Rising unemployment, slowing real estate market and global inflation burned a $140 million hole in Seattle’s budget, and future deficits look likely. Even if these do not materialize, the status quo is far from sufficient to tackle our cluster of crises: homelessness, inequality, climate change, behavioral health and road rage.
We can solve this problem, but we have already messed it up. During the Great Recession, local governments cut spending on everything from housing to parks and mental health services to library hours. We still live with the consequences, on our streets and in our neighborhoods, every day.
But this time, instead of cutting services we desperately need, let’s expand and diversify our revenue streams and make them progressive.
To that end, Seattle City Council Budget Chair Teresa Mosqueda called a working group on progressive incomes with the mayor’s office, representing a range of political constituencies in Seattle. That’s great, but we don’t have to wait for recommendations before we act on what the city needs. And yet many of the council members seem to lack urgency, with six of the nine members voting for reject a recent expansion proposal to JumpStart. It is inexcusable.
Although the state legislature has made it difficult for cities and counties to generate revenue, we have options if we think creatively.
Some criteria
As the leader of a startup, I’ve learned that there’s a lot to consider when building additional revenue streams. Also, not all progressive taxes are created equal, so we need to establish some criteria to determine viability.
First, model the amount of money a tax generates minus the amount of money it takes to administer it. Also, consider How? ‘Or’ What it’s progressive. The more it redistributes from the rich to the poor, the better. Top earners are also resilient during economic fluctuations and do not swing up and down with their associated sources.
Next, consider the legal risk. What is the probability that a court will invalidate it? If not, is it a promising avenue for the courts to create exclusions that open up options for new kinds progressive taxes? Similarly, look at the political consequences; is the tax sustainable? Is it likely to create momentum for a progressive majority or provoke backlash? Finally, avoid other negative consequences, like councilman Alex Pedersen’s “100% low-income” sixplex plan, which would mean no new units, low-income or not.
Let’s start with these
- Expand JumpStart. It’s legal, and it has nothing to do with the Trotskyist attack on corporations that the anti-taxxers claimed in their propaganda. This is a small correction from an 80-year low in fees for high earners and corporations. An increase like recent proposal during budget season, plus an additional tier for revenues above $1 million will leave the region very competitive.
- Parking tax, with higher rates for outdoor lots and those located in areas rich in transit. Increase street parking charges. Use the same scheme to charge impact fees on new spots. For both, handicap parking and on-street residential parking are exempt for people in poor census tracts or those who qualify for government assistance.
Seattle has 1.6 million seats. Parking increases driving, pollution and road violence. This increases development costs and makes it difficult to build compact and complete neighborhoods. If we also eliminate parking minimums, we will increase incomes, increase housing options, and dramatically improve quality of life.
- Adopt a tax on empty housing, like in Vancouver. It may not open tons of houses or raise tons of money. But we desperately need both, and this will be a part of each.
- Finally, levy 1% income tax. To make it progressive, either pair it with a standard deduction (1% x (income – $40,000). Or, to make it even more progressive, pair it with a cash back (1% x (income) – $400), since the poor would receive a check instead of a tax bill.
Seattle Voters Support an income tax, and it’s time to take the fight to the state Supreme Court. Make the deduction/refund separable so that a lump sum income tax becomes the worst case in the advent of a grumpy court. Such a tax would still be much more progressive than our sales and property taxes.
And that’s not all
My best finalists are promising, but they need more analysis. I’m a big fan of the progressive consumption tax; it’s wonky and weird, but it’s wickedly cool. Incorporating it into state law will require some serious finesse, so it deserves more serious study.
We could also development air rights auctiona sin Sao Paulo, but we will need to identify how this would interact with the city’s Mandatory Housing Affordability (MHA) program. Or we could consider a more revolutionary infrastructure efficiency fee, based on the net income associated with different types of properties. Urban3The work of suggests it would be incremental, but it’s new enough that we’d need some serious expert advice on how to do it.
There are also a host of other options. We could charge for excessive wage inequalities in companies, or even the use of bridges with exemptions for people in precarious situations. We could increase capital gains or inheritance tax, or add an inheritance tax. We may increase MHA fees or real estate excise taxes, especially on luxury properties, or add additional fees for AirBNBs.
Whatever taxes they choose, the council must move. The alternative is huge cuts that will erode our quality of life, undermine local businesses and make life worse for our most vulnerable neighbors. It will let all our crises fester. We tried this route during the Great Recession. It failed. It’s time for something better.
Ron Davis is an entrepreneur who has spent most of his working life working to improve the lives of workers and seniors. He serves on the boards of Futurewise, Seattle Subway, the Roosevelt Neighborhood Association and the University YMCA, where he fights to make Seattle a more just, inclusive, green and walkable city. He holds a JD from Harvard Law School and lives in northeast Seattle with his wife, a family doctor, and their two boys.
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