$500M annually in Seattle. $1B King County-wide. Billions across the state.
This is the magnitude of progressive revenue streams that may be possible–provided the State Legislature takes action. There are two big things to know about the Washington State Constitution that explain how and why the options look the way they do.
First, Article 7 of the Washington state Constitution requires that “[a]ll taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax.” “Income” is considered property in our state. This is why the Supreme Court blocked Seattle’s attempt to levy a traditional progressive income tax: the plan for 2.25 percent on individual income over $250,000 (or $500,000 for joint filers) didn’t pass the “uniformity test.”
But here’s what does: a flat rate, applied to everyone, with a uniform standard deductible. Economist Dick Conway went so far as to figure out how a flat-rate income tax with a $15,000 deductible could replace most other taxes in the state. This achieves progressivity: if you make, say, $100,000 a year or less, under his plan the $15,000 uniform deductible would zero out all you owe.
According to Washington law, a city could pass a flat rate income tax, but only the State Legislature can create deductions.
Second, flat rates would be fine and deductibles unnecessary if we could use tax revenue to simply “give people with less rather than more income” money. But Article 8, stipulates that “No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm.”
There’s some positive precedent on this front. The City of Seattle uses a portion of its Sweetened Beverage (aka “Soda”) Tax to provide vouchers that work just like cash to buy food through the Fresh Bucks program. Eligibility extends to 80 percent of median household income. By way of example, that’s $61,800 for an individual and $88,250 for a family of four.
So while city and county-level public assistance isn’t unconstrained, there’s a fair bit of latitude to help a lot of people who may be struggling to get by or need a hand to get back on their feet.
Not every affluent individual and household is tech-powered, but our red-hot tech sector is a big contributor to some eye-popping numbers: there are nearly 63,000 households in Seattle making more than $200,000 annually (and over 90,000 more in the rest of King County).
Simply as a function of growing even faster than they were pre-crisis (here’s why), tech companies with thousands of workers here like Amazon, Microsoft and Google will contribute to our bounceback. But we don’t have to leave things to chance or leave people behind. There are four potential paths to raise serious revenue for systematic public sector investment in making our recovery faster, fairer, and more just.
These are ballpark estimates, may not be quite right, and almost certainly could be could improved (tell us how here). Our intention is to raise awaareness, mobilize support, and elicit good ideas with these as a start: