March 6, 2024
In this issue:
- Estimates show capital gains tax repeal [I-2109] draining billions from Washington budget
- Tax evasion by millionaires and billionaires tops $150 billion a year, says IRS chief
- It’s no secret our tax system punishes low-income people. It doesn’t have to.
- Do high taxes on our rich make any sense? (Yes, they do.)
- Where the rich got richer in the Seattle area
Good news and bad news this week. First, state lawmakers listened to us and refused to adopt I-2109, an initiative to cut billions from education, childcare, and early learning by giving a tax break to the mega-rich.
That’s great news. Lawmakers refused to put the needs of fewer than 4,000 wealthiest people above the needs of millions of Washington students, parents, and young children. They sent I-2109 onto us, the voters, for November’s ballot.
Now the bad news: I-2109 still has a chance. Polling shows Washingtonians would reject this initiative if they had to vote on it today. But November is a long way off, and the hedge-fund millionaire behind I-2109 has already spent $6 million just to get it, and others, on the ballot.
We won’t sit still. We must let everyone know that I-2109 will:
- cut more than $5 billion from much needed education and childcare, reducing the workforce and impacting Washington’s economy
- increase tax pressure on people with low and middle incomes, who already pay up to 6 times more of their incomes on sales and property taxes than the super rich do.
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-Treasure
ESTIMATES SHOW CAPITAL GAINS TAX REPEAL DRAINING BILLIONS FROM WA BUDGET
“A proposal headed to voters to repeal Washington’s capital gains tax would knock roughly a billion dollars a year from the state budget, money that would otherwise go to early learning and child care programs and school construction, according to new state estimates.
Initiative 2109 is on track to appear on this November’s ballot. It would repeal the 7% tax on capital gains over $262,000 (up from $250,000 for taxes due last year). During the 2025 fiscal year, which begins July 1, a projected $913 million would evaporate from the state’s budget if the tax were nixed. Between $941 million and $1.09 billion would disappear during fiscal years 2026 to 2029, according to the estimates, prepared by the state Department of Revenue.
To put that number in perspective, the state’s operating budget, which covers most day-to-day government operations, public schools and state colleges and universities, is around $69 billion. Sen. June Robinson, D-Everett, wrote the capital gains tax bill that the Legislature approved in 2021. If it’s repealed, it is a big hole in the budget, said Robinson, chair of the Senate Ways and Means Committee. We’re going to have to come back next year and deal with that reality.”
More – Bill Lucia, Washington State Standard
TAX EVASION BY MILLIONAIRES AND BILLIONAIRES TOPS $150 BILLION A YEAR
“The nation’s millionaires and billionaires are evading more than $150 billion a year in taxes, adding to growing government deficits and creating a lack of fairness in the tax system, according to the head of the Internal Revenue Service.
Audits of taxpayers making more than $1 million a year fell by more than 80% over the last decade, while the number of taxpayers with income of $1 million jumped 50%, according to IRS statistics.
When I look at what we call our tax gap, which is the amount of money owed versus what is paid for, millionaires and billionaires that either don’t file or [are] underreporting their income, that’s $150 billion of our tax gap, Werfel said. There is plenty of work to be done.”
More – Robert Frank, CNBC
IT’S NO SECRET OUR TAX SYSTEM PUNISHES LOW-INCOME PEOPLE. IT DOESN’T HAVE TO.
“Especially at the state level, taxes worsen America’s yawning wealth gaps rather than easing them. Low-income taxpayer attorneys and other experts say clear paths exist for states to do better.
States can choose to alter their tax structure so it weighs less heavily on those who make less money. The reliance on sales taxes plays a big role in this inequity since they place a higher burden on lower-income residents.
Another option? Data collection to better track how tax policies affect people by race and income, and to determine whether some practices are counterproductive. State revenue agencies handling tax collection don’t tend to track demographic data that can make clear how impacts differ by race. But it’s already apparent these disparities exist. People with less money pay a greater share of it in state and local taxes than wealthy residents, who are disproportionately white.
By allowing this data to be collected, we can begin to look at how to dismantle the racism intrinsically woven into our tax system, and the race-related distributional impacts, said Creeana Bort, policy and advocacy organizer at the NAYA Action Fund.”
More – Maya Srikrishnan and Ashley Clarke, Mother Jones
DO HIGH TAXES ON OUR RICH MAKE ANY SENSE? (YES, THEY DO.)
“Jurisdictions that tax the rich, the standard conservative mantra goes, will always wind up watching their richest flee to jurisdictions that sensibly refuse to “soak the rich.” But right-wing harrumphing about the foolishness of raising taxes on the rich rests on a relative handful of high-profile anecdotes — like the Bezos windfall — that profoundly distort the actual tax-the-rich story.
So points out Cornell University sociologist Cristobal Young. Migration overwhelmingly occurs when people are establishing their careers. The wealthiest among us have oodles of business and social contacts that make them prominent, well-connected insiders where they live.
The numbers back up Young’s case. His research draws on data from the tax returns of every million-dollar income earner in every U.S. state over thirteen years, along with Forbes global billionaire data. By the time people reach the peak of their careers — and enter the top tax brackets of their states and countries — many have become embedded elites. Places are sticky: When you achieve success in a place, it becomes harder to leave.
Right-wing champions of the richest among us simply ignore stats along this line. They continue to insist that taxes on the rich are running far too high in far too many places. Our actual tax-time reality: Taxes on our rich in no places are running high enough.”
More – Sam Pizzigati, Inequality.Org
WHERE THE RICH GOT RICHER IN THE SEATTLE AREA
“Four Seattle-area cities are among the top in the nation where the rich got richer in the last few years, according to an analysis of census data released last week. While Americans as a whole prospered during the pandemic, stock market booms primarily boosted the wealth of households at the top of the ladder.
Among 100 American cities with the highest mean household incomes, Bainbridge Island and Issaquah saw the largest percent increase between 2019 and 2022, per an analysis of 2022 American Community Survey data:
- Bainbridge Island, with a mean household income of about $215,000 in 2022, saw the nation’s largest percent increase in mean household income, 48%, over three years, per the report.
- Issaquah, with a mean 2022 household income of $196,000, saw a 43% increase in mean household income over the same three-year period.
- Mercer Island, with a mean household income of $291,000 in 2022, showed a 29% increase, while Sammamish increased 24% to $262,000, per the report.”
More – Christine Clarridge, Axios
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