Readers, welcome to another installment in our Flashback series, where we enlist the help of past Seattle Times editorial boards to debunk shortsighted and poorly reasoned editorials published on the Times’ op-ed page in the present day.
Today, 2015 Seattle Times is going to help explain why 2021 Seattle Times’ opposition to a capital gains tax on the wealthy doesn’t make sense.
Twice now in the past two weeks (most recently this morning) the Times’ editorial board has demanded in an unsigned editorial that Senate Democrats stop moving forward with a sorely needed bill that would finally — finally! — take a substantive step towards righting our upside down tax code by levying a capital gains tax.
The Times’ owner, Frank Blethen, appears terrified of the prospect that Democratic legislators will move from talk to action after six years of mulling the idea of levying a capital gains tax. (Governor Jay Inslee first proposed doing so in December of 2014, and the idea has been under consideration ever since, but it’s never been acted upon, despite clear evidence the public supports it — including six straight years of polling commissioned by NPI.)
In just a few days, Blethen’s op-ed page has run the two aforementioned editorials plus an op-ed from progressive tax reform opponent Matt McIlwain of Madrona Venture Group, who is utterly opposed to any form of tax on wealth. (He’s wealthy and doesn’t want to pay his fair share in dues to our state.)
A rebuttal op-ed supporting the capital gains tax from Nick Hanauer was also published — but the print version of it hilariously included a small sidebar urging readers to check out McIlwain’s piece. (The online version links to the editorial instead.) Of course, since McIlwain’s piece was published first, there was no corresponding sidebar promoting Hanauer’s perspective. Very convenient.
Those new to Washington State politics might be forgiven for thinking that the Seattle Times Company and its owners have always opposed progressive taxation.
The truth, however, is that the Times has a long history of vacillating on this subject. During the past two decades, the Times has gone from opposing Tim Eyman’s destructive initiatives to supporting them — and then opposing them again. It has come out in support of levies to fund essential public services, and at other times, it has denounced them. I know of no other editorial board anywhere with a mercurial ideological drift like that of the Seattle Times.
I have observed before in this space that the Times’ editorial board is kind of like the characters in The Strange Case of Dr. Jekyll and Mr. Hyde, Robert Louis Stevenson’s Gothic novella. At times, you can open up the Seattle Times and find editorials in the Opinion section that are rooted in the logic of progressive values and espouse worthy ideas Cascadia needs. That’s the paper’s Jekyll persona.
Just as often, unfortunately, you can open up the newspaper and find truly awful, cringe-inducing editorials parroting disinformation and debunked right wing myths about any number of subjects, especially the economy, transportation, and matters of public finance. That’s the paper’s Hyde persona.
It is precisely because the Times has these multiple editorial personas that we can bring you the Flashback series here on the Cascadia Advocate. We can debunk the editorials that came out of the Hyde persona with the board’s own unattributed words from some other date because the paper also has a Jeykll persona.
Hypocrisy and double standards are certainly common in politics, but as we’re about to see, the Times’ present opposition to a capital gains tax is not a garden variety case of hypocrisy. This is cognitive dissonance at its finest.
With that introduction, let’s dive in!
We’ll start with last week’s editorial from 2021 Seattle Times:
A capital-gains tax bill moving toward a state Senate vote is too flawed and should be abandoned. The Democratic leadership’s rush to create this tax even as the state’s revenue picture is expected to continue improving, coupled with its disingenuous use of the legislature’s emergency power, further signals a need for voter skepticism.
Hm. What do you think about the idea, 2015 Seattle Times?
A long-term solution to the education-funding crisis in Washington is right in front of lawmakers. Instead of punting to committees and next year’s Legislature, they should buckle down and make the choice to begin taxing capital gains.
Makes sense. Less talking, more doing! Our team agrees with 2015 Seattle Times. A capital gains tax was a good idea in 2015 and it’s still a good idea now — the votes unfortunately didn’t exist to pass it back then, due to Republican control of the Washington State Senate, but Democrats run both chambers now and can get this done. The need is still great, and the pandemic has shown us that.
Let’s examine another bad argument from 2021 Seattle Times:
The state constitution prohibits [an] income tax. The current Supreme Court may decide a tax on capital gains is acceptable. If this tax passes, the inevitable litigation would delay collection for months, perhaps years. Even without the courts, the revenue would not begin coming in until 2023.
2015 Seattle Times, is that a concern for you?
Capital-gains revenue would fluctuate with the stock market.
The House proposal addresses this by creating a “student investment fund” to fund basic K‑12 education and keep higher-education tuition steady. Additional revenue in strong years would be saved, building a reserve to cover costs during down years.
Arguments that these are stealth income taxes should be heard in context. The income in question is largely profits generated by very large investment portfolios, above and beyond retirement accounts.
What a refreshingly different vantage point.
And a good observation, too, about the tax being a means of securing an investment in our state’s future from people who are accumulating wealth not based on work, but rather market machinations and manipulations.
Washington’s tax system is sadly not based on ability to pay, which is why it’s been ranked dead last in the country among all states’ tax systems in terms of fairness. We have one minor tax on wealth right now — an estate tax — which is devoted to the Education Legacy Trust, and that’s basically it.
The Washington State Constitution, by the way, doesn’t say that the state may not levy an income tax. If you search the text of the Constitution for such a prohibition, you won’t find it, because it doesn’t exist. The notion that the Constitution disallows taxing income stems from a goofy 1930s-era Supreme Court decision that threw out a voter-approved initiative providing for an income tax. That decision was absurdly reasoned, and is waiting to be overturned.
The Times conceded as much in its editorial from last week when it stated: “The current Supreme Court may decide a tax on capital gains is acceptable.”
Curiously, in this morning’s follow-up editorial, the Times has a line suggesting the very opposite could happen: “And the Supreme Court may well find that a capital gains tax violates the state constitution’s ban on taxing income.”
(There’s that cognitive dissonance again — with even closer proximity!)
By the way, under the logic of the anti-tax crowd, all taxes are effectively income taxes because they are paid out of people’s incomes. And if we can’t tax income, then we can’t have any taxes at all, which means we can’t have any essential public services, which means we can’t have a functioning state. Just dumb.
Let’s go back to 2021 Seattle Times:
True, this editorial board supported a capital-gains tax in 2015 as the Legislature struggled to meet its constitutional requirement to fully fund basic education, under the 2012 Supreme Court McCleary ruling. That crisis is no longer upon lawmakers.
Ha! Actually, an even worse crisis is upon lawmakers now.
We’re in the midst of a deadly, crippling pandemic, and despite advances in testing, contact tracing, and vaccination, along with a greater availability of masks and PPE, we have not figured out how to safely return most of our teachers and students to in-person instruction after almost a year of schools being closed.
Nor did legislators ever get around to addressing the special education funding crisis, or reversing harmful cuts to arts, music, cultural, and civic education when they were passing legislation to respond to McCleary in prior sessions.
In short, the job never got done. And Washingtonians know it: 60% of voters NPI’s pollster surveyed last year agreed with the statement that our schools are underfunded and we need to raise state revenue to fully fund them.
I do appreciate the acknowledgment of the Times’ past position. That flash of honesty is something we rarely see in an editorial like this. You’ll notice, if you parse this editorial carefully, that there are shades of the Jeykll persona sprinkled here and there. It’s a Hyde editorial, but the Jekyll persona is not entirely silent.
2015 Seattle Times, any thoughts?
Senate leaders have agreed on a bipartisan proposal to meet the state’s constitutional obligation to fully fund basic education and provide an equitable education for all students. They also agree that more revenue will be needed — about $3.5 billion every two years — but now need to decide where it should come from.
Not to be confused with the immediate 2015–17 state budget debate, this would be a long-term funding source as lawmakers replace local education levies with state funding.
A remarkably different take, eh? Even though Republicans were in control of the State Senate at the time, the Seattle Times still editorialized in favor of levying a capital gains tax on the wealthy, giving the idea the respect it deserved.
Republican lawmakers, of course, did not listen, and they pursued a property tax based “McCleary fix” that wasn’t really a fix at all.
That bit above about the capital gains tax being a long-term funding source is really important. Washington’s public finances have been in lousy shape for a long time because our upside down tax code dates back to the aftermath of that goofy Supreme Court decision I mentioned. Long term structural problems require long term solutions, and a capital gains tax is such a solution.
Our starved public services need revenue, but lower and middle income families are already contributing plenty to support them through the sales tax, property tax, and business and occupation tax (which is a tax on gross receipts). Wealthy families, on the other hand, are paying almost nothing. That’s wrong. The status quo is unacceptable. We need action to change that, and we need it this session.
More than forty other states tax capital gains. Washington may someday join that list, but this ill-conceived legislation would be a bad way to get there. Voters’ backlash would be well-deserved.
Stop SB 5096 now.
2015 Seattle Times, your view?
Taxpayers at this level have benefited directly or indirectly from public investments in education. They would benefit further by supporting an equitable system that provides equal opportunity for students in every school to learn and help build Washington’s future.
They certainly would. Whether a capital gains tax is devoted to K‑12 schools, or to higher education, or to childcare — as this legislative session’s proposals favor — it would reduce inequity in our state and strengthen our commonwealth. Everyone would win, including and especially the people who would pay the tax.
Like Nick Hanauer has said, the wealthy (especially our local billionaires, who have the most wealth) will still be wealthy if we levy a capital gains tax. But they’ll be investing in Washington State to a slightly higher degree than before. That would be an important step towards having a more progressive tax code.
It is truly silly that the Seattle Times is describing the current efforts to pass a capital gains tax on the wealthy as “rushed” and “hasty” given that the idea has been under consideration for over half a decade. For whatever reason, this seems to be their favorite argument, which they not only begin with, but end with too, as we can see from the concluding paragraph in this morning’s editorial:
Writing an equitable tax code is hard work. It deserves to be treated with diligence, not hustled through piecemeal with thin justification. The Senate has SB 5096 queued for an imminent vote. It should not pass.
I’m not sure I’ve ever seen a more dishonest characterization of the process surrounding a bill in the Legislature. We are halfway through the 2021 session and all that’s happened so far is that the Senate is progressing towards a floor vote on an idea that has been under consideration for a really, really, really long time.
Nothing is being rushed. Multiple public hearings have been held and the bill has been revised and amended based on that public testimony.
And the bill will assuredly be amended again. The version that gets considered on the Senate floor may not even be the version that Ways & Means approved.
The House has its own version of this proposal, although curiously, that bill has gone unmentioned in both Seattle Times editorials. Perhaps that’s because Blethen fears if the shrunken faction of the Senate Democratic caucus that opposes a capital gains tax can’t stop a vote in the Senate, the prospects for the bill will be all downhill from there — all the way to Governor Inslee’s desk.
The specter of a “voter backlash” is also unfounded.
NPI has been asking Washington voters about their views on levying a capital gains tax to fund investments in education for six straight years.
Our last poll found nearly three in five Washingtonians (59%) supportive.
What’s more, the percentage who “strongly” support a capital gains tax on the wealthy to benefit education has been consistently above 40% — consistently greater than the entire percentage of those opposed.
The right wing may be opposed to a capital gains tax on the wealthy, but the public is not. Legislators can move forward with this worthy idea with the knowledge that it’s something Washingtonians want to see get done.
If you enjoyed this post, you’ll probably want to read some of the other installments in our Flashback series, which dates back to 2008!
Previous installments of Flashback
- Flashback: Eight years ago, the Seattle Times deemed Dino Rossi wrong on many big issues (2018)
- Flashback: The Seattle Times was for funding Metro bus service before they were against it (2014)
- Flashback: Once upon a time, the Seattle Times supported levying a state income tax (2010)
- Flashback: Seattle Times debunks Seattle Times’ own position against Sound Transit Proposition 1 (2008)