Taxes aren’t the solution
Published 3:48 pm Monday, November 23, 2009
If this is what a recovery feels like, you can be excused for wondering how it’s different from a recession.
Consumer spending, which fuels so much of the economy, remains anemic. Sales tax collections have taken a huge hit, reducing anticipated state revenue by another $760 million and leaving lawmakers with a $2.6 billion budget hole to fill starting in January.
The cooling revenue picture has heated up talk of tax increases to help balance the budget. It’s a distraction from the serious budget discussion that needs to take place, and one that threatens to further dampen consumer confidence and prolong the economic pain.
The unemployment rate in Snohomish County is up to an exasperating 10.2 percent, nearly a full percentage point worse than the state level. When is a recovery not really a recovery? Now we know. When it’s a jobless recovery.
It’s a chicken-and-egg conundrum: Meaningful economic growth requires more consumer spending, but consumers who are fearful for their jobs, and have seen their home equity and retirement accounts evaporate, aren’t interested in racking up more debt. Businesses won’t start hiring until they’re sure they can sell enough wares to justify it.
So the line on the economic growth chart keeps running sideways.
Higher taxes won’t turn around the state revenue picture. Raising the sales tax would further discourage consumer spending, exacerbating the root of the current problem. Higher business taxes would discourage job growth, producing the same bad result.
Sin taxes? That well has been tapped so often that it’s almost dry. There’s not much to gain. A levy on sugary drinks or snacks? That may be warranted, but such revenues should be dedicated solely to programs to fight obesity.
State spending is out of balance with available revenues, and lawmakers need to engage in entirely new ways of thinking about it. Considering higher taxes just postpones that.
Government simply can’t afford to do all it currently does. It grew rapidly in recent years; now it must become smaller. Some functions should be spun off to the private sector. We’d start with getting the state out of the liquor businesses, an anachronistic setup. Many other state services, with very high payrolls, might be worthy candidates for privatization.
Getting spending to a sustainable level will require major restructuring in how the state deals with social services, corrections and transportation. Meanwhile, we mustn’t forget that education, at all levels, remains the state’s most important priority — and the best path to healthy economy.
It’s time for some dramatic, out-of-the-box thinking in Olympia. Any debate over raising taxes distracts from the discussion we really need to have.
