Washington can’t afford austerity; tax the rich to save jobs, services

By MARILYN WATKINS

OLYMPIA (June 25, 2020) — As tax revenues fall with people out of work and whole industries shuttered, Washington’s state and local governments are laying off staff, reducing pay, and slashing services that are helping people weather the COVID-19 storm. Cutting important services now will cause immediate suffering, prolong the recession, and deepen racial and economic inequity.

We need our state legislators and other elected officials to have the courage to raise new taxes on wealthy individuals and corporations, then reinvest that money in health care, secure housing, child care, educational opportunity, and income support for people and small businesses who are struggling for survival.

The June 17 state revenue forecast predicts the state will collect $4.5 billion less than expected in the current 2-year budget cycle that ends June 30, 2021, and face a similar loss for the 2021–23 budget. With only about $2 billion in reserves, Gov. Jay Inslee has already cancelled a scheduled pay increase and required most state employees to take unpaid days off. He’s also ordered all state agencies to find ways to cut their budgets by 15 percent, and is likely to call the State Legislature back for a special session this summer to make those reductions.

Now eliminating funding for militarized police, mass incarceration, and other forms of racist oppression would improve health and economic security for millions of state residents — but that’s not what’s on the chopping block. Here are some of the programs state agencies have identified for possible cuts:

●  Dental care for 204,000 adults, maternity care for 36,000 women, and medical interpreters helping 96,000 people on Medicaid;

●  Long-term care for seniors and disabled people, home visiting for new parents, and TANF grants for families in deep poverty;

●  Child care and other support for highly vulnerable children; and

●  College financial aid for 10,700 students.

A decade ago during the last recession, our legislature made exactly these kinds of cuts, along with reductions in mental health services. Those decisions caused real suffering and helped ensure that most of the benefits of renewed economic growth went to a privileged few. As a result, working families were already struggling to cover the basics when COVID-19 came along.

The social distancing and stay-at-home orders necessary to slow the spread of coronavirus resulted in half a million jobs lost in Washington this March and April — not counting all the gig workers, independent business owners, and others who don’t show up in official statistics. In May, the private sector gained back 72,000 jobs, but the state and local governments cut another 20,000 jobs — that’s 20,000 families who lost much of their income and won’t be helping our economy get back on track.

Meanwhile, much of the federal economic relief Congress initially provided is drying up. Those stimulus checks were a one-shot deal. Most small business loans/grants only cover eight weeks. The extra $600 per week in unemployment insurance (if you can get it) ends in late July. And people without federally recognized immigration status didn’t get any of that aid. Democrats in the U.S. House back in the other Washington already passed extensions of those programs and at least a partial bailout for state and local government budgets, but the Republicans who control the U.S. Senate and the current occupant of the White House are trying to pretend COVID-19 has vanished and we can all just return to the way things were.

Our State Legislature should use a special session to raise taxes on the wealthiest corporations and high-income individuals rather than further immiserating people and driving our state into deeper recession. Despite Washington’s progressive reputation and the relatively strong labor standards we’ve won here, our state has some of the most extreme income inequality in the country. Some of the wealthiest people on the planet live in the Seattle area, along with hundreds of thousands of highly paid professional and tech workers. Their comfy lifestyles are made possible by the millions of low- to moderate-wage workers in child care, restaurants, food production, personal services, retail, and so on — who are being priced out of Seattle and other urban centers.

And Washington has the worst tax system in the country, overtaxing low-income households and letting the well-to-do get by without contributing.

Over the past few years, legislators have introduced several progressive revenue bills they could enact now. These include Sen. Joe Nguyen’s (D-West Seattle) bill to tax corporations that choose to pay high salaries, the capital gains tax on households with large stock portfolios, and increasing the tax on multi-million dollar estates. If they were really bold, they could scrap our regressive tax system altogether and institute a progressive income tax — like most other states have (Idaho, Wisconsin, and South Carolina, for example).

We need those funds reinvested in housing, health care, income support, and community empowerment, not left in the pockets of the comfortably wealthy. Our elected representatives are bombarded with messages telling them to cut, cut, cut. They need to hear from us, too.

Marilyn Watkins is Policy Director for the Economic Opportunity Institute. The EOI’s mission is to build an economy that works for everyone by advancing public policies that promote educational opportunity, good jobs, healthy families and workplaces, and a dignified retirement for all. (This column was originally posted by the South Seattle Emerald and is crossposted here with the author’s permission.)