Tag Archives: taxes

Eric Cantor and Republican Revisionist History

Republicans are great at continually revising history to fit their myth making. A prime example is their constantly using Ronald Reagan as the Great Tax Cutter. What is left out is that Reagan also raised taxes a number of times.

Widely circulated right now is the video of the  60 Minutes interview this last weekend with House Republican and Majority Leader Eric Cantor. When Leslie Stahl asks him about Reagan also being a compromiser and having raised taxes, Cantor falters as his press secretary off screen yells that’s not true.

One wonders where Cantor’s press secretary got his education. And Cantor seems to feel no need to be more responsive or truthful.  It’s a prime example of right wing dogma trying to deny historical reality and rewrite history. 60 Minutes did the public a service by not editing out the press secretary’s comments but making them part of the story.

Here is the interview on Crooks and Liar’s entitled Eric Cantor’s Press Secretary Interrupts 60 Min to Claim Reagan Never Raised Taxes. It includes a a video clip of the exchange with Leslie Stahl, Eric Cantor and Cantor’s press secretary and a clip of Reagan noting the need to compromise.as a reason he raised taxes.

Crooks and Liars in fact goes further than 60 Minutes

“As has been noted here at C&L, the Republican myth about Ronald Reagan being unwilling to raise taxes is just not true. Heaven forbid, Reagan raising taxes 11 times, not just several as the 60 Minutes report stated, might get in the way of their talking points about St. Ronnie.”

The Raw Story carried the story in a post entitledCantor refuses to admit Reagan raised taxes”   They note that:

After his huge tax cut in 1981 slashed all tax rates to 23 percent, sparking a   budget crisis, Reagan realized he’d also have to raise taxes in the years that followed. He raised taxes four times between 1982 to 1984, increasing the payroll tax, broadening the base of Social Security payees, applying the income tax to higher earners and rolling back corporate and individual tax breaks.

Reagan’s historic tax cuts for the wealthiest Americans, whose rate went from 70 percent to 28 percent during his administration, ultimately forced the president to raise taxes on more people than any other U.S. president during a time of peace, according to New York Times columnist Paul Krugman.

In total, Reagan raised taxes 12 times during his two terms in office.”

Republicans seem to have no limits these days to telling stories and making up history. It is important for the media to help sort out the myth making and revisionist history from the historical reality.  And voters need to realize that a lot of what is said by Republicans these days is just campaign talk and not true.


Why the Tax Cutting Mania of the Right Wing Does not Make Sense

Yesterday 60 Minutes did an excerpt on the current mania of the right wing to cut taxes. In an excellent video on the issues, David Stockman, President Reagan’s Budget Director discusses how cutting taxes for many, especially the right wing , has become a religion and has become “rank demagogy” Stockman argues that wealth has increasing become concentrated in the hands of just a few.

The video spends a lot of time discussing Washington State’s I-1098 campaign to put in place an income tax on the top 2% of Washington taxpayers. Governor Gregoire notes that those opposed to it argue about the need to better fund education in our state and asks if not this then what?

The income tax under I-1098 is only on income above $200,000 for a single person and $400,000 for a couple.  Less than 2% of Washington’s taxpayers fall in this category.

An income tax is the fairest tax of all. If you don’t make any money you don’t have to pay any income tax. But with property taxes and sales taxes you pay whether you have income or not, regardless of whether you have a job or not.

You can watch the video by clicking on the link below:

60 Minutes video  Deficits: Taxing the Rich 

Supermajority Vote Requirement for Washington State Legislators as Proposed by I-1053 is Unconstitutional

This issue should have been decided long ago by the Washington State Supreme Court. Any attempt to limit the Washington State Legislature from enacting revenue bills or repealing non-performing tax exemptions by requiring a supermajority vote is unconstitutional. Initiative 1053 is unconstitutional and should be rejected by voters this November.

The Washington State Constitution is very clear on this issue.

Article II, Section 22 states:

“PASSAGE OF BILLS. No bill shall become a law unless on its final passage the vote be taken by yeas and nays, the names of the members voting for and against the same be entered on the journal of each house, and a majority of the members elected to each house be recorded thereon as voting in its favor.

It does not state that more than a majority vote can be required. Initiative 1053 tries to change that by requiring Legislators to act by a 2/3 supermajority vote in both Houses to enact revenue measures or repeal tax exemptions. It happens to be revenue in this case but it could just as easy be environmental protections or labor issues or race issues or women’s issues or any other issue.

The fact of the matter is that anything more than 50% to pass a bill would give Legislators on one side of the issue more power than the other side in determining the outcome of a vote.  Requiring a 2/3 vote to pass a measure means that the vote of 1/3 of the Legislators can prevail over the vote of 2/3 of the Legislators.

A majority vote gives both sides on a issue equal voting power  to pass or reject legislation. Everyone’s vote has equal weight. It’s the basic concept of one person/one vote. But a 2/3 vote requirement for Legislators to pass something means that 1/3 of the Legislators can prevent passage;  in essence giving the vote of those opposed to a measure  twice the weight of someone voting for the measure.

This sets up a two tiered system of weighted votes, something that is not in the State Constitution for passing legislation.  It distorts the process of representational government. Initiative 1053 tries to change the Washington State Constitution by saying that in some cases your elected Senator or Representative will represent you with one full vote to decide an issue but in cases involving raising revenue or repealing non-performing tax exemptions, they will essentially only have the equivalent of half a vote to decide the issue if they vote yes. If they vote no their vote will represent a full vote.

This is the flaw in supermajority votes. Under a 2/3 majority vote requirement to pass some issues, it sets up a system that essentially assigns Legislators the equivalent of half a vote if they vote yes or a full vote if they vote no on certain issues.

While I-1053 would require supermajority votes for deciding to raise revenue or repeal non-performing tax exemptions, it only requires a simple majority to pass itself. It does not require a 2/3 vote.

Washington voters are certainly not overwhelmed by this proposal based on past voting. In the one instance in which it was mentioned specifically in the ballot title, it just barely passed. That was Initiative 960 in 2007. It only received a 51.24% yes vote. That is nowhere near the 2/3 voting requirement it is asking the State Legislature to operate under.

In 1993, the 2/3 vote requirement was an issue in Initiative 601, even though it was not specifically mentioned in the ballot title.  It also just barely passed with a 51.21 % yes vote.

Eyman mentions this measure passing 3 times which is misrepresenting the issue. In 1998 voters passed Referendum 49. It’s subject dealt with motor vehicle excise taxes, bonds for highways and spending limits. Nowhere was a 2/3 vote requirement mentioned in the ballot title or official arguments for the voters pamphlet by supporters and opponents as referenced by the League of Women Voters.

These attempts to negate the concept of 1 person/1 vote for Legislators voting are unconstitutional. They are attempts to assign different voting powers to different Legislators depending on whether they vote for or against a particular measure. The Washington State Constitution does not allow the ability to weight votes for bills depending on the subject.

Article I, Section 29 states:

CONSTITUTION MANDATORY. The provisions of this Constitution are mandatory, unless by express words they are declared to be otherwise.

The State Constitution does not set up the power to weight votes depending on a Legislator’s position on a bill.

The issue of revenue/taxes is specifically addressed in another part of the Washington State Constitution.

Article VII, Section 1 states:

TAXATION. The power of taxation shall never be suspended, surrendered or contracted away.

Initiative 1053 is obviously an attempt to take away the Legislator’s authority to raise revenue or taxes to support public services. The only way this can be altered is by a constitutional amendment.

An initiative or legislative bill can not amend the state constitution. That requires a constitutional amendment. Because constitutional amendments affect the basic framework of how our government works, it is a specific instance where the state constitution spells out a requirement for a 2/3 vote by the Legislature and a majority vote of the people to pass. Two other instances spelled out for 2/3 votes by the Legislature are to expel a member of the house and a 2/3 vote in the first 2 years to amend an initiative.

No where does the Washington State Constitution say that voters can by a simple majority vote on an initiative, limit the power of Legislators to pass revenue legislation or repeal under-performing tax exemptions  by requiring supermajority votes. Under Article I, Section 29 to do so would require express words and no such words exist in the Constitution.

Initiative 1053 should be rejected by voters this November. It is unconstitutional. Uphold our Constitution by voting No on 1053 this November 2nd!

Washington State Sales Tax Deduction Dropped Again from U.S. Senate Bill

Dropped from the US Senate Bill passed last Thursday to reduce the alternative minimum tax that would have affected millions of taxpayers, was a provision that allows Washington State taxpayers to deduct their sales tax from their Federal income tax. Washington taxpayers will still be able to deduct 2007 sales taxes but not their 2008 sales taxes, because the current deduction will expire this year.

“As the senators wrangled over the AMT on Thursday, they dropped a provision that would allow residents of Washington and seven other states to continue deducting their sales taxes from their federal income tax.
Without that provision, residents will be able to deduct sales taxes when they file their 2007 federal income taxes in April. But then the tax deduction would expire.
Sens. Patty Murray and Maria Cantwell, both Democrats, and Rep. Brian Baird, D-Vancouver, had been pushing bills to make the sales-tax deduction permanent, or at least extend it two more years.
Lawmakers from Washington and the seven other states with sales-tax deductions will try to pass a quick fix later this month or in January, a spokeswoman for Cantwell said.”

We’re not talking peanuts here. An analysis released by Senator Cantwell’s and Representative Brian Baird’s office notes that:

“The Congressional Research Service estimates that Washington state taxpayers who itemize and who claim the sales tax deduction will realize tax savings of more than $557 million.[iv] In 2005, 37 percent of the nearly three million tax filers in Washington state chose to itemize, and 83 percent of those itemizers claimed the state sales tax deduction.[v] That year, the $2 billion that Washington state taxpayers claimed in tax deductions translated into $557 million in tax savings that went right into the pockets of Washington state residents. Congressional Research Service estimates indicate that each Washington state taxpayer who used the state sales tax deduction saved an average of $600 in 2005.”

The fact is that states which have a state income tax can deduct this on their Federal income tax. Washington state has no income tax. As Cantwell’s office notes:

“In most states, taxpayers who claim itemized deductions on their federal income tax returns can claim a deduction for state income taxes paid. The purpose of this deduction is to prevent the double taxation of funds that are used to finance state services. However, from 1986 until 2004, residents of eight states that have no income tax but which finance their state services using a sales tax, were denied a Federal deduction for these state taxes. In 2004, Congress passed legislation to temporarily restore the deduction for state and local sales tax, thus restoring parity in the federal Income tax code for residents in those states without an income tax. Unless legislation is passed to extend this deduction, it will expire at the end of 2007.”
Without the state sales tax deduction, non-income tax states would be able to deduct only 36.6 percent of the state and local taxes they pay, all of which comes from property taxes. States with an income tax, by comparison, would be able to deduct 56.1 percent.[vi] This means that taxpayers who file in states with an income tax can expect to save substantially more than those who reside in the states without state income taxes. In 2004, Deductions from state and local income tax claimed on federal income tax forms totaled $202.3 billion.[vii] “

If Cantwell, Murray, Baird and the rest of the Congressional delegation are not successful in re-enacting the state sales tax deduction on Federal income tax returns for next year, the overall tax burden on Washington taxpayers will go up.

Of course this would increase citizen pressure for tax reform in Washington state. A state income tax coupled with a reduction in sales taxes and property taxes would both produce a less regressive state tax system and also allow for the ability of Washington State taxpayers to deduct their state income tax from their Federal income tax.

A state income tax is a fairer tax than sales taxes and property taxes which you have to pay whether you are working or not, whether you are retired or not and whether you have any income or not. But you only pay an income tax if you have income.

see also: Washington State Income Tax Makes Sense

Washington State Income Tax Makes Sense

The Washington State Senate Ways and Means Committee held a hearing yesterday on two income tax proposals. Rumor had it that it was a token hearing and that they had no intent of doing anything. That’s unfortunate.

When you think about ways you can raise revenue to fund state services like education, health care, environmental protection and transportation, the income tax is the fairest way. If you are not making any money, you pay no tax. Pretty simple.

But property taxes on your home? You have to pay those regardless of how much money you make. Being unemployed is no excuse.

Sales taxes you also have to pay regardless of how much money you have earned. Right now we have the highest sales tax in the country. It makes no difference whether you are earning minimum wage or you are Bill Gates, you pay the same sales tax rate when you buy school supplies for your children and clothes and shoes.

Our heavy reliance on the sales tax and property taxes has earned us the dubious distinction of being labeled as having the most regressive tax system in the country. In a study released in 2003, the national Institute on Taxation and Economic Policy looked at the tax policies of all 50 states and issued a report: Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. The report found that:

Washington’s Tax Code: Soak the Poor and Middle Class, Spare the Rich

When all Washington taxes are totaled up, the study found that:
# The wealthiest one percent of Washington taxpayers—with average incomes of $1.6 million—pay only 3.3% of their income in Washington state and local taxes. After accounting for tax savings from federal itemized deductions the effective rate becomes just 3.2%.

# Middle-income Washington taxpayers earning between $31,000 and $48,000 pay 11.1% of their income in Washington state and local taxes, almost three and a halftimes the effective rate of the very wealthy.

# But Washington families earning less than $17,000—the poorest fifth of Washington non-elderly taxpayers—pay a whopping 17.6% of their income in state and local taxes, more than five times the rate on the best off.

The study found that Washington’s taxes are so extremely regressive because the state lacks an income tax and instead relies primarily on regressive sales and excise taxes to pay for public.

Washington’s tax structure has not changed since this report was issued. What has changed is that the Washington State Legislature has given out a slew of Tax Exemptions to special interests, increasing the tax burden even more on individual taxpayers.

As reported by Marilyn Watkins of the Economic Opportunity Institute in a 2006 report entitled Adding Up: New Tax Breaks in Washington 2004-2006:

“In the three legislative sessions from 2004 through 2006, the Washington legislature passed at least 61measures either granting new tax preferences or extending old ones. These new tax breaks will cost the state nearly half a billion dollars in the 2007-09 biennium.”

Of course any effort to enact an income tax has to be done in conjunction with overall tax reform. Shifting more of the burden to individual taxpayers is not acceptable. This includes a corporate income tax, critical performance audits of tax exemptions, reducing sales taxes and a property tax Homestead Exemption on one’s principal residence.

House Democrats Working for Eyman

Seventeen House Democrats have signed onto HB 2117 in the Washington State Legislature. House Bill 2117 would re-enact the provisions of Eyman’s Initiative 747. Initiative 747 is currently being reviewed by the Washington State Supreme Court after a lower court overturned it.

I-747 limited revenue growth from property taxes each year to the lesser of 1% or inflation, whichever is lower. The problem is that if inflation is greater than 1%, the revenues available to cities and counties do not keep up with inflation and fewer services can be provided.

Many cities and counties, particularly ones that are experiencing little new construction, are facing revenue shortfalls. This is particularly true for some counties in eastern Washington.

In addition many voters are confused when they see their property tax bills go up 5% or more each year in their taxing district. They don’t understand that the 1% limit applies to the overall property tax valuations. If some homes increase in value faster than other homes in a city or county they will see a bigger tax increase on their personal property tax bills. The 1% limit does not refer to an individual taxpayer ‘s property taxes being limited to only a 1% increase.

What Washington State needs is a Property Tax Homestead Exemption on people’s principal residence. It could either be a flat exemption on all homes – like the first $50,000 of valuation is not taxed. Or it could be a percentage of the median property tax in a county – like the first 25% of the median property tax valuation is exempt from being taxed.

Tim Eyman signed into the Legislative hearings this year on property tax bills as opposed to the Homestead Exemption. He is not interested in changing our tax system to one that is fairer and less regressive – he is only for an across the Board cutting of taxes , which cuts funding for local services.

It seems that some Democrats aren’t willing to take a closer look at alternatives like the Property Tax Homestead Exemption or Circuit Breakers which would benefit those homeowners most needing help – low and middle income households, who pay a higher percentage of their wages for property taxes than the more wealthy do.

It is important that taxpayers contact their legislators and urge them not to re-enact I-747. There are better solutions to solving rising property tax burdens than across the board property tax cuts which benefit wealthy property owners like shopping malls and developers more than the average taxpayer struggling to make ends meet.

The Washington Tax Fairness Coalition has set up a website page that will allow you to communicate your opposition to rushing to enact I-747, rather than look at alternative property tax proposals that specifically help low and middle income homeowners most in need of help.

Click here to send a message to Legislators. This is a link that allows you to send a message to your Legislators. The Washington Tax Fairness Coalition message is on both I-747 and their priority bill to have a tax exemption report included as part of the State budget. You can modify their text to send your own message.

Washington State House Democrats supporting re-enacting Eyman’s I-747:

Christopher Hurst L.D. 31
Kevin Van De Wege L.D. 24
John McCoy L.D. 38
Dean Takko L.D. 19
Don Barlow L.D. 6
Troy Kelley L.D. 28
Christine Rolfes L.D. 23
Larry Seaquist L.D. 26
Mark Ericks L.D. 1
Deborah Eddy L.D. 48
Ross Hunter L.D. 48
Dave Quail L.D. 40
Lynn Kessler L.D. 24
Dawn Morrell L.D. 25
Brian Blake L.D. 19
Pat Sullivan L.D. 47
Patricia Lantz L.D. 26

These Legislators need to hear from their constituents that they don’t support I-747 tax cuts that hurt local services like paying for police, fire, parks, and libraries by not allowing revenues to even keep up with inflation. Eyman’s I-747 was not tax reform for a fairer tax system, it was a tax cutting measure to cut local government services. It is the wrong answer to fairer taxes for Washington taxpayers!