Steve Ballmer, Jeff Bezos fund effort to defeat state income tax

http://www.techflash.com/seattle/2010/09/ballmer_bezos_fund_effort_to_defeat_state_income_tax.html

by cwan • 16 years ago

33 61 16 years ago

lzw9• 16 years ago

Good. Washington state, during the boom of the 1990s, grew state expenditures as if they expected no end to the good times. When the dotcom crash happened, they started raising taxes to keep spending at the bubble levels.

They could have put aside money for a rainy day, or kept services at the level that they were so that when things went back to normal, they wouldn't be so stretched.

But this is not how government works.

Since taxes are set at a percentage, it would seem that they should never need to be raised, right? If it costs 1/10th or 1% of GDP to keep roads in repair, when the economy is booming, there may be more roads but that percentage is more dollars in real terms.

But what governments often do, and what Washington has done here, is just spend money on other things, let the roads get bad, and then claim that they aren't getting enough money to keep the roads up to justify raising the road taxes.

It is a simple game of bait-n-switch.

The big money is in getting people to sell future economic growth to resolve a short term artificial pain-- which is what they're trying to do now. Sure the state income tax will be a "tiny tax only on the rich".... but the federal income tax started out that way, and look what it has become.

Washington state has spent money irresponsibly. They should be forced into financial prudence.

Glad to see some entrepreneurs understand enough economics to oppose these kinds of power grabs and bait-n-switch tactics.

antpicnic• 16 years ago

The data doesn't seem to agree with your supposition of runaway state spending. According to the Tax Foundation (http://www.taxfoundation.org/taxdata/show/486.html), state and local spending as a percentage of income has trended downward since 1994. The overall state and local tax burden as a percentage of income was 10.4% in 1994 and 8.9% in 2008 (the last year shown in the table).

Having said that, I'm opposed to the initiative. WA needs fundamental tax reform including replacing the B&O tax with a value added tax as well as changes to reduce the regressivity of the state tax system. The initiative is a band-aid.

kevin_morrill• 16 years ago

You have to be very skeptical of government statistics on GDP and inflation. They have every motivation to downplay inflation (e.g. let's not count real estate and oil) and play up GDP.

yummyfajitas7• 16 years ago

First, your chart represents taxes, not spending. Spending may be considerably higher than taxes - for instance, Washington may be incurring debt to pensions.

Also, representing taxes as a percentage of income obscures the increase in spending due to increased income.

http://www.ofm.wa.gov/economy/longterm/2010/lt10ch4.pdf

Taxes should not grow with income - if anything, they should drop. Richer people require fewer government services - many (though not all) government services are either transfers to the poor or protecting people from them.

koenigdavidmj• 16 years ago

The Washington sales tax alone is 8.9 percent (including city and county sales tax in Seattle), so obviously property taxes are not included at all in those numbers.

bhiggins3• 16 years ago

Washington state has the most regressive tax structure in the entire country.

lzw9• 16 years ago

Which is why it has a thriving startup scene. "progressive taxation" is nothing more than the idea that people should be punished for benefiting society.

If everyone paid the same percentage taxes, then the rich would pay more than the poor because the rich have more money. You would call this "Regressive" even though the rich pay more.

You cannot make an argument that is logical that rich people should pay a higher percentage of taxes, not without throwing out the entirety of everything we know about economics.

"progressivism" is simply socialism, and the real goal is to eliminate private enterprise. IF you can't do it directly, taxing it until it stops moving is the alternative you choose.

timr4• 16 years ago

"Washington state has spent money irresponsibly. They should be forced into financial prudence."

If you're going to make this claim, you have to defend it with facts. Right now, you're just making a very wordy assertion, based on an extremely loose understanding of the situation, and a big helping of ideology.

Here's a history of Washington state spending since 1999:

http://fiscal.wa.gov/FRViewer.aspx?Rpt=Recast%20History%20Ex...

Since you seem very sure of yourself, perhaps you'd like to tell the rest of us which lines are "irresponsible". Be sure to defend your choices.

(As a former resident of Washington, my opinion is that one of the huge problems in state has been the abuse of the initiative process to both lock up tax revenue for particular uses (just like California), and also to knock out important sources of revenue (like property taxes and the vehicle registration tax). In a state that already has no income tax, it becomes extremely difficult to satisfy even reasonable growth in spending when other important sources of revenue are eliminated or capped at arbitrary levels.)

lzw9• 16 years ago

I love it that you claimed I had an "extremely loose understanding" which, we must presume you know because you're psychic, right? And then you go on to quote numbers showing that spending went up %50. Of course, you must attack me personally, because at the end of the day, I'm arguing for fiscal responsibility, and your position is that you and people like you better know how to run our lives, and so you feel the right to take, at gunpoint, money to spend on initiatives you personally approve of, and it really shouldn't matter what us peons with a "loose understanding" think, right?

Which is, of course, why you hate the initiative process. About the most democratic process in the state.

kreek• 16 years ago

I was hoping this was about California ;)

cprogmer• 16 years ago

Can someone explain to me why everyone who earns $200,000+ a year in income should be fair game, but some socialite whose trust fund accrues that much or more in capital gains should be off-limits?

1053r• 16 years ago

<sarcasm>Because people who earn that much by working are new money, and should be penalized for trying to break into high society. Gotta keep the riff-raff out of the country club, you know.</sarcasm>

On a more serious note, if you make that kind of money for any significant amount of time, you're going to be a member of the investment class pretty soon (i.e. making your money from capital gains) unless you have poor money management skills (or unusual circumstances, like supporting 10 people, or an expensive gambling habit, etc.).

fgf• 16 years ago

Or live in new york...

simonsarris• 16 years ago

In New Hampshire we have no income tax, just a capital gains tax.

tptacek• 16 years ago

Sure. I'm not in favor of eliminating the capital gains tax (quite the opposite), but the logic here is very simple: the money accruing gains has usually already been taxed. Taxing it twice is a drag on investment.

You want people to save and invest. They're not putting it under their pillows (else it wouldn't be accruing gains). Instead, that money is being put to use in the economy, enabling people to build factories or start companies.

euroclydon• 16 years ago

Thomas, I'm going to finally bite here: Is there some thread where you've explained why you favor big-tax big-gov?

bhiggins3• 16 years ago

Washington has the most regressive tax structure in the entire country and is facing a significant budget problem. An income tax is a step in the right direction, and frankly I would be happy to see the $200K (single) - $400K (married) limit lowered even to the point where I would be paying it.

lzw9• 16 years ago

Its facing a significant budget problem because the state is irresponsible in its spending. so you want to punish the victims of this irresponsibility, and give even more money to the people who have been irresponsible.

Calling it "Regressive" is just code to let us know you're a socialist and you won't agree with anything that doesn't punish "the rich".

potatolicious• 16 years ago

You keep making the claim that WA state spending has been irresponsible an out of control, yet you have yet to offer any substantiation of this claim, despite being asked to by multiple posters.

I am disinclined to believe something malicious without evidence.

Your use of the word "socialist" as an excuse to make ad hominem, unsubstantiated attacks against a fellow user is also not appreciated. You are in attack dog mode and discouraging honest discussion about an important and contentious issue.

scrod• 16 years ago

Now if they're really serious they'll find a covert spokesperson to represent their views — someone down-home and earthy, perhaps like Joe the Plumber, who can express their political position in terms and with voice that the great majority of voters (WA has a median household income of ~55K; http://www.ofm.wa.gov/economy/hhinc/medinc.pdf) would find more approachable. Ballmer and Bezos may have name recognition, but any good PR strategist knows that having a couple of billionaires vocally object to high-marginal-bracket tax increases would be just a bit gauche.

brettmjohnson2• 16 years ago

The problem with these types of Ballot Initiatives:

  Do you want to eliminate the state income tax?
  X Yes
  _ No

  Do you like to drive on paved roads?
  X Yes
  _ No

  Do you want fire fighters to show up if your house is on fire?
  X Yes
  _ No

As a resident of California, I can assure you that budget related initiatives should never be put to a popular vote. The voters will nearly always agree that most altruistic government expenditures are good (like roads and firemen), yet they will nearly always vote against attempts to pay for them.

In California, it only takes 50.1% of the general populace to decide to spend a bunch of money, but it requires 66.7% of the state legislator to approve a budget to pay for it.

forkandwait2• 16 years ago

More to the Ballmer / Bezos point (sans the cool formatting):

Do you want a motivated and highly educated worforce and otherwise high-infrastructure state?

X Yes _ No

Do you want to pay taxes to support it?

_ Yes X No

forkandwait2• 16 years ago

Forgive my replying to my own thread, but I would like acknowledge that much of the way public institutions do things is currently broken, even if the idea of public institutions is great -- I am very sympathetic to all the libertarians here at HN even as I vehemently disagree with them (I would say I am in favor of decentralized socialism, run by Athenian style democracies). Bad management of epidemic proportions (which I grant -- e.g. see "Waiting for Superman") makes people susceptible to a simplistic anti-government "privatize everything" sentiment (which I think is downright goofy).

But I still believe in taxing the rich, since they feed off society at least as much as they contribute.

lzw9• 16 years ago

This is a state that paid something close to $2B for new fancy stadiums that weren't needed, and has never met a glamor or status project that it didn't want to do. It is constantly spending money on status symbols whose real purpose is not to benefit the people, but to aggrandize the politicians who got them built.

Paved roads are really cheap, and are a tiny fraction of the expenses of the state. But they let them go to hell, even though they have plenty of money to keep them up, because people notice broken roads and you can extort more taxes from them this way.

Its the oldest trick in the book.

So, talking about paved roads as a reason to create a whole new tax and remove one of the few decent things about the washington business environment is disingenuous. I'm sure you weren't being disingenuous, but the politicians who bring it up are.

bhiggins3• 16 years ago

I don't like the government subsidizing stadiums either. At least, very recently, Seattle decided not to build a new basketball stadium and as a result the Supersonics moved to Oklahoma. I think that was the right call. I just wanted to point that out just so nobody falsely accuses you of painting with too broad a brush in the future.

brettmjohnson2• 16 years ago

Paved roads in the U.S. are not really cheap. A typical 2-lane rural road is about 1.7 million dollars per mile. A suburban road is double that; 3.5 million dollars per mile.

ftp://ftp.dot.state.fl.us/LTS/CO/Estimates/CPM/summary.pdf

jseliger• 16 years ago

* Do you want to eliminate the state income tax? X Yes _ No*

The issue in Washington State is:

* Do you want to create a state income income tax where none presently exists? _ Yes X No*

Why not? For the same reason other posters have noted: Seattle has a thriving startup scene, and its comparative advantages over California are a) no income taxes; b) you can live in Seattle and not have a car; c) you can buy a condo on a vaguely normalish salary, unlike in much of L.A. and Silicon Valley. If you remove a), you've mostly got a state where the major city has weather that most people don't especially like and a taxation system that punishes the creation of wealth.

That's bad.

mdiep• 16 years ago

It's no surprise that Bezos is fighting this initiative. He moved to Washington to start Amazon.com specifically because they had no state income tax. (He was choosing between Washington and one another no-income-tax state that I can't remember.)

Steve Ballmer, Jeff Bezos fund effort to defeat state income tax

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