What are we gonna tax?

Just a few days ago the Seattle City Council passed an Occupy Seattle inspired resolution containing a raft of feel good jargon about our latest economic crisis. For a while the Council was flirting with a city income tax! This is the City Council (except for Councilmembers O’Brien and Bagshaw, who weren’t on the Council then) that repealed a citywide “head tax” that generated about $4.5 million dollars for pedestrian and transit friendly projects around the city. What’s gotten into their heads? A city income tax isn’t a bad idea, but it’s illegal. A payroll tax for sustainable transit is a good idea too, but it’s legal.

It’s worth telling, again, the sad story of Seattle’s “Head Tax.” The tax was an employee-based tax that charged business with revenue above $80,000 a tax of $25 for each employee that drove to work. Yes, this really happened. If I didn’t know better, I’d be surprised that such a progressive and sensible tax was actually passed and implemented by the City Council.

But it didn’t last long. In 2009 under pressure from the Downtown Seattle Association the tax was repealed. Keep in mind that the average business in Seattle paid $92 in “head taxes,” and that huge businesses with millions in revenue were paying only several thousand dollars in taxes.

Remember, too, that the tax generated $4.5 million for sidewalks, crosswalks, and other improvements to make it easier for people to avoid driving. And guess how much the shortfall was in the Seattle Department of Transportation’s budget the following year? It was about $4.5 million. More after the jump.

So you’ll excuse me if the Seattle City Council’s latest interlude with Madame Defarge leaves me scratching my head. Here’s a body that voted down a reasonable and affordable tax because they claimed it hurt businesses when it didn’t hurt business at all. And it generated money for lots of great neighborhood projects, like the ones Proposition 1 would have paid for. Repealing it blew a hole in their budget for street improvements. Now they adopt a breathless resolution calling for “equitable taxation” inspired by a movement that includes people who are refusing to pay the transit fares. It sounds like they’ve lost their heads.

If the Seattle City Council wants to adopt a program of local taxation that would generate income for transit, fund bike and pedestrian infrastructure, and even reduce the costs of transit, why not consider a payroll tax for transit infrastructure? I wrote about the payroll tax option to fund transit in a post on Seattle’s Land Use Code earlier this year. Generally speaking the law is written for implementation at the county level, but cities are specifically called out in RCW Chapter 81.104.150

Cities that operate transit systems like street cars or trolleys, could submit a proposition to the voters to impose tax of up to two dollars per month per employee to provide high capacity transportation service. That would be $24 dollars per year, about the same as the $25 per year”head tax” repealed by Council. A regional payroll tax could generate a lot more.

A payroll tax is not an income tax because it is paid by the employer not the employee. True, imposing a payroll tax to fund street car operation or other transit related infrastructure would take a vote of the people. But unlike $60 car tabs this tax couldn’t be called regressive. And the funds could be used “any purpose relating to planning, construction, and operation of high capacity transportation systems and commuter rail systems, personal rapid transit, bus ways, bus sets, and entrained and linked buses.”

Or the City Council could bring back the “head tax,” which wouldn’t require a vote at the ballot box. That tax also exempted those employees who didn’t drive to work from the calculation of the tax.

Either way, the lobbyists from the Downtown Seattle Association would squeal about a tax like this. But the Council, in its resolution, has promised to resist “corporate influence in politics that all contribute to ongoing wealth disparities.” Sorry Downtown Seattle Association, looks like your “influence” won’t be welcome anymore!

I know imposing new taxes isn’t an easy step politically. But as long as the Council is going down a rabbit hole with ideas like an income tax, something that won’t pass legal muster, why not take a stab at something that would: a payroll tax. After all, our sustainable sister to the south, Portland, uses a payroll tax to fund TriMet. That’s an idea I can wrap my head around.

48 Replies to “You Want a Resolution? How About a Payroll Tax for Transit”

  1. “A payroll tax is not an income tax because it is paid by the employer not the employee.”

    That’s totally ridiculous, and a misunderstanding of how businesses work. A payroll tax is part of the cost of labor as is the payroll itself, along with healthcare etc. Businesses just figure it in when they make an offer to an employee. Only a business which hires minimum wage workers only would be impacted. The rest would just take it out of our next year’s increases if any.

    1. People who write about economics should probably consider taking an economics class sometime. Payroll taxes, whether imposed on the employer or the employee, primarily fall on the employee. The only time this would not be true is in times of full employment, in which case the employer would not be able to “pass on” the tax to the employee. We are currently at very high unemployment, so this tax would be a de facto $25 tax on each employee. It therefore would also be regressive, and subject to the same problems that defeated the Prop 1 measure. A better method is a percentage payroll tax, which is what is used to fund TriMet in Portland.

      1. You can’t do a percentage tax under current state law.

        In any case a payroll tax is somewhat more progressive than some other forms of tax such as the $60 license fee simply because it falls on those who are employed as opposed to the unemployed, those on SSI, or the retired.

        A further advantage is those who commute to work in Seattle pay it as opposed to just Seattle residents.

        $25/year isn’t much, even to a minimum wage worker.

      2. And employers can avoid the tax by encouraging employees to use public transit, biking, walking, etc. Many employers pay for parking anyway and can save money by switching that to transit. For example, my employer pays up to $170 a month for transportation. Most people use that for parking, but I use mine for a bus pass for which I only use about $110 of my monthly allotment. I wish my employer would encourage more folks to use transit by allowing them to pocket the difference.

      3. Thanks Chris Stefan.

        And people that comment about economics and such should also take a class in civics, too.

        I can’t understand why you’d say that a payroll or “head tax” would fall on the employee. In both cases the employer pays the tax. How do you think the employer would “pass on” either of these taxes? Charging them to apply?

        Since you’ve taken a couple classes in economics you’ll know that regressivity happens when the tax rate decreases as the dollars subject to taxation increases. How would that apply to either of these taxes? There is no income or dollar amount being taxed here.

        I’m with you on doing what Oregon does which is allow a percentage of wages to be taxed. I’d love to tax all the wages in Seattle at .6918% for transit. But again, the employer pays those taxes.

        Zef, nothing drives me more insane than city councils who pass hippie dippie resolutions and then repeal taxes, and people who try to call me out because I didn’t take an economics class. If you don’t like the idea, say so. But I’m not going to argue with you or anyone else about my college transcripts or what kind of house I live in or what neighborhood I live in.

      4. Roger,

        The employer would “pass on” the tax by paying its employees less. If you’re employed by a corporation, take a look at your paystub; you should see line items for Social Security and Medicare. Both of these are payroll taxes which are nominally levied on employers, but in practice are passed onto employees.

        As I’ve discussed elsewhere on the thread, in the long term, who pays the tax is primarily a function of elasticity, rather than law or contracts. If companies pass on more taxes, their employees and applicants will demand higher salaries. If companies have higher payroll expenses (from paying the tax), they will offer lower salaries. But it’s completely wrong to suggest that, because the tax is assessed on employers, it will have no impact on employee income.

        As far as progressivity and regressivity goes, note that the two terms are relative. Progressive taxes are those for which people with higher means pay relatively more, and regressive taxes are those for which people with higher means pay relatively less. A tax of $25 per worker represents 0.1% of annual income for a worker earning $25,000 a year, or 0.025% of annual income for a worker earning $100,000 a year.

      5. Alex, that’s not right.
        The SSA tax is 13.4% in total, with 6.2% paid by the employer, and 6.2% paid by the employee. The employee portion was reduced temporarily to 4.2% for 2011.

        That portion on your check is just your half, not the employer’s 6.2% passed on to you.

      6. Mark: See my other comments. In the short term, wages are very inelastic. In the long term, higher taxes on employers will lead to smaller payrolls. It’s not a given that the $25 will get passed on wholesale to employees, but it’s also not a given that employers will pay for it out of profits. Realistically, it will end up somewhere in between.

      7. It’s $25. A year. I have a feeling many people wasted at least that much of their employer’s money reading the comments on STB today.

      8. This is so frustrating! It’s not a difficult concept. The employer is charged $25 per employee. The employer looks at the wide-open labor market, and thinks “well, I will just pay my employees an average of $25 less.” And that is usually what they do. It is widely understood by economists and anyone who pays attention to economic studies that the social security payroll tax, for example, is not in reality evenly split between employers and employees–it is actually paid almost entirely by the employees through lower wages. As Aleks keeps trying to point out, it is based on the elasticity, and in a time of high unemployment employers have pretty free rein to pass on taxes to employees. If you are a very specialized business where you need people with rare skills, maybe the situation would be different, but skilled employees are paid more anyway.

        Roger, I am not saying whether I am in favor of it or not, I’m calling you out on shoddy analysis. It’s ridiculous to accuse someone of not understanding “civics” just for pointing out flawed reasoning. Would you apply that to scientists who point out a politician’s misunderstanding of climate change? They shouldn’t criticize because that would be bad “civics?” I know my comment was snarky, but the fact is you consistently make a point of using economic principles to back up your arguments, but you also consistently show that you don’t understand those principles. If you want to argue for density for other reasons, that’s fine, but don’t bring up something like supply and demand without acknowledging the inelasticity of the housing market. I think the head tax would be a great way to fund transit, but don’t try to say that employees wouldn’t pay it or that it would not be regressive.

        Speaking of that, it is also pretty clear. Any flat tax is regressive because poor people pay a higher percentage of their income than rich people. Simple as that. A tax is progressive when higher income people pay a higher percentage of their income. Every tax is either regressive or progressive, so we can argue over the degree. This head tax would be mildly regressive, in my opinion, because at least it only applies to employed people and it is a small amount.

  2. I’m for bringing back the head tax, with this caveat:

    $25 per person who drives
    $15 per person who takes transit
    $10 per person who rides a bicycle
    $5 per person who walks

    It’s regressive, in that it costs more to accommodate drivers, but recognizes that even walkers need sidewalks, bus riders need stops, bike riders need sharrows etc.

    Feel free to adjust those numbers to reflect your own reality of the cost per group.

    1. I like it – except I would probably consider switching the bicycle and transit charges – unless the bicycle could accommodate 40 people.

      1. Buses cost more to operate than bicycles do. The heavier axel weight wrecks the roadway faster. Hence my ordering. I added a few extra dollars to bicycles so that more bicycle infustructure could be built as well.

        But my point is nothing is free about people working in a city, even pedestraians.

    2. The original exemption for alternative commutes was very hard to enforce. What about the person who takes the bus four days a week, but drives the one day when they have to take their kids to soccer practice? How much do we pay for them?

      1. Agreed. I much prefer “natural” methods of incentivizing alternatives. For example, if you charge a per-vehicle toll for crossing a bridge, then you create an incentive to carpool without needing any complex enforcement system.

        The same basic principle underlies the Georgian “land value tax”. Modern property taxes attempt to recoup more money from more valuable properties, but in fact, they discourage development. If we charged taxes based only on the value of the *land*, then we create a huge incentive to use the land as effectively as possible. Enact this tax tonight, and by tomorrow, there would be construction starting on every surface parking lot in downtown/Belltown.

        I would also love to see Seattle mandate a decoupling between parking spaces and jobs/housing (with limited exceptions for jobs that truly require a car, like cab drivers or delivery services). If employees could earn more by opting out of parking, then fewer employees would drive. This is a bit more complex than the above two, but I believe it follows the same basic principle: rather than having lots of exceptions and special cases, just set the right price for the right commodity.

  3. Crazy talk, Roger. Around here we use sales taxes, property taxes, and car tab taxes for transit. A tax on employers would drive businesses away — there goes Microsoft and Boeing and Amazon and [fill in the blank]. Just because TriMet does it that way does not make it right . . . we’re far more progressive than Portland.

    1. Amazon is the only one of these with a significant number of workers in Seattle. Microsoft signed a letter to the Bellevue City Council this year to get on with East Link. I think Boeing has signed similar letters in the past. (Although Boeing’s huge free parking lots and refusal to run shuttles to transit centers leaves something to be desired.) So at some level, companies see good transit as necessary for business.

      1. “Amazon is the only one of these with a significant number of workers in Seattle”

        Well then who is filling up the buses and bridges coming into Seattle every morning? They don’t all work for Amazon. We also have the Gate Foundation, all those law firms etc.

        Amazon happens to encourage driving by providing a parking subsidy. They also encourage bus riding by handing out transit passes. They also encourage bicycling by providing cages, showers and towels. They seem to be pretty agnostic toward transit preferring to let the employee choose the right mode.

      2. “of these” = Amazon, Microsoft, and Boeing

        Law offices, like banks and major-network TV stations, have remained downtown occupations in spite of the suburbanization of other industries.

        There’s another factor here too. Microsoft’s main campus was built at a time when everybody wanted to live on the low-density periphery. That’s no longer the case, and some companies find they can attract more and better workers by being in the cities, or at least in suburban downtowns rather than far-flung office parks.

      3. Microsoft’s main campus was built at a time when everybody wanted to live on the low-density periphery.

        Yes and no. Their new west campus had its grand opening less than 3 years ago.

        More importantly, though, most people who work at Microsoft live on the Eastside, including a significant portion of young folks. (Who do you think lives in all those apartments on 148th?)

        That said, it will be interesting to see what happens as the current crop of young MSFT employees get old. Will they continue commuting across the lake? Will they move? Will they get new jobs?

    2. By providing each employee with a free bus pass, including those who only use it a few times a year, Microsoft already pays what amounts to a de-facto payroll tax to fund transit.

  4. The GDP ‘pie’ is only so big at any given time. It really doesn’t matter how you slice it when you start to add up how much pie is left over after all the taxes, levies, tolls, fees, fares, and whatever creative name you wish to give your particular little slice is.
    Transit’s share of the pie is far larger in Seattle than most other similar sized cities.
    If Roger needs more pie, let him go bake his own. Get your fingers out of mine!

  5. The problem with that tax was political, not economic. Its wasn’t large enough to fund many substantive projects that could be viewed as adding value to employers, but it was enough of a pain to cited leveraged by other cities as an example of why Seattle is unfriendly to business. the city wanted 18 million to study rail in Ref 1; that’s 4+ years of head taxes right there.

    Thought exercise: If the Bush tax cuts expire, how much more in taxes would Seattle as a City (ie sum of residents and businesses would) be paying a year? In some ways, I hope they do, as that would help to restore some semblance of balance to the fed budget, but on the other hand, those are dollars thrown down the drain on entitlements that could otherwise be spent locally on things that could grown the economy.

    1. those are dollars thrown down the drain on entitlements that could otherwise be spent locally on things that could grown the economy.

      First, you’re assuming that the tax revenue would be spent on entitlement programs, rather than elsewhere. It’s not like Congress hasn’t made cuts elsewhere for the sake of entitlement programs in the past. The automatic cuts we’re now facing don’t actually take effect until 2013, which is conveniently one election cycle away. If that election results in either party regaining control of both houses of Congress, then you can bet that automatic cuts formula will be overridden.

      Secondly, you’re assuming that entitlements programs cannot grow the local economy. If Medicaid keeps a low-income wage-earner able-bodied, rather than allowing him to fall crippled, he can still produce positive economic output over the course of his life. If Medicaid saves the life of a low-income child, the investment of public education won’t have been wasted, and might produce a productive adult member of society.

      But before we go too far off the rails here in talking about federal budgetary policy, let’s bring this back to the topic at hand, specifically your first point. You are absolutely right: Seattle’s public discourse is rife with half-measures like Prop 1. If people understood they could get bang for their buck, they would be far more likely to support a tax.

      The problem is we don’t pick leaders in this city. We pick debaters, nitpickers, and hand-wringers.

  6. First, it is not a “head tax”. A head tax hits everyone equally, without regard to ability to pay. The “payroll tax” only hit employers.

    Second, the payroll tax’s structure assumed commuters of modes with less of a carbon footprint would have some savings passed along to them by the employer. I haven’t heard even anecdotal evidence that that actually happened.

    Third, the payroll tax taxes employers for *locating in Seattle*. Talk about a backward incentive! A city income tax would have the same problem, although it would be far more progressive.

    Fourth, I suspect the cost to employers to administer the tax was probably up there with how much they paid, making for a very inefficient revenue source. The cost of identifying the different modes of employee commute wasn’t a snap of the fingers, either, and many businesses probably skipped that step just to save some costs in administering the tax.

    And really, haven’t many of you faced discrimination in getting a job by an employer who asked if you had a car to get to work? I’ve been a victim of such discrimination several times, even when I lived right down the block.

    Commuter payroll tax: Good idea, bad application.
    .

    Now, car tabs, that made sense, in a political vacuum. It’s biggest problem was that the car drivers outnumber the non-drivers, not that it was a philosophically bad idea.

    So, the key may be to reduce the number of payers in such a structure, by giving a waiver to at least the ten percent of poorest drivers, so we can convert ten percent of the self-interested opposition into supporters who see an opportunity to tax people other than themselves and still get a benefit. And then put it on the November 2012 presidential ballot, when those ten percent of waived drivers would turn out to vote.

    But also avoid the appearance that the ballot item is pushing play toys for the rich. In other words, drop the streetcar category. Make it just about speeding up buses, repaving the asphalt beneath buses, and building sidewalks to connect to the bus stops. Don’t make it about bikes or streetcars. Make it about improving bus service.

    The waiver mechanism needs to be worked out ahead of time, not merely promised. We have plenty of simple models to build from. Let’s use them.

    But then, don’t go for the $80, as using up our full taxing authority is dangerous fiscal policy. We may need that remaining $20 later for an emergency.

    I believe Seattleites will vote for a car tab *if* the poor aren’t taxed, if there are clearly no ways for rich folks (e.g. Paul Allen) to make a fast buck off of it, if it won’t install more bike lanes (not that I have anything against bike lanes, but I want the item to pass), if filling in the missing sidewalks can be noticeably expedited, and if the benefit is diffuse enough that it spreads out to every neighborhood.

    1. Third, the payroll tax taxes employers for *locating in Seattle*. Talk about a backward incentive! A city income tax would have the same problem, although it would be far more progressive.

      While taxes are a large consideration when employers choose where to locate, it’s far from the only one. Do you think that Amazon would abandon their shiny new campus in South Lake Union and move to Bellevue if we passed a payroll tax? Maybe, but they’d have to weigh it against the astronomical cost of moving, and the additional pain doing so would inflict on their employees. Right now Amazon is the beneficiary of Microsoft engineers fleeing the daily 520 clusterf*ck.

      The difference is an income tax is generally levied on *residents*. So if we had a city income tax, that would give high earners incentive to move out of the city and commute in from Federal Way or whatever, which is counterproductive to our goal of reducing commute trips.

      Fourth, I suspect the cost to employers to administer the tax was probably up there with how much they paid, making for a very inefficient revenue source. The cost of identifying the different modes of employee commute wasn’t a snap of the fingers, either, and many businesses probably skipped that step just to save some costs in administering the tax.

      That was indeed a difficult exemption to calculate. But I think that for most businesses the total size of their payroll is not something that would be difficult to compute. A payroll tax also has the advantage that all businesses are already registered for the purpose of paying B&O taxes. An income tax would require setting up a new bureaucracy to track down all the residents of the city.

      1. “Right now Amazon is the beneficiary of Microsoft engineers fleeing the daily 520 clusterf*ck.”

        Only the ones that already live in Seattle.

        “The difference is an income tax is generally levied on *residents*. So if we had a city income tax, that would give high earners incentive to move out of the city and commute in from Federal Way or whatever, which is counterproductive to our goal of reducing commute trips.”

        When I lived in an area with a city income tax, it was levied on both residents and workers. If a suburban city had an income tax, there was usually a reciprocal agreement where they shared the proceeds.

      2. The difference is an income tax is generally levied on *residents*. So if we had a city income tax, that would give high earners incentive to move out of the city and commute in from Federal Way or whatever, which is counterproductive to our goal of reducing commute trips.

        Your own argument still applies. Lots of ex-Softies went to Amazon to skip the commute. Do you think they’re going to move back to the Eastside just to save a thousand or two a year?

        Anyway, it’s not unprecedented to charge income tax for non-resident employees. Massachusetts does this, much to the chagrin of people who moved to NH to escape the taxes.

      3. “The difference is an income tax is generally levied on *residents*. So if we had a city income tax, that would give high earners incentive to move out of the city and commute in from Federal Way or whatever, which is counterproductive to our goal of reducing commute trips.”

        When I lived in an area with a city income tax, it was levied on both residents and workers. If a suburban city had an income tax, there was usually a reciprocal agreement where they shared the proceeds.

        Oh yeah, because that would be really easy in Washington’s political climate. We have a County transit authority that only recently reluctantly agreed to allocate bus service based on where people would ride the buses rather than where the taxes were collected. Our regional transit authority still operates on this model. If you look at the instructions for Oregon’s income tax for nonresidents, you will find that nonresidents only owe income tax on income from “Oregon sources,” which in the vast majority of cases makes it analogous to a payroll tax. I highly doubt that the Legislature would authorize Seattle to levy an income tax on people who live in Duvall even if they do work in Seattle. That’s just not the way the Pacific Northwest operates.

        Your own argument still applies. Lots of ex-Softies went to Amazon to skip the commute. Do you think they’re going to move back to the Eastside just to save a thousand or two a year?

        You do have a point, though I still think my point is still valid. I know young, single guys who moved from Seattle to Redmond to avoid the new tolls on 520, but I also know young, single guys who moved from Redmond to Seattle and started taking the bus because they didn’t want to pay tolls to frequent bars in Belltown or attend Mariners or Seahawks games. Amazon is located in the cultural heart of the region, whereas Microsoft is a low-density office park in a cultural dead zone where you have to walk 2 miles just to find food after 4 PM. Downtown Bellevue is a little better, but I still think that single 20-somethings like myself would rather live in Seattle. But my point was about older, married-with-children high-earners who already are more likely to want a 4-bedroom house on a cul-de-sac.

      4. So my question is should we really be spending what’s closing in on $3 billion dollars to accomodate 20-somethings who would rather live in Seattle to frequent bars in Belltown or attend Mariners or Seahawks Sounders games? Yes, there are still a large number of people that commute into DT Seattle from the Eastside but this older demographic made the decision long ago that they would drive and are close to retiring. The finacial jobs are morphing into data centers in Moses Lake. Even the strangle hold DT Seattle has on government jobs is miraculously shrinking.

      5. What $3 billion dollars? Do you mean East Link? 520? Others have pointed out that people are increasingly moving to the side of the lake they either work at or do most of their activities at. That doesn’t mean the number of cross-lake travellers will go down to a trickle. People will still cross the lake to visit relatives, make deliveries, attend activities, go to school for a couple years, or go to temporary jobs. In a county of over a million people, you have to assume tens of thousands of people will be crossing the bridge every day for a hundred reasons, even if their primary workplace is close to home. Otherwise we could just as easily cut all the Ship Canal bridges except the Fremont Bridge, because nobody in central Seattle would ever go to Northgate.

  7. The head tax was a pain in the ass to compute and required employers to track a new set of data for the purposes of calculating it. My sense is that a lot of businesses wound up spending more on calculating the tax than they actually wound up paying. There were also complaints about fairness – why were businesses singled out to pay for improvements that everyone would be using?

    The Tri-Met payroll tax has a few big things going for it – it covers the entire Tri-Met area (so folks in one city aren’t singled out), it’s based on salaries (which businesses already track and report on for things like Employment Security in WA), and applying it to transit makes a clearer connection between who’s being taxed and the benefits to that group (businesses explicitly funding transit that helps people get to work).

      1. “Because it’s paid by the employer, not the employee”

        Don’t kid yourself. If the employer is paying it, it’s coming out of the employees pocket, just indirectly. That said, in comparison to all the other benefits, like “free” parking or a “free” transit pass, it’s small potatoes and deserves an honest chance.

      2. Who pays the tax is less about who it’s assessed on, and more about elasticity. That is, how flexible are employers in the salary they’re willing to offer, and how flexible are employees in the salary they’re willing to accept?

        In the short term, salaries are very inelastic. First of all, many employees are legally protected from arbitrary salary drops, including anyone earning minimum wage and anyone whose wage is specified by personal or union contract. And second, any company that said “hey, we’re dropping everyone’s salary by $25” would get laughed out of the park (if, indeed, that kind of change wasn’t specifically prohibited).

        In the long term, of course, companies have the freedom to offer lower starting salaries or lower raises, or to enact pay cuts. But it’s not a given that the average salary will drop by exactly the amount of the payroll tax. In practice, it’s likely to be somewhere in between. A company might decide to recoup the rest by raising prices, for example.

        It’s also important to distinguish the degree to which a given company is a price (or income) maker or taker. For example, convenience stores have very little freedom to set prices for cigarettes, since there is so much competition for what is (essentially) an identical product. Conversely, Apple can charge a huge premium for its products, since its products are very distinct from its competitors’.

        In general, highly-branded companies that are highly desirable to work for are the most likely to pass on a payroll tax to its employees and/or customers, while generic businesses with lots of contract workers are the most likely to eat it. In other words, gas stations and convenience stores will pay the cost out of profits; QFC will raise prices; and Trader Joe’s will cut salaries. (I know, that was a lot of words to say something obvious. :D)

      3. Having said all that, I generally prefer direct income taxes. We know for sure what the tax base is. With corporate taxes, we don’t. For example, companies could decide to lower janitorial salaries and leave executive salaries intact. Or they could raise prices on their products, which are primarily consumed by low-income earners.

        The tax system that I’ve long advocated for is a universal income tax with local options. Cities, counties, school districts, etc. can specify a “local option” tax rate for each of the federal income brackets. You fill out your federal tax return; you indicate where you live / where you work / where your kids go to school, and then the form tells you how much you owe and to whom. So, for example, King County might assess residents at 10% of the federal tax they owe, and employees at 5%. If Seattle wanted extra money, they might add 2%/1% for those categories. For someone who lives and works in Seattle, if you earned $50,000, and your tax burden is $8,000, then King County would get $1,200 from you, and Seattle would get $240 — about what they get now (given normal expenditures). If you earned $200,000, and your tax burden is $50,000, then King County would get $7,500 from you, and Seattle would get $1,500. (Now we’re not broke anymore!)

    1. It was kind of a pain to try and run around and interview everyone about their commute just so I could figure out what to put on the damned form. We only have seven or eight employees, and even then I just said ‘to hell with this’, and put them all down for $25 a piece.

      But even given that, I don’t buy the argument that the $25 ultimately came out of my employees wages. I mean by that standard everything I buy for the company has the potential to be put in the same category. What if I decide our company wants to donate some money to the Red Cross for example, or say I feel like getting some equipment repainted before it’s 100% necessary, either of those costs could be looked at in a similar light.

      Either way, as an employer I didn’t sit there and say, “Well the next person I hire is going to be making $25 less per year”. For such a small amount of money I just chalked it up to the cost of doing business, and it ultimately came out of whatever profit the company made that year. In other words, out of my pocket.

      I should also mention that it would never occur to me to move my business out of Seattle to a more ‘business friendly’ city as a result of such an insignificant cost. At the end of the day, to have a successful business I need to have enough infrastructure around so that my customers and employees can live close by and enjoy a good quality of life. If that means coughing up a couple bucks to pay for sidewalks and bus bulbs then I for one am happy to contribute.

      1. “Economic rationality”, as it’s conventionally defined, increases proportionally with the amount of money at stake. :)

        What I mean to say is that, as a owner of a private small business, your thinking process is very different than that of the major institutional shareholders of a multinational corporation. The former act more like individual people, while the latter act more like the idea “homo economicus” you find in economics textbooks.

        For what it’s worth, I think that small private companies, nonprofits, and cooperatives make far better decisions for the world, even if they result in less economic profit for their owners. But still, you’d better believe that the Wal-Marts of the world would not let that $25 per worker get in the way of their profit.

  8. This would be far better applied at at least the county level, and yeah, preferably in all three central Puget Sound counties.

  9. As citizens, meaning as taxpayers and part-owners of where we live, let’s look at the other side of the balance sheet. Like a car in bad repair, lousy transportation costs us a lot of money, and prevents us from earning more money.

    Like any expenditure for tools or machinery, it’s right to insist that the money be well-spent. But it’s especially important to ask ourselves this question: how can we use this money so as to increase our ability to make more money, through saved time and increased productivity?

    Mark Dublin

    1. Holy bad journalism, Batman!

      I’m going to assume that this is a rough transcript of a televised story, and forgive the comma splices and non-sequiturs.

      What really bothers me is that the article does such a poor job talking about the facts.

      Let’s say the average monthly parking cost in downtown really is $285. That’s closer to $10 a day, not $25. And what does the “national average” mean? Who are we being compared to? Are these numbers indexed for cost of living? Are they adjusted based on the average income of the people who use these spots? Of course parking is more expensive in downtown Seattle than Detroit, or Houston, or the DC suburbs. And who cares if it’s more expensive if the people using the spots are all rich?

      And they leave out so much relevant data. For example, there are lots of projections and reports detailing how the demand for parking is affected by price. If the best available sources say that the mayor’s plan is expected to raise lot prices by $1/hour or $5/day, and that utilization is expected to drop 5% as a result, why doesn’t it say that? And if it turns out that utilization will drop from 100% to 95% — meaning that finding a spot will go from impossible to possible — why doesn’t it say that?

      Instead, the “red vs blue” presentation style makes it sound like Seattle will lose half of its employees and tourists if this tax is enacted.

      And finally, the last paragraph is very deceptively ordered. Right after making you think that Seattle parking is way-out-of-line expensive (it’s not), they tell you about how the tax will improve bike infrastructure (unpopular) and “walkways” (what does that mean? does it include sidewalks?). And then they tell you how the proposal will not go before voters. Clearly, at this point, you’re supposed to be angry at the mayor for trying to destroy the city, and not even being polite enough to ask the voters for their say.

      This is why I get most of my news from the Stranger. Every news source is opinionated; it’s just that the bad ones try to pretend that they’re not. At least the Stranger is upfront about their views.

      1. Good points. I have to claim Mea culpa for linking to that article. I was in a hurry looking for a reference that would compare the revenue stream to the tab tax and the head tax. I believe there is a good argument to be made for the parking tax but yes a lot better reference is needed. Perhaps a post from the highly paid journalists at the STB := Short of a London style congestion fee a parking tax seems like the way to go.

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