Who says we need a tax increase? There is a better way

The following newsletter was sent to Sen. Ericksen’s subscribers April 1, 2019. To subscribe to Sen. Ericksen’s newsletters, click here.

On the Senate floor.

While Democrats push massive tax increases, Ericksen calls for budget caps and tax relief

Taxpayer Protection Plan offers better approach

  • As Washington enjoys record surplus, Dems propose biggest tax increase in state history
  • Uptick in tax collections would fuel permanent growth in government
  • Ericksen proposal avoids tax increase, returns money to the people

Right now the Washington Legislature is getting set for the strangest debate we’ve ever seen. At a time when our economy is growing by leaps and bounds and is delivering record tax collections into state coffers, legislative Democrats are saying we need an enormous and punishing tax increase just the same.

Our budget debate was formally launched last week as majority Democrats in the House and Senate released their budget proposals. Washington expects to collect $50 billion in taxes over the next two years — a whopping $5 billion more than we had the last time the last time we wrote a budget, two years ago. The problem is that the Democrats want to spend even more. The House Ds want to spend $53 billion and the Senate Ds want to spend $52 billion — and they want Washington taxpayers to make up the difference.

Democratic proposals for tax increases are never a surprise. They come every year, rain or shine, no matter what shape the economy is in or what promises were made during the last election campaign. What matters more is whether the Democrats have the votes to pass them. This year they do. But at a time when the economy is generating tax money hand over fist, it’s not as if the state needs the money. We have more than enough to meet every pressing need and still have a couple billion left over.

There is a better approach. In previous weeks, I’ve told you about my Taxpayer Protection Plan, which would roll back taxes, strengthen voter-approved limits on the growth of state spending, and provide incentives to manufacturers to create new jobs in Washington state. This week, let’s drill down a bit on the arguments for a massive tax increase at a time when the state is awash in money.

A more sensible approach to extraordinary tax collections

Taxpayer Protection Plan puts emphasis on fiscal responsibility

This year I have introduced legislation that would steer the state in a more sensible direction. We can use these extraordinary revenues to reduce the tax burden on Washington residents and put ourselves in an even stronger economic position. The plan:

  • Cuts the state sales tax and puts $2 billion back into taxpayers’ pockets. (SB 5610)
  • Reduces the state property tax in times of extraordinary tax collections, or requires that excess money be spent on one-time projects. (SB 5609)
  • Provides a tax incentive to all Washington manufacturers, creating jobs and new business opportunities. (SB 5608)

Is this tax increase really necessary?

Desperate times these are not. The 2019 Legislature is facing its brightest budget outlook since 1989. We’re expecting $50.6 billion over the next two years.

  • This is a whopping $14 billion increase since 2013. State tax collections are up 45 percent while median household income has increased just 22 percent.
  • If we continue doing everything the state is doing, and meet all of our legal obligations, we would still have a bit more than $2 billion left over.
  • If we enact modest efficiencies in state government, we could save another $1.5 billion – that ought to be plenty for any program lawmakers wish to enact.

Income tax the real goal

The case for a tax increase this year is so weak you might think there must be more to it. And of course there is. The House Democrats and the governor have gotten behind a new income tax on capital gains, a proposal so thoroughly unconstitutional that we can be sure someone will take it to court. This is what advocates are counting on. They figure a well-framed court case would give our liberal state Supreme Court a chance to overturn its 1933 ruling against the income tax. This would open the door to a general income tax all of us would pay, while eliminating the requirement of a public vote. No constitutional amendment would be required. The income tax is the ultimate prize.

A lesson from history

In 2007, the state found itself in a similar situation. The economy was booming, tax collections were on overdrive, and Democrats were in charge. Rather than spending sensibly and saving for a rainy day, they passed a budget that spent virtually every penny, creating new obligations that could not be sustained without a tax increase sometime in the future. This massive run-up in spending was really a gamble that the good times would last forever – and of course they never do. In this case the reckoning came so quickly there was no question about cause and effect. When recession hit in 2009, plummeting tax revenues posed a challenge, but the wild overspending plunged the state into the worst fiscal crisis since the Great Depression. Lawmakers were forced to dial back programs they had just expanded and slash billions in spending, both real and projected. Chastened lawmakers said they had learned their lesson and vowed never again. But that was 12 years ago, and the Legislature’s memory is short. By the way, many economists believe we’re due for another recession by 2021.

Legislative profiles on TVW

It was my pleasure to appear on TVW once again for their series of “legislator profiles,” which air during breaks between programs. Legislators get a few minutes to discuss their background and priorities. You can see my profile by clicking here or on the video above.

Recommended reading

Sen. Mark Schoesler in Spokesman-Review: Inslee and friends still haven’t gotten message on carbon fees and taxes

Walla Walla Union-Bulletin (editorial): No need for state Legislature to raise taxes

Spokesman-Review: State expects $850 million revenue boost over next 28 months

Rep. Mary Dye on Washington Ag Network: Low carbon fuel standards will hurt Washington ag, Washingtonians

KIRO-TV: Vape businesses, customers fear 60 percent tax

KOMO-TV: Bill to enhance DUI laws makes progress in state Legislature

Vancouver Columbian (editorial): Let Washingtonians decide on death penalty

Contact us!

Email: Doug@SenatorEricksen.com

Phone: (360) 786-7682Mail: P.O. Box 40442, Olympia, WA 98504