? (I will refrain from commenting on President Obama’s plan for 529 accounts here).

Again, legislators should think carefully about what is being proposed, and recognize that there’s a better way of dealing with budgetary challenges than this plan.

Gov. Jay Inslee’s New Tax Hikes Are the Wrong Direction for Washington State | Op-Ed

In light of ongoing state fiscal issues, Washington Gov. Jay Inslee is proposing a raft of tax hikes.

There are numerous problems with all of these proposed increases (and I’ll write about several of them in this and succeeding posts), but Inslee’s desired jump in taxes on cigarettes sold in our state is one of the three more ironic ones he’s pushing. Why? Inslee has always billed himself as a progressive Democrat. And yet he’s going all in for a tax hike that would if enacted be extremely regressive, as well as very fiscally unsound.

This 2012 study found that poor smokers spend about 14 percent of their household income on cigarettes. According to the left-leaning Center for Budget and Policy Priorities, 29 percent of poor adults smoke, compared to 18 percent of non-poor adults.  A 2007 study by the Heritage Foundation indicates that even before the economy hit rock bottom, more than 25 percent of smokers lived below the federal poverty line, with a further 25 percent living between the poverty line and 200 percent of it. These are the people Inslee wants to tax more, and in so doing, he wouldn’t even be shoring up the state’s revenue base in a sound manner.

There’s a general economic principle that if you tax something, you get less of it. In this case, what Inslee is trying to do is more heavily tax the consumption of legally purchased cigarettes. That might work well from a fiscal standpoint if no smokers were going to quit in response, or alternatively locate, buy and consume untaxed cigarettes that are purchased illegally. But when cigarette taxes go up, some smokers do quit just like anti-tobacco campaigners want them to (we’ll come back to Inslee’s solution to that problem in a bit). But most shift to buying illicitly sold smokes. Inslee doesn’t seem to have a solution to this conundrum, despite the fact that he’s trying to hike the tobacco tax in an already high-tax state that is full of Native American reservations where state tax is often not charged on cigarette purchases made by non-tribal buyers, and which borders Idaho (which has a much lower tax rate than Washington).

Given this situation, it is unsurprising that Washington has one of the highest rates of inbound cigarette smuggling of any state. Nearly half of all cigarettes consumed here are smuggled and thus have gone completely untaxed by Olympia or local governments. Nationally, cigarette smuggling deprives governments of $5.5 BILLION per year.  A fair chunk of this amount is the loss sustained by Washington.

It is unclear why Inslee wants to double down on this problem. Some more conspiracy-minded critics of his plan argue that by pursuing this kind of bad tax policy, he’s making it easier for Washington progressives to force through a state income tax, and a high one at that. More often than not, states that pursue cigarette tax increases wind up missing their revenue targets (in some cases, they even bring in less total revenue after the tax hike than they did before it, as happened in New Jersey and DC), meaning they have to find different, supplemental sources of revenue in future. In this case, that different, supplemental revenue source could be the kind of income tax we see in most American states, but which Washington voters oppose. Irrespective of the reason, doubling down on the smuggling and lost revenue problem seems to be exactly what Inslee is trying to do.

A second problematic component of Inslee’s tax plan is his proposal to jack up taxes on e-cigarettes. This, too, is ironic. Part of the logic for cigarette tax hikes is to force people to quit smoking or at least reduce their likelihood of killing themselves with cancer in chasing their nicotine fix. Higher e-cigarette prices mean more expensive devices of the type that a friend and her husband claim helped them quit smoking, and which various health studies and experts out there—including former U.S. Surgeon General Dr. Richard Carmona, former American Lung Association president and CEO Charles D. Connor, and Medical and Executive Director of the American Council on Science and Health Dr. Gilbert Ross—seem to think are less likely to kill than inhaling smoke from a tobacco-filled stick the user set on fire. (Side note: The R Street Institute also has a good post on why this tax increase is silly). But by setting a high tax rate on e-cigarettes, I suppose at least theoretically, Inslee might be dealing with the revenue problem posed by people quitting smoking, as long as they all try an e-cigarette instead of going cold turkey or using Nicorette (given the weather in the Pacific Northwest, I bet most will just go the Nicorette route, though).

Legislators should think carefully about the lack of logic behind these proposals as the session gets underway. There are better budgetary solutions than tax hikes, including the regressive, fiscally unsound and just plain nonsensical ones discussed here. I’ll write more about the third highly ironic tax hike proposal from Inslee in a separate post.

Is Governor Inslee Right About the Impact of Coal Exports on Puget Sound?

Large cargo ship being loaded with coal at the Ridley Island Terminal in British Columbia, Canada. [image: istockphoto.com]

Large cargo ship being loaded with coal at the Ridley Island Terminal in British Columbia, Canada. [image: istockphoto.com]

Would you consider a change of 0.083 percent “unparalleled” and “significant”? Apparently, Governor Jay Inslee does.

Two weeks ago, Governor Inslee visited the Vancouver Columbian editorial board and defended his proposal to require an unprecedented level of analysis regarding proposed export terminals. His process, known as “expanded SEPA,” has never been done before and would attempt to analyze the environmental impact not only of the terminal but of all the products being exported.

The governor told the Columbian he felt this was justified because:

“We know this, wherever the coal is burned, a portion of the coal that is burned ends up in Puget Sound and off our West coast and makes our water more acidic. We will be evaluating the carbon pollution increase associated with the state of Washington and it appears to be significant. It would have a significant increase in the carbon pollution associated with the economic activity and with an unparalleled dimension the increase in carbon pollution associated with these projects would be unparalleled in state history.”

He went on to note that “we’ve had to move some of our oyster operations to less acidic waters because of carbon pollution.”

There are two key claims he makes here:

  1. Human-caused ocean acidification is already causing Washington oyster growers to leave the state.
  2. Coal exports from Washington would have an “unparalleled” impact on Puget Sound and Washington waters.

Both of these claims are wrong.

First, the Governor frequently says that oyster growers are leaving the state. He has stopped, however, saying where they are going. Previously he noted that they moved to Hawaii. It is unlikely that oyster growers looking to avoid ocean acidification would move to the middle of the ocean, which may be one reason the Governor no longer adds that bit of information.

Additionally, the oyster growers that have moved were along the coast, not in Puget Sound. Along the coast, there are natural swings in the pH of the water by 0.6 pH. According to the IPCC, the UN climate change agency, the total contribution of mankind’s carbon emissions to acidity is 0.1 pH since industrialization, over 100 years. The human-caused portion of acidification over 100 years, therefore, is only about seven percent the amount that can occur naturally, in a single day, along the coast (the pH scale is logarithmic, making 0.1 only seven percent of 0.6).

Currents, upwelling and other natural forces, not carbon emissions from burning coal, are the cause of changes in the pH level along the coast. Blaming coal for oyster growers moving to Hawaii is simply unscientific.

Second, using the IPCC’s science, which the left used to call the “scientific consensus,” we can estimate the impact of coal exports from Washington on the Puget Sound.

Like any estimates, there is a margin of error. But, as we will see, even allowing for an wide margin of error, the impact is far from “unparalleled” or even “significant.”

  1. In 2012, China used 4.1 billion tons of coal according to the Energy Information Administration (EIA). This number will increase in the future, but this is a good baseline number.
  2. The proposed export terminals could ship about 100 million tons of coal annually.
  3. Exports from Washington, therefore, would account for a maximum of 2.4 percent of China’s coal consumption.
  4. Coal used by China accounts for 22 percent of worldwide CO2 emissions according to the EIA.
  5. Thus, Washington’s coal exports would account for a maximum of 0.54 percent of worldwide emissions and a commensurate amount of ocean acidification.
  6. According to the IPCC, under the second highest emissions scenario, known as RCP 6.0, the oceans will see pH fall (i.e. become more acidic) by 0.2 by the year 2100.
  7. This means the maximum amount the coal from Washington would impact Puget Sound would be to lower pH (i.e. increase acidity) by 0.000836.
  8. Since the pH scale is logarithmic, the change in pH over the next 100 years due to the carbon from coal exported from Washington is 0.083 percent of what can occur daily, naturally, in Willapa Bay.

Put simply, the Governor claims that a change in the pH of Puget Sound or the coast of Washington by 0.083 percent over 100 years as compared to what occurs naturally in one day, is “significant” and “unparalleled.”

One final note. All of this assumes China will not find a replacement for the 2.4 percent of their coal consumption that would come from Washington’s export terminals. That is clearly false. It is likely that China will have no difficulty finding a replacement for most or all of that tiny amount of coal, meaning the net impact of stopping coal exports from Washington’s on ocean acidification would be literally zero.

Our consistent position has been that every energy source should pay for the impacts it causes and coal emits more carbon than any other energy source. Our position is also that Washington should focus on policies that yield the greatest environmental benefit. Governor Inslee’s plan to stop the export terminals based on the potential impact of exported coal on ocean acidification clearly fails the second test and is not supported by the science.

[Reprinted with permission from the Washington Policy Center blog; image: iStockphoto.com]

Video Catches Senate Transportation Co-Chair Tracy Eide in Awkward Confirmation of Legislative Obstruction

Identifying when a legislative roadblock is being placed in Olympia can be a bit like spotting black holes in outer space; by their nature, they defy detection and you have to look carefully for signs of what happens around them, or in the case of transportation reform legislation, what does not happen.

In that vein, we give credit to state Sen. Steve O’Ban (R-Pierce County) for discovering evidence that a vortex suspected to exist around Senate Transportation Committee co-chair Tracy Eide (D-Federal Way) and which is blocking progress toward key reforms does indeed exist.

During a Jan. 22 committee work session at which State Department of Transportation Secretary Lynn Peterson was answering legislators’ questions about high-profile trouble spots on WSDOT-managed projects including more than $400 million in fixes to cracked pontoons and other issues with the Highway 520 bridge replacement project. O’Ban queried Peterson on the subject of the Legislature’s oversight role, specifically asking whether she was aware of any legislation that might have required WSDOT to notify the Legislature of such massive problems in a timely manner.

Peterson said she was aware that there had been a bill in the House last year that would have obligated her department to report to the Legislature on high-dollar cost mistakes. After turning to check with an aide, she mentioned that the bill had passed and that her office was preparing documents for the Senate committee.

O’Ban, of course, knew the bill – HB 1986 – had passed the House in a time long, long ago during the 2013 regular session by a vote of 87-7. He knew because he had sponsored it and he also knew it had gone nowhere in the Senate under Eide.

“It did pass out of the House, it’s now stuck in this committee in the Senate. So I’m hoping that the Senate will hear it and it will become law,” said O’Ban.

Legislators say the darnedest things under duress. Though barely audible on TVW’s recording, Eide grumbled to Peterson, “Give us the rest of the package.” Package would seem to refer to the Democratic proposal to raise gas taxes. Cue nervous laughter.

O’Ban may only be in his freshman year as a Senator, but he plays like a senior.

The Most Important Vote of 2014 – Boeing 777X Contract

Although 2014 is a general election year with control of the Legislature up for grabs and still unknown ballot measures yet to qualify, perhaps the most important vote of the year will be tomorrow on Boeing’s 777X contract offer. Not only does this union vote have the potential to impact tens of thousands of jobs, but it could dramatically change the state’s fiscal outlook, not to mention its economic psyche.

While a “Yes” vote would ensure the 777X is produced in Washington, what could a “No” vote mean for the state, besides the potential loss of future Boeing jobs and ripple effect on the economy? According to Bloomberg:

“Washington faces a credit downgrade, higher borrowing costs and the loss of jobs and tax revenue should Boeing Co. (BA) decide to move production of its new 777X jetliner to another state . . .

The company’s production line for the 777, the earlier version of the twin-engine model, is in Everett, a city of 105,000. With more than 30,000 workers at the plant, ‘a drawdown or transfer of those workers would have a ripple effect,’ said Pat McClain, Everett’s executive director for governmental affairs.

If Boeing selects a new location, it would be a ‘credit negative’ for Washington state and the Puget Sound region, according to a Nov. 21 report by Moody’s Investors Service. ‘The regional economy would lose a potential engine of growth and the local and state government would forgo potential tax revenues.’ . . .

Losing 777X production ‘will raise the cost of capital — could be several hundred million dollars,’ James McIntire, Washington state treasurer, said in an Economic and Revenue Forecast Council meeting in Olympia on Nov. 20 . . .

‘It’s not just losing one airplane’s production, it could be the start of a Boeing exodus,’ said JC Hall, chairman of the Redmond, Washington-based Pacific Northwest Aerospace Alliance, an industry group.”

With so much at stake it’s no surprise to see a union rally planned for 4 p.m. today on the Boeing 777X contract offer. What is a surprise, however, is what the union rally is encouraging – a “No” vote.

While Governor Inslee won’t encourage a “Yes” vote other elected officials are as reported by the Everett Herald:

“Western Washington political and business leaders had a sobering message for the Machinists union on Monday: Rejecting the Boeing Co.’s latest contract offer will mean losing thousands of jobs and risk the future of the state’s aerospace industry . . . Elected officials from Everett, Renton, Kent and Snohomish County on Monday urged IAM members to approve the contract.”

A “No” vote tomorrow may also have the potential to shake up what was otherwise shaping up to be a sleepy 2014 Legislative Session.

 

[Reprinted with permission from the Washington Policy Center blog; featured image courtesy of the Boeing Corporation]

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