The state of Washington is in the process of perpetuating old mistakes when it comes to taxation.
There are many reasons lawmakers select the blend of taxes they do. The most frequent is to make them as inoffensive as possible to the greatest number of voters. Often this means raising unfair or unwise old taxes to which people have become accustomed. In Oregon, a mix of income and property taxes is the default option. In Washington, legislators have twisted tax codes into pretzel shapes, avoiding the much-feared income tax but levying virtually every other tax and fee under the sun.
Unable to reach an agreement within the standard 60-day session, Washington lawmakers started a final lap of the race Monday with a special session to close a nearly $3 billion gap between spending and revenue in the second half of the current two-year budget cycle. They will almost certainly end up with a package of ostensibly short-term hikes in sales, sin and other consumption taxes.
All taxes result in distortions of people's economic choices. High corporate taxes can erode job creation and plant-siting decisions. High sin taxes can bring an increase in smuggling of untaxed cigarettes, for example. An income tax can force high-earners out of one state, like Oregon, and into low- or no-tax states like Washington.
In Washington, high sales taxes have a huge impact on individual buying decisions, especially in border counties. Perhaps nowhere is this on starker display than in Pacific County, where retail merchants are at an automatic 7.8 percent price disadvantage with stores a short drive away across the Columbia River in Warrenton and Astoria.
It is a simple fact many millions of dollars leave Pacific County and enter Clatsop County each year. In the two counties' increasingly blended economy, some degree of equilibrium is maintained, as people live, work and shop wherever it makes sense to do so. But the state of Washington does its own merchants a real disservice by making them less competitive on prices. Higher sales and sin taxes will make things worse.
Conventional wisdom holds that an income tax will never pass in Washington and a sales tax will never pass in Oregon. Both states can point to others that are far more screwed up than we are when it comes to the tax burden and excessive government spending. That doesn't mean citizens and leaders shouldn't strive to do better.
Perhaps what is needed in both states is something analogous to the federal deficit-reduction panel - broad-based, governor-appointed committees charged with real power to find funding mechanisms that make sense for the 21st century. These should include ways of building up substantial reserve accounts when the good times return, in anticipation of future downturns.
In Washington especially, it is time to quit hobbling along with a stupid, regressive tax system and implement something better.