Smart Bombs: Shift burden to the wealthy

It’s a harrowing ride on the Plenty O’Revenue Expressway, with budgetary shifting behind every twist and turn.

In Washington state, the Senate offers a transportation package that keeps proceeds from the gasoline tax in transportation accounts, but there’s no mention of what general-fund programs will run on fumes as a result. In Idaho, a legislator proposes a transportation package that dips into the general fund. In Kansas, a governor facing a self-inflicted revenue shortfall wants to siphon gas tax dollars to pay for ill-advised tax cuts.

Why all the budgetary swerving? The fear of t-t-t-axes. The solution could be simple and painless for 99 percent of Americans: raise taxes on the top 1 percent.

Before you feel sorry for them, consider this from the Economic Policy Institute: “Congressional Budget Office (CBO) data measuring comprehensive household income show that the top 1 percent of households captured 38.3 percent of total income growth between 1979 and 2007, more than the collective income gains of the bottom 90 percent of earners (36.9 percent).”

It’s also true that because of the stock market crash, the wealthy lost the most during the recession, but income inequality remains massive and will probably resume widening as the economy grows.

After several years of spending cuts, states should raises taxes on the wealthy because that’s where the money is. Plus, state and local taxes, unlike the federal income tax, are generally regressive.

Across the 50 states, the poorest 20 percent of households pay an average 10.9 percent of their income in state and local taxes. The top 1 percent pays 5.4 percent, according to a report by the Institute for Taxation and Economic Policy. In Washington, it’s 16.8 percent for the poorest and 2.9 percent for the richest – the widest gap in the nation.

Meanwhile, the Keystone Research Center found that if states placed the same burden on the top 1 percent as middle-income earners (an average of 9.5 percent of income vs. 5.4 percent), they could generate an extra $68.3 billion. Washington’s total would be $3.4 billion, which could finance a large reduction in college tuition, and still leave more than $3 billion to meet near-term K-12 demands under the McCleary decision.

Two senators, Sen. Barbara Bailey, R-Oak Harbor, and Sen. John Braun, R-Centralia, have proposed a bill that would set college tuition at a percentage of the state’s average wage. A rough calculation shows that annual in-state tuition at Washington State University would drop from $11,400 to about $8,000. That’s a four-year savings of $13,600.

Business leaders keep telling the Legislature that college access is critical to future economic growth and increased government revenue, but high tuition and daunting debt are imposing barriers. The senators’ plan would initially cost $226 million, but they haven’t identified a funding source.

I can steer them to one.

Isn’t it rich? Shaila Dewan of the New York Times reports, “Of the 10 or so Republican governors who have proposed tax increases, nearly all have called for increases in consumption taxes, which hit the poor and middle class harder than the rich.”

In Washington, we do this with Democrats in charge.

Revving the engine. The incessant Obama-bashing on immigration masks a simple fact: There is no consensus on reform within the Republican caucus, so the issue is stuck in “park.”

“I’m anxious for us to start taking steps,” said Rep. Cathy McMorris Rodgers. Start? House leaders have been telling us for years they’re on the verge of rounding the corner to a possible on-ramp paved with potential – but nothing set in stone! – solutions.

Wake me when they slip it into first gear.