Seattle Doomed-to-Fail Socialist Experiment

July 16, 2020 by Dan Mitchell @ International Liberty

 

Not all bad city governments are alike. In places like Chicago, local politicians generally impose bad policy because they’re buying votes (especially the votes of bureaucrats), not because they’re motivated by ideology.  But as you can see from this video, some Seattle politicians are genuinely crazy. 

And those crazy local lawmakers are very serious about their class-warfare tax agenda.  The Wall Street Journal recently opined on the proposed tax hike in Seattle.

Seattle’s…City Council has decided this is the perfect moment to slap businesses with a large new tax on employment. …Recall that in 2018 Seattle passed a $47 million annual “head tax,” only to repeal it after a furious public realized it penalized job creation. No matter, the socialists who dominate the City Council passed a new iteration this week that’s more than four times bigger and punishes employers for paying good wages. Beginning next year, some 800 businesses with a payroll over $7 million will pay a tax of between 0.7% and 2.4% on all salaries over $150,000. …Councilwoman Teresa Mosqueda says the tax will create a “more robust and resilient economy,” but how taxing job creation accomplishes that is a mystery. The tax will stifle economic upward mobility, since employers will have an incentive not to raise pay above $150,000. …the new tax has veto-proof support on the City Council, which passed it 7-2.

What’s especially absurd, as explained by Brad Polumbo in a column for the Foundation for Economic Education, is that Seattle’s politicians want to exempt government bureaucrats from the tax.

…the tax could seriously hurt the economy… “As the region enters a deep recession and faces near-record job losses, the city council will be sending tax bills to companies across multiple sectors that have their doors closed and have been forced to layoff employees,” the business organization Downtown Seattle Association said… in an infuriating but sadly typical twist, the Seattle City Council exempted all government employees from their new tax. That’s right: The supposedly benevolent socialist city officials who thrust this upon their constituents made sure to carve out a giant exception for their peers on the taxpayer dime. …the city council’s new tax is…imposed on working people by politicians who made sure to spare the government class from sharing any of the burden.

By the way, this is a repeat fight.   Seattle lawmakers tried to impose a similar tax back in 2018 but were thwarted by opposition from private-sector workers and businesses (it’s also unclear whether such a tax would survive a legal challenge since the state’s constitution bars taxes on income). If the tax ultimately is approved and implemented, it’s easy to predict the consequences. Businesses and workers will migrate to surrounding communities without the tax.  Not all of them, of course, but enough to make a difference. And that difference will get bigger with the passage of time.

What Ms. Mosqueda and Ms. Sawant don’t understand is that this cartoon only partially explain why socialism doesn’t work.  To be fully accurate, it also needs a door called “Escape” for the geese that fly away with their golden eggs.

I realize this is a perverse thought, but part of me wants this tax hike to be implemented just so we’ll have some powerful new evidence about why statism is a bad idea.

P.S. The proposed tax hike is just one reason why investors, entrepreneurs and business owners should be leery about creating jobs in Seattle. There’s also the big increase in the minimum wage and the recent (failed) experiment in autonomous socialism.