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Posts Tagged ‘Seattle’

Not all bad city governments are alike. In places like Chicago, local politicians generally impose bad policy because they’re buying votes (especially the votes of bureaucrats), not because they’re motivated by ideology.

But as you can see from this video, some Seattle politicians are genuinely crazy.

And those crazy local lawmakers are very serious about their class-warfare tax agenda.

The Wall Street Journal recently opined on the proposed tax hike in Seattle.

Seattle’s…City Council has decided this is the perfect moment to slap businesses with a large new tax on employment. …Recall that in 2018 Seattle passed a $47 million annual “head tax,” only to repeal it after a furious public realized it penalized job creation. No matter, the socialists who dominate the City Council passed a new iteration this week that’s more than four times bigger and punishes employers for paying good wages. Beginning next year, some 800 businesses with a payroll over $7 million will pay a tax of between 0.7% and 2.4% on all salaries over $150,000. …Councilwoman Teresa Mosqueda says the tax will create a “more robust and resilient economy,” but how taxing job creation accomplishes that is a mystery. The tax will stifle economic upward mobility, since employers will have an incentive not to raise pay above $150,000. …the new tax has veto-proof support on the City Council, which passed it 7-2.

What’s especially absurd, as explained by Brad Polumbo in a column for the Foundation for Economic Education, is that Seattle’s politicians want to exempt government bureaucrats from the tax.

…the tax could seriously hurt the economy… “As the region enters a deep recession and faces near-record job losses, the city council will be sending tax bills to companies across multiple sectors that have their doors closed and have been forced to layoff employees,” the business organization Downtown Seattle Association said… in an infuriating but sadly typical twist, the Seattle City Council exempted all government employees from their new tax. That’s right: The supposedly benevolent socialist city officials who thrust this upon their constituents made sure to carve out a giant exception for their peers on the taxpayer dime. …the city council’s new tax is…imposed on working people by politicians who made sure to spare the government class from sharing any of the burden.

By the way, this is a repeat fight.

Seattle lawmakers tried to impose a similar tax back in 2018 but were thwarted by opposition from private-sector workers and businesses (it’s also unclear whether such a tax would survive a legal challenge since the state’s constitution bars taxes on income).

If the tax ultimately is approved and implemented, it’s easy to predict the consequences. Businesses and workers will migrate to surrounding communities without the tax.

Not all of them, of course, but enough to make a difference. And that difference will get bigger with the passage of time.

What Ms. Mosqueda and Ms. Sawant don’t understand is that this cartoon only partially explain why socialism doesn’t work.

To be fully accurate, it also needs a door called “Escape” for the geese that fly away with their golden eggs.

I realize this is a perverse thought, but part of me wants this tax hike to be implemented just so we’ll have some powerful new evidence about why statism is a bad idea.

P.S. The proposed tax hike is just one reason why investors, entrepreneurs and business owners should be leery about creating jobs in Seattle. There’s also the big increase in the minimum wage and the recent (failed) experiment in autonomous socialism.

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What’s the most poorly governed city in the United States?

Those are all good options, but Seattle may deserve this award. Following municipal elections last November, the City Council is controlled by hard-left members who want to impose the local version of “democratic socialism.”

In a National Review article from February, Christopher Rufo describes their agenda.

Seattle has effectively become the nation’s laboratory for socialist policies. Since the beginning of the year, the socialist faction on the Seattle City Council has proposed a range of policies on taxes, housing, homelessness, and criminal justice that put into practice the national democratic-socialist agenda. In the most recent session, socialist councilwoman Kshama Sawant and her allies have proposed massive new taxes on corporations, unprecedented regulations on landlords (including rent control and a ban on “winter evictions”), the mandated construction of homeless encampments, and the gradual dismantling of the criminal justice system, beginning with the end of cash bail. …In order to consolidate their newfound power, the progressive-socialists have begun to manipulate the democratic process in their own favor: first, by providing all Seattle voters with $100 in taxpayer-funded “democracy vouchers,” which are easily collected by unions, activists, and socialist groups; and second, by implementing a ban on corporate spending in local elections… the progressive-socialists are no longer interested in gaining reasonable concessions; they intend to overthrow capitalism itself.

The Wall Street Journal opined this week on the latest development in Seattle’s suicidal approach.

The economy is on life support, but that isn’t stopping the Seattle City Council from trying to soak employers with a new tax on hiring. …The proposal is a reprise of the council’s 2018 tax on each new hire that was repealed amid public opposition. The new proposal “is 10 times larger than the 2018 version, and it’s also in an economy that’s about 1,000 times worse,” says James Sido of the Downtown Seattle Association…a 1.3% payroll tax on most Seattle businesses with $7 million or more in payroll. …Businesses would be assessed based on the prior year’s payroll, but revenue has cratered this year amid the pandemic. …businesses on the margin that have been forced to lay off or furlough employees may not bring them back if it means crossing that $7 million payroll threshold. The tax would discourage smaller companies from growing in Seattle. …Seattle is the hardest hit city in the U.S., with unemployment rising 105.92% between January and March. Only a socialist would think now is the time to further punish job creation.

Good points.

Though I would add that it’s never a good time to raise taxes and punish job creation.

Here’s what the greedy members of the City Council don’t understand (or pretend not to understand):

It’s complicated and difficult to move out of a country.

It’s a potentially expensive hassle to move out of a state.

It’s relatively easy to move out of a city.

And that’s why Seattle’s experiment with socialism is bound to fail.

If the socialists on the City Council impose this tax, there inevitably will be an out-migration of entrepreneurs and businesses to surrounding suburbs. That will be bad for ordinary people in the city (a point that workers in the economy’s productive sector already understand).

And when that happens, I wonder if they’ll learn that it is possible to run out of other people’s money?

P.S. Seattle’s politicians already have destroyed jobs and ruined businesses with a big increase in the minimum wage.

P.P.S. The constitution of the state of Washington prohibits an income tax, so there’s an ongoing debate whether Seattle’s tax grab – if enacted – would survive a court challenge.

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I wrote last July about how greedy politicians in Seattle, Washington, were trying to impose a local income tax.

That effort has been stymied since there’s anti-income-tax language in the state constitution (Washington is one of nine states without that punitive levy), but that doesn’t mean the city’s tax-and-spend crowd has given up.

There’s a proposal for a new scheme to impose a “head tax” on successful companies.

The top three percent of the high grossing businesses in Seattle will carry the load of Seattle’s proposed employee head tax. Backers are calling it the “Progressive Tax on Business.” The tax will apply only to those companies with $20 million or more annually in taxable gross receipts as measured under the City’s Business and Occupation tax. The city estimates that will be 500 businesses. …the tax is based on total revenues and not net-income. …Councilmember Mike Obrien has been pushing to a head tax for two years and doesn’t believe businesses will leave Seattle because of it.

I suppose this might be a good opportunity to point out that this tax is bad for growth and that it will encourage out-migration from the city.

Or perhaps I could make a wonky point about how this tax is related to the income tax in the same way a gross receipts tax is related to a sales tax.

But I’m motivated instead to focus on the very heartening response to this tax grab by both business and labor.

Here’s how the city’s leading employer is responding.

Amazon is…making its opposition known to a proposed Seattle tax by bringing a halt to all planning on a massive project scheduled for construction in Downtown Seattle, and may tweak its plans to occupy a new downtown skyscraper. “I can confirm that pending the outcome of the head tax vote by City Council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sub-lease all space in our recently leased Rainier Square building,” says Amazon Vice President Drew Herdener. …Jon Scholes, president of the Downtown Seattle Association, said the City Council should take heed of Amazon’s decision.

But some of the class-warfare politicians are oblivious to real-world concerns.

Two supporters of the tax, City Council members Kshama Sawant and Mike O’Brien, seemed unmoved by Amazon’s decision. “I understand Amazon doesn’t like it. I’m sure they would love to go to a city that has no taxes. And maybe they will find that place,” O’Brien said. …Added Sawant, “Amazon is perfectly capable of paying that, double, even four times that.” She also called Amazon’s tactic “extortion.”

I don’t know if Sawant is an idiot or a demagogue. What’s she’s basically arguing is that if a victim runs away from a mugger, the victim is an extortionist.

Wow, that’s a novel (and French) way of looking at the world.

That being said, there’s probably nothing surprising about the business community resisting a tax on business. So here’s the part of the story that really warms my heart.

Private-sector workers also are protesting.

Construction workers shouted down Seattle City Councilmember Kshama Sawant on Thursday as she attempted to speak in favor of Seattle ‘s proposed new “head tax” at an open-air news conference. The construction workers shouted “No head tax!” each time Sawant tried to speak in favor of the measure… The conference, held outside Amazon’s Spheres, was intended to show support for the head tax and opposition to Amazon’s announcement of a construction pause on a massive downtown construction project. But the group of about 20 construction workers showed up and drowned out Sawant’s message. …construction workers…praised Amazon for providing well-paying jobs to thousands of Seattle-area residents.

Unsurprisingly, Ms. Sawant doesn’t care about workers. She simply wants the money so she can buy votes.

Amazon would pay more than $20 million of that total under the proposal. …Sawant maintains that Amazon could easily afford to pay that amount.

Let’s close with some good news. Seattle isn’t normally considered a hotbed of free market thinking (though a disproportionate share of my readers are in the state of Washington).

So I’m guessing Ms. Sawant and her greedy colleagues probably are not very happy about this (admittedly unscientific) polling data.

This is very encouraging. Hopefully it’s a sign of the good things that can happen with private workers (unionized or not) and private employers join forces to protect themselves from politicians.

It will be interesting to see how the City Council responds. If they move forward with this tax grab, Seattle truly will be in the running to the Greece of America.

And if that trend continues, don’t be surprised if Amazon’s soon-to-be-announced second headquarters eventually morphs into its primary headquarters (hopefully without any cronyism).

P.S. It goes without saying (but I’ll say it anyhow) that the state of Washington should never, ever, allow a state income tax.

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