September 22, 2019 by epoetus
“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” — Louis Brandeis, Supreme Court Justice (1856-1941)
“When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.” — Thomas Piketty a famous economist who proved in his book “Capital” that there is an economic connection between rising wealth and income inequality and the degradation of democratic processes
The San Juan County Democrats agree that taxation is essential for democracy
Last weekend the San Juan County (SJC) Democrats passed a resolution calling for a dramatic rise in the income tax and the creation of a wealth tax, which they justified by stating that it is necessary for maintaining a democracy. This resolution is the first of its kind in Washington state. In addition, it broaches the subject of doing so in Washington state – a state that has not been able to implement an income tax. The next steps for this is to have the legislative representatives of the San Juan County Democrats bring this up in a broader audience of Democrats so that it can be added to the Washington State Democratic platform and also to become a topic for elected Democrats to use in creating legislation.
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Why an income and wealth tax for Washington state now?
Washington state is one of the most regressively taxed states in the nation. This means that the poorest residents of the state pay a higher portion of their income in taxes than the wealthiest residents. The main sources of revenue for Washington state are a property tax, a sales tax, a B&O tax for businesses and the gross receipts tax for businesses. The property tax is responsible for 30% of the state’s revenues. As Washington state becomes more liberal, and creates policies directed at fully funding education at all levels and making healthcare more affordable, it’s becoming clearer to the voters that everyone needs to pay their fair share.
Seattle, with its recent headcount tax, has demonstrated an increased interest in taxing the incomes of large corporations and wealthy people. Court decisions relating to this matter have recently come out supportive of a Seattle income tax. In a state where an income tax is supposedly unconstitutional, it appears that the time is ripe to forge ahead.
What is the justification for implementing progressive wealth and income taxation policies?
Democracy. While the discussions we hear about taxation in the media, in the public and amongst political candidates focus on the role of government and the general idea of taxation being bad, we have not been able to bring the idea of everyone paying their fair share of the taxes front and center onto the stage of public discourse. The basic rationale of “paying your fair share” goes along the lines of those who have become rich have gotten there because our government and its people have played a big part in enabling that success. This means that those who have benefitted the most need to pay their fair share so that other people can have equal opportunities at success. By contributing their fair share via taxes to public schools and colleges, libraries and infrastructure like roads that helped them become successful, they enable greater equality of opportunity. This is a common sense argument in favor of “progressive taxation.” With the research published by Thomas Piketty and other economists, the rationale for “progressive taxation” goes well beyond that.
Recent economic research by people like Thomas Piketty and Emmanuel Saez into the dynamics of rising wealth and income inequality have crushed any economists belief in “trickle down economics.” Has anybody heard a pundit argue the merits of “trickle down economics” in the media recently? And any residual belief in that has been completely erased by the realization that “Trump’s Tax Break” did nothing to bolster the economy – it only helped the rich get richer and proved once more that “trickle down” doesn’t work. In fact our economy is on the brink of a recession now, but that is the subject of a different article. Piketty’s research demonstrates that when wealth and income inequality rise, as they have now and during the Gilded Age before it, that our democracy no longer functions properly. As Elizabeth Warren is saying on the Presidential campaign trail, our elected officials are purchased and our governing institutions are corrupted by “Money in Politics.” According to Piketty and Saez, the remedy demonstrated by their economic research is aggressive income tax rates for the wealthy and corporations — as was seen during FDR’s Presidency which gave rise to the New Deal — and an annual wealth tax for the wealthy.
Thomas Piketty quote
Louis Brandeis quote
Income tax article
History of income tax in Washington state
More history of income tax in Washington state
Attorney General statement on the constitutionality of an income tax
Seattle times article on the merits of an income tax
Taxes in Washington
Appeals court decision on Seattle income tax
Elizabeth Warren anti-corruption
FB video by Robert Reich on why we need a wealth tax