The Washington State Legislature is in session and looking at the list of proposed bills; nobody’s wallet is safe. Following their last session where the Democrat controlled legislature threw bipartisanship out the window and set new records for spending, it looks like they have set a course to follow that up with new tax programs that will dwarf any in recent memory.
Thanks to Proposition 960 the Office of Management and Budget must calculate the cost of bills submitted for consideration. This newspaper has signed on to receive email notification of those budget calculations and each day we receive numerous messages about the cost to taxpayers of new legislation. While many of the proposals are specific to individual segments of our state economy, there are currently two bills in the legislative process that would add over $88 billion in new taxes over the next 10 years. Yes, that is billion with a B. To put that in perspective those two bills would cost every occupied household in Washington state approximately $37,500 over the next 10 years. That is an average of just over $4,550 per year or 8.7 percent of the average household income in this state.
I am sure that the Democrats will argue that most of these new taxes will be levied on businesses and not on the individual taxpayers of the state, however, it doesn’t take a genius to figure out that businesses will pass these new taxes onto the consumer through higher prices.
The biggest one of these bills is the Democrat plan to provide every resident in the state with health insurance. The taxes in that bill are estimated to be an additional $61.3 billion. The money will be raised by imposing a tax on payroll of 3 to 5 percent of wages depending on the size of the employer’s annual payroll. Residents who work out of state will be charged 2 percent on all of their out of state earnings. It doesn’t matter if the employer already provides his employees with health insurance. The employer must still pay the tax. The program will be administered by the Department of Health, which will have the ability to adjust benefit levels and exclude coverage for preexisting conditions in order to make sure costs don’t exceed available revenues. As the impacts of this bill ripple through the economy one can only wonder how high the tax will go and how large the bureaucracy will become to administer it. What is clear is that many small businesses that are currently struggling to pay for employee health care may opt to drop their plans and let the state provide coverage for their employees. This will ultimately result in an escalation of the program costs and most likely the taxes needed to fund the program.
The other big new tax is the carbon tax. This bill would raise $26.7 billion over 10 years by increasing the taxes on producers and consumers of hydrocarbons, that is, gasoline, natural gas or coal. The smallest part of the tax applies to producers who extract or import these products into the state. That tax is calculated on the tons of product so it is difficult to determine its impact on the cost of a gallon of gasoline, but taxpayers can bet the new tax will increase prices at the pump. The second part of that tax is clearly a new tax on the consumer of gasoline. That tax starts at an additional 10 cents per gallon in July of this year and increases by 10 cents per gallon each year until the new tax is $1.00 per gallon in July of 2017. With a built in escalation of 10 cents per year the tax will automatically increase the rate of inflation far beyond its current manageable levels of around 3 percent. Revenue from this tax is projected to increase 52 percent in year three, 35 percent in year four and 27 percent, 22 percent, 18 percent, 16 percent and 14 percent in years five through nine. The bottom line is this will not just raise the cost of gasoline for your car. It will impact the cost of everything including electric utility rates, transportation costs, even groceries. It will most likely severely damage the tourism industry, as millions of tourists will avoid Washington because its gas costs will become the highest in the nation.
Of course proponents of these measures will argue the programs are necessary in order to solve the health care crisis and protect our environment. There is no doubt that something needs to be done to address the issues of health care but first we need to address the issue of what is creating the “crisis” in the first place. Is the problem really the result of greedy insurance companies and trial lawyers or is it the result of bad government policies.
But taxpayers and consumers really need to ask their state representatives if their currently proposed solutions aren’t worse than the disease.