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Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Friday, March 5th, 2021

Flashback: Six years ago, The Seattle Times was all for a capital gains tax on the wealthy

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.

Back to 2021 Seat­tle Times:

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.

Every sin­gle time we’ve asked, we have found robust pub­lic sup­port.

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

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