Short-Term-Only Favors Really Aren’T

Wouldn’t it be fun to quit your job? Late on a sleepy Sunday afternoon, plenty of breadwinners have entertained the thought - but, on Monday morning, off to work they go. Why? The family needs a steady income.

The people in charge of state government need a similar sense of responsibility. State governments get their money from taxes and taxes are roughly as popular as work on Monday morning.

In both Idaho and Washington, legislators are talking about cutting taxes. They ought to do what any responsible breadwinner does before quitting a job: consider the long-term consequences.

That’s not happening, either in Boise or in Olympia.

In Idaho, the state has a one-time revenue surplus. The most prudent strategy is to invest it in one-time outlays, such as fixing decayed school buildings and dangerous roads. Instead, some legislators want a permanent tax cut, even though it could force long-term cuts in future operating budgets of schools and universities.

Given the compelling case for improving Idaho’s roads and schools buildings and the bare-bones nature of Idaho’s current education programs, a tax cut would hurt the state. It would bypass the opportunity to invest in one-time improvements. And, it would weaken the future of public schools and universities.

In Washington, the Puget Sound area’s booming economy has produced enough revenue that legislators can consider additional tax relief. The question is, how much and what kind?

To figure out the wisest answer, Washington’s legislators need to think farther ahead than how popular a tax cut might make them next fall. They need to think about the fairness and stability of the state’s tax system. They need to think about making the tax environment more attractive to the businesses whose current contributions account for the booming revenue.

Washington state’s tax cutters are focused on the property tax. Senate Democrats propose a tax credit that would go to homeowners only. This does nothing for lower-income people who live in rental housing. And, it would shift the tax burden more heavily onto business.

The Washington Research Council has pointed out that Washington already has the highest business taxes in the West and the seventh-highest in the nation. Boeing has said it is looking for states in which to locate e-commerce subsidiaries and Washington “isn’t even among the top 10 choices,” due to its business climate.

Forgotten, in the current boom, is the fact that during recessions property taxes provide a stabilizing revenue source. Washington’s other revenue sources are the sales tax, which plummets when consumer spending falls, and the tax on gross business income, which taxes failing firms as heavily as thriving firms.

If legislators cut property taxes too deeply, they would set the stage for a more severe revenue crisis during the next recession. This makes an emergency reserve fund doubly important to the state’s stability. But budget writers propose to cut reserves, too.

Tax cuts are like a Sunday afternoon nap - energizing, but only within limits. Legislators should make sure any tax cuts build a stronger future, not a weaker one.