[Editor’s Note: This editorial was co-authored with Patrick Ennis]
In the 1990 budget compromise, Senate Majority Leader George Mitchell of Maine, pushed a 10 percent luxury tax through Congress, including that for yachts that cost more than $100,000. Enough Democrats and Republicans agreed that the Robin Hood tax, as it was called, would protect jobs by taxing those who could “most afford” to pay more. For the economy then, as it is now, was struggling. Simple enough it seemed to many at the time.
But a funny thing happened on the way to expanded revenue and saved jobs. Those who could “most afford” it stopped buying yachts – to the tune of a 77 percent drop over the following year. Most profoundly, as the bottom dropped out of yacht sales, an estimated 25,000 blue-collar shipworkers, lost their jobs. Many of these from Senator Mitchell’s home state of Maine – which until then, had a generations long tradition in shipbuilding.
Fast forward 20 years to Washington State Income Tax Initiative 1098 that confronts us today. The public employee unions whose bosses have given more than $4 million to its passage, claim to do so in the name of saving jobs in education and healthcare. According to their own website “Washington’s middle-class families are struggling and the wealthiest need to start paying their share.” This Robin Hood tax is aimed at those most able to afford it. It too will have destructive unintended consequences.
Entrepreneurial capital – the lifeblood of Washington’s vibrant start-up tech community would be under severe pressure to move elsewhere, bleeding jobs to the 46 other states whose tax code would be more welcoming. Washington’s innovation economy is in a constant battle to attract the best and the brightest. Adding to that burden the need to sell prospective employees on the 4th highest personal income tax in the country will cause many to avoid Washington altogether and take their talent elsewhere.
Those targeted by this tax, are also the most able and willing to legally avoid paying it, by moving their businesses and jobs to a state where they can do exactly what they do now, without the added tax burden this act imposes. With a state unemployment rate of 9 percent, why force the hand of Washington job producers in this way?
Oregon understands this first hand having recently passed a similar hike on income taxes on its wealthy, but realizing only half … Next Page »
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