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Spokane, Washington  Est. May 19, 1883
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Opinion

Our View: Income tax and sales tax hike would hurt, not help

A moribund economy stifles spending and investment, choking off tax collections that government needs. But government cannot revive itself by wrapping its own fingers around the throats of people and businesses who already are gasping for air.

Leaders in the Washington Legislature don’t seem to appreciate this reality. They are looking instead at substantial tax proposals that would aggravate our recession-induced plight.

An income tax that would accomplish too little too late – even if voters gave it their unlikely blessing – was floated by Senate Majority Leader Lisa Brown, D-Spokane, and House Speaker Frank Chopp, D-Seattle.

That dubious idea may be fading, but there is serious talk now about a sales tax increase as the latest response to a $9 billion revenue shortfall for the 2009-2011 biennium. Such a proposal would have to win the favor of state voters even as residents face layoffs, pay cuts, overdue bills and home foreclosures. If people do agree to a tax hike, it will be months before any of that revenue starts to flow.

In the meantime, cash that might have gone into consumer spending or business investment will have been diverted to tax collections.

Meanwhile, House Capital Budget Committee Chairman Hans Dunshee, D-Snohomish, wants the state to issue $3 billion in bonds for a massive investment that would put 90,000 people to work modernizing public school buildings and higher education facilities.

He’s counting on energy-efficient construction to generate some $80 million a year to help amortize the bonds, but even if his optimism is realized, he’d still need a state source, presumably taxes, to cover the remaining $170 million a year.

But even if that obstacle could be negotiated, state Treasurer Jim McIntire has warned that a bond issue of such magnitude could hurt the state’s bond rating, a concern shared by Gov. Chris Gregoire, who notes that it would raise the cost of paying off bonds that will be needed for essential highway projects across the state.

Lawmakers naturally dislike curtailing services that many of their constituents rely on – education, social services, health care, public workers salaries and benefits – but historic times demand discipline and a universal willingness to sacrifice.

Hastily resorting to more taxes offers relatively modest short-term relief at the risk of encumbering ultimate economic recovery. State lawmakers need to keep their eyes on long-term goals.

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