Rescue state economy by bringing fairness to taxes

Now it’s the Democrats’ turn. The Obama era has begun. George W. Bush is back on his ranch. And there is no time to bask in the euphoria of the inauguration.

The economy is headed down a steep path. Public services, health care and education are being cut. Our infrastructure is falling apart. Our retirement funds have disappeared, while foreclosures are accelerating. Millions of workers have lost their jobs, and millions more will lose their jobs in the next six months. After eight years of neglect and downright dismantling of government, the chickens have come home to roost.

We may hope that the federal government will bail us out of this mess. But we cannot afford to be passive recipients of bad economic news and good federal rescue packages. We have to do some rescuing of our own.

Here are some ideas that the Legislature and the people in our state can put into place as partners in rescuing our state from the great recession.

1. Take advantage of the federal government’s expansion of health care. Make subsidized health care available for all workers losing their job. Do they need it? You bet. You try paying for health care while living on an unemployment check. You can’t. There is a huge surplus in the state’s unemployment compensation trust fund that could generate even more money from the federal government to provide health coverage to unemployed workers.

2. Expand, don’t contract, community college education. When workers lose their jobs, getting new education and retraining is essential to finding and keeping new jobs when the economy turns around.

3. Fund family leave insurance. By law, family leave insurance is supposed to start in October. With workers scrambling, having five weeks of family leave at $250 a week to care for a newborn child makes moral and economic sense.

4. Think and act outside the box. North Dakota has a state-operated and -owned bank that is central for North Dakota’s agriculture, businesses and families. No bad debt at this bank. So now that our private financial institutions have failed and are running to the federal government and the taxpayers to bail them out — the ultimate act of corporate welfare — maybe we should have our own bank, one that actually serves the people, the homeowners and the businesses in our state.

5. The biggest problem with any programs to rescue our services is that we don’t have sufficient public resources. That’s an odd state of affairs, when King County is the fourth-wealthiest county per capita in the country. This is because we have an upside-down tax system, in which middle-class and low-income families and small businesses pay much more proportionally than wealthy families and large corporations. As a result, our state is always in violation of our paramount constitutional duty: the education of all children.

Now is the time to flip our tax system around, reducing sales and property taxes and exempting small businesses from the gross receipts tax. To pay for this, and to fully fund education, we would need a tax on the income of the wealthy and a legislative effort to close some business tax loopholes.

Is this fair? You bet it is. After all, it is the wealthy and the large corporations who have benefitted the most from the past decade of winner-take-all economics. You could argue that they, too, have lost some of their gains. But someone whose income is cut from $5 million to $4 million is in a different boat than rest of us. We need to make sure that this top sliver of people are paying their fair share in taxes to our government, so that our government can indeed deliver education to all children, expand health insurance, and generate among us a peace of mind that we are all currently missing.

Turning our tax system on its head would increase consumer spending, as middle income and low income families would have slightly more money. That is one of the ingredients to an economic recovery. And upending our current tax system is a small price for the wealthy to pay to preserve a civil society that protects the privilege and affluence of the few, while ensuring the economic well-being of the many. In this new era, we are all in this together. No exceptions!

John Burbank, executive director of the Economic Opportunity Institute (www.eoionline.org ), writes every other Wednesday. Write to him in care of the institute at 1900 Northlake Way, Suite 237, Seattle, WA 98103. His e-mail address is john@eoionline.org.