Damon Agnos reminds me of the best chart ever for countering the argument that we’re too heavily taxed in Seattle (Seattle ranks #42 out of 50 and Seattlites pay less in total taxes than residents of Phoenix, AZ or Billings, MT).
But his solution seems wrong to me:
Our low tax burden is one reason our transportation infrastructure has fallen so far behind our population growth. We can continue to face the liberal’s dilemma of regressively funded public works (a divide-and-conquer dream for the Tim Eyman crowd), or we can figure out a more equitable way to create the spending increases needed to fund big city infrastructure. A progressively structured income tax, even if just within the city, would be a good start.
I’m pretty sure that an income tax within the city of Seattle would just drive growth out to the suburbs. After all, of the top-10 highest-taxed cities on in the chart above, many — like Philadelphia — have a city wage tax that has done a lot of damage to the urban core by pushing jobs and housing out to the city limits.
We need an income tax, but it needs to be state-wide. This should theoretically be easier, since, unlike many East-coast cities, our metro area is wholly contained within a single state (so you don’t have issues of businesses hopping across the border to evade the tax).
Thanks for the link! I agree that a statewide income tax would be better and wondered whether a city income tax would be worthwhile (in the hypothetical world of my blog post). But I have my doubts about anyone running a successful initiative a statewide income tax, even if it’s revenue neutral.
Seattleites, on the other hand, could plausibly support an income tax, especially a modest one aimed at the upper end of the income scale. The hope would be that the targeted high-earners live in Seattle for the lifestyle and wouldn’t be hopping over to Bellevue, etc. over a small increase in their tax burden.
As for businesses moving, it’d depend on how things are structured. I know Philadelphia’s wage tax is assessed on Philadelphia residents regardless of where they’re working, and on anyone working within Philadelphia. It sems like this wouldn’t affect a business’s bottom line, but might affect its ability to compete with non-Philadelphia businesses for the non-Philadelphia workforce. I don’t know much about the history of the city, but I’d guess some of the prime drivers behind people and jobs leaving the city were the collapse of heavy industry and white flight. The residential patterns there mirrored those of many neighboring cities.
I’d hope that an income tax for Seattle would work out more like it does in New York City, where people pay it because they want to live in the city. But then, Seattle ain’t New York, so maybe not.
That’s interesting. You could make the case that there’s enough of a housing demand among high-income people to support an income tax within the city. But what you don’t want is for Seattle to become Manhattan — an island of super-wealth where no one else can live. If there were such a tax, it would have to be very progressive. Like it only kicks in above $75K, say.