Sunday, August 29, 2010

Today You Finally Start Working For Yourself

The typical worker in Washington State must put in more than two-thirds of the year — 241 days — to pay his or her share of the expenses of all levels — local, state and federal — government. Those 241 work days include funding all the various regulatory burdens as well.

According to Americans for Tax Reform, August 29, is the day this year the average Washingtonian stopped working to fund the enormous cost government. Because of Washington’s excessive amount of taxation and regulation, Cost of Government Day (COGD) is actually 10 days later than the national date of August 19. That has also given the state the dubious distinction of dropping one spot from last year—  to 46th place — the fifth latest in the country.

Olympia has abandoned the Priorities of Government approach to budgeting in favor of the tax-and-spend method, so our state’s poor showing shouldn’t come as a surprise. However, being in perpetual crisis mode means taxpayers always end up paying the price, as we saw last year when the Legislature approved $552 million in new taxes and fees. The cost of state government has been far outpacing inflation and population growth, with the reason for the increase resting firmly on the shoulders of the Democratically-controlled state legislature, which even in this floundering economy, thought it was a great idea to increase total state spending again this year. Total state spending this biennium increased $4.2 billion, to is $72.7 billion — compared to $68.5 billion in the 2007-09 biennium. 

Has the tax and spend approach, coupled with the onerous explosion in taxes, fees, spending, and regulations worked for Washington? Not exactly. Next year’s state budget deficit is estimated at $3 billion — and growing —and is estimated to end up being closer to $4 or $5 billion.

So when will next year’s Cost of Government Day fall? It’s probably too soon to tell, but November’s vote on Initiative 1098 — the proposed state income tax on “high earners” — could be an interesting indicator. According to the Governor’s budget office, the proposed income tax would bring in more than $11 billion over five years, starting in 2012. However, not only would I-1098 raise taxes on “the rich,” but estimates by the Office of Financial Management indicate implementing an income tax would cost $50 million a year or more, and create a costly new bureaucracy — meaning more than 500 new state employees in addition to the 8,000+ new ones already hired under Governor Christine Gregoire.


  1. Bruce Anderson5:58 PM

    I think when something is presented as a "fact", and it just doesn't make any sense, it probably really is wrong.

    Let's parse this a bit - 241 days, becomes 241 "work" days in your post - which if we mean a 52 week year/working 5 days a week (52x5=260) - that leaves 19 work days for the average worker to pay all their other expenses, including the balance of what they're spending absent the cost of taxes and regulations.

    Do you really believe this?

    I'll give you the benefit of the doubt and say you screwed up converting calendar days to work days - still 2/3's of the year to pay for taxes and regulations?

    Again, do you really believe this?

    You're saying "typical worker" which means Federal taxes at something less than the maximum tax rate. State taxes for the typical worker might be property taxes if they're a homeowner, gas taxes if they drive, sales taxes on most goods. Those taxes are coming out of the fraction of their remaining income after income taxes and SS withholding. That's nothing close to a high percentage of one's income.

    Finally regulations? There was a bogus study out a couple of years ago (I read it) that stated that the cost of regulations added $150k to the price of a house in Puget Sound - obviously wrong when houses can be purchased today in Seattle for under $165k - could they possibly be worth only $15k absent government regulation? Less than the price of most new cars?

    Our society really has lost critical thinking skills.

  2. Let's parse this down as you suggest...

    It's 241 total days, not business days.

    When you add up all the assorted taxes businesses pay — in Washington: B&O, L&I, Unemployment, Sales taxes, Litter Tax, Personal Property Tax (a tax on equipment including computers and things like furniture your business owns), Intangible Tax, etc., plus federal taxes such as Medicare, FICA, Social Security on your employees, the employers portion of Income Tax, etc, as well as local taxes — not to mention Property Taxes if your business owns the real estate where it's located, so yes, 2/3 of the year is just about right.

    As far as state regulations go, let's look at things like the Heat Stress Rule...

    It isn't about a lack of critical thinking skills, it's about learning just how heavily taxed and regulated business really is in Washington.

  3. Bruce Anderson2:55 PM

    The Tax Foundation says in 2010 Washington State's tax freedom day is April 15th, looking at combined local, state and federal tax burdens.

    We're still one of the worst, but not as late in the year it seems. I count 92 work days to pay all of the various taxes.

    Interesting too are two items they highlight - one is that the date has slide back a couple of weeks since 2007, because of the recession, tax cuts and and certain tax repeals.

    The second interesting fact is that they calculate that we would have to work another 38 days to pay for the deficit.

    For regulations - we always talk about the cost of regulations, but we never seem to subtract the value added by regulations. What would the cost to us be if we didn't have traffic regulations, requirements to make our food safe, our water drinkable?

    One can argue, and should, about the cost/benefit of a regulation and who should bear the costs relative to who reaps the benefits - but a blanket notion that regulations are simply a burden that can relieved isn't realistic nor desirable. (Though any regulation on me personally is of course enormously unfair...if it falls on you...not so much)