MATERIAL FACTS AND ECONOMIC INDICATORS RELEVANT TO WASHINGTON STATE’S BUDGET
According to a peer reviewed published independent Institute and ballotpedia, Washington State presently owes more than it owns. Washington State’s budget, even though balanced as required by law (1), has been estimated to be in debt by 89.6 billion dollars. The 2015-17 biannual budget nor the operating budget explain how the Government will solve this challenge.
“According to a January 2014 report by the nonprofit organization State Budget Solutions, Washington had a state debt of approximately $89.6 billion. Its state debt per capita was $12,988. Source (2)
WASHINGTON STATE IS PART OF THE SINKHOLE STATES THAT HAS A HIGH TAXPAYER’S BURDEN
The Taxpayer Burden is each taxpayer’s share of state bills after its assets available have been tapped. Taxpayer Burden measurement incorporates both assets and liabilities, not just pension debt. In 2014-5, according to TIA, a neutral accountacy institute, Washington State had $36 billion of assets available to pay bills totaling $56.2 billion. 12.6 billion dollars of unreported retirement liability, 7 billion dollar of unfunded retiree’s health-care benefits and 7.8 billion dollar of unfunded pension benefits have been due. To fill the $20.1 billion financial hole each Washington taxpayer would have to send $8,500 to the State. Thus, at minus $8,500, Washington State’s “Taxpayer’s Burden” ranks 29th out of the 50 states and is part of those 39 “Sinkhole States” (i.e., having a negative Budget) without enough assets to cover its debt (Source). (3)
We have not been able to find the figures for 2015-16, but it’s presumed that the negative balance is about the same or worsse, if only because the State has to find an extra 4 billion dollars to comply with the Wa state Supreme Court on basic education.
HOW BIG IS WASHINGTON STATE’S 2015-7 GENERAL BIENNUM BUDGET ?
As of the 2016 Legislative Session, the State of Washington will spend a total of $93.7 billion for the 2015-17 biennium (or about $128 million per day on average during the two-year spending period). This $93.7 billion includes amounts from three different budgets, which are plans of how the state will spend the money. The relative size of each of the three state budgets is as follows:
1. The budget that pays for the day-to-day operations of state government (including federal funds and dedicated funds) is called the Operating Budget ($78.9 billion).
2. The budget that pays for transportation activities, such as designing and maintaining roads and public transit, is called the Transportation Budget ($8.3 billion). This budget includes amounts for both transportation operating activities ($4 billion) and transportation capital activities ($4.2 billion).
3. The budget to acquire and maintain state buildings, public schools, higher education facilities, public lands, parks, and other assets is called the Capital Budget ($6.6 billion).
HOW HAS THE INSLEE GOVERNMENT PROPOSED TO PAY FOR THIS BUDGET AND RESOLVE THE DEBT PROBLEM ?
To pay for its activities in 2015-17, Washington State will tax citizens and businesses $40.2 billion; receive federal and other grants of $28.5 billion; collect fees and assess charges for licenses and permits of $18 billion; and borrow another $3.9 billion. Other sources, including transfers, account for $3.2 billion.
WHERE DOES MOST OF THE STATE MONEY COME FROM ?
Most of the money Washington State’s governmental agents use to pay for services comes from state taxes. Washington’s major tax sources include the sales tax, the property tax, and a unique tax called the Business and Occupation (B & O) tax, which is a tax on gross receipts rather than on profit or income. Washington is one of seven states that does not levy a personal income tax. (4)
Compared to $34 billion across the previous biennium, the 2016-7 official budget was fixed at $38.1 billion in general fund expenditures on June 30th, 2015. (5)
BY EXEMPTING THE RICH CLASS FROM PAYING ITS SHARE IN TAXES, HAS THIS “TYCOON TRICKLING EFFECT” BEEN BENEFICIAL OR JUST A SELF-SERVING MYTH ?
Today we have an abundance of evidence that the billionaires’ “trickling effect” does more harm than good. Most of the loopholed cash is not reinvested within the American economy to produce more jobs and sustainable products and services. Most of these billions of dollars goes into private wealth accumulation (i.e., buying private islands, mansions, planes, boats, art etc), outsourcing and the mechanization or robotization of labor, meaning that machines are replacing more and more the worker, with few if any worker’s compensation.
ARE THERE ANY PRECEDENTS WITH RETARD TO HIGH TAXES FOR THE MONEY ELITE AND IF YES, DID THIS POLICY HAVE A BENEFICIAL EFFECT ON THE ECONOMY ?
As the Roosevelt administration had been gearing up to support the Second World War campaign before Pearl Harbor (December 7th, 1941), taxes were already high by historical standards. There were 32 different tax brackets, starting at 10% and topping out at 79% on incomes over $1 million, 80% on incomes over $2 million, and 81% on income over $5 million. But it was right after Pearl Harbor that the tax heat surged for the super-wealthy.
“In April 1942, just a few short months after the attack, President Roosevelt proposed a 100% top rate. At a time of “grave national danger,” he argued, “no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year.” (That’s roughly $300,000 in today’s dollars). Roosevelt never got his 100% rate. However, the Revenue Act of 1942 raised top rates to 88% on incomes over $200,000. By 1944, the bottom rate had more than doubled to 23%, and the top rate reached an all-time high of 94%.” (CBS News)
From the Second World War up until the 1970s, the Middle class benefited from a large chunk of the economy’s growth income (Source). So yes, these taxes were beneficial.
HOW HAS THE CHALLENGE OF SOCIAL INEQUITIES EVOLVED IN THE UNITED STATES AND IN PARTICULAR IN WASHINGTON STATE ?
Washington State is one of 15 American states whose top 1 percent capture all of the State’s income growth (which includes capital gains income). (6)
“Income inequality has risen in every state since the 1970s and in many states is up in the post–Great Recession era. In 24 states, the top 1 percent captured at least half of all income growth between 2009 and 2013, and in 15 of those states, the top 1 percent captured all income growth. In another 10 states, top 1 percent incomes grew in the double digits, while bottom 99 percent incomes fell. For the United States overall, the top 1 percent captured 85.1 percent of total income growth between 2009 and 2013. In 2013 the top 1 percent of families nationally made 25.3 times as much as the bottom 99 percent.” (Source)
All in all, in terms of the Nation, income inequality has risen in every state since the 1970s and in many states is up in the post–Great Recession era (ie, in the 1920s). In 24 states, the top 1 percent captured at least half of all income growth between 2009 and 2013, and in 15 of those states, the top 1 percent captured all income growth. In another 10 states, top 1 percent incomes grew in the double digits, while bottom 99 percent incomes fell. For the United States overall, the top 1 percent captured 85.1 percent of total income growth between 2009 and 2013. In 2013 the top 1 percent of families nationally made 25.3 times as much as the bottom 99 percent. (7)
In the past, income inequality reached a peak in 1928 before declining rapidly in the 1930s and 1940s and then more gradually until the late 1970s. The 1940s to the late 1970s, while by no means a golden age, was a period in which workers from the lowest-paid wage earner to the highest-paid CEO experienced similar growth in incomes. This was a period in which “a rising tide” lifted everyone. The historic significance of this historic fact is as follows: There is nothing inevitable about top incomes growing faster than other incomes, as has occurred since the late 1970s. The unequal income growth since the late 1970s has brought the top 1 percent income share in the United States to near its 1928 peak of hegemony.
HOW IS THE POWER SYSTEM STRUCTURED ?
In our mercantile-military fear-based narcissistic predatory type of American civilization, (ie, there are other types of civilization, but this is the one we have right now), money is one of the central elements that keeps the State’s power structure the way it is, where most or all of the State’s growth income goes to the “one percent” and the crumbs, if any, go to the 99 percent.
There are two manners in which the “one percent” accomplishes this transfer of wealth. First, by buying, via over three billions dollars of lobby money, politicians-law-makers, which many unethical politicians and judges accept in order to pay for their electoral campaign and be part of the privileged “five percent”, if only to pay for their high rising elitist university costs so that their children will be able to perpetrate this system of things.
And second, by weakening and sickening the 99 percent with toxic fast and processed foods, soda pop, cigarettes, GMO-glyphosate poisons, prescription drugs and thousands of toxic chemicals and molecules (from BPA, to POPs, benzene, chlorine, fluoridation, heavy metals and more) that destroy health (including mental health) in association with the pro-active progapanda on guns and violent videos mingled with quasi-inaccessible civil justice for the poor and mid-class, the chronic stress of a predatory economic system, brain-destroying cell phones, among hundres of other predatory techniques, all of which produces epidemics of chronic diseases, chronic stress and chronic misery that lead to a low brain frequency “collective subconscious” thanks to which critical and informed thinking as well as attention spans get more and more difficult (8) while political and media manipulation get more and more effective.
The social reproduction of this “system of things” is thus perpetrated thanks to which the material interests of most of the “one percent” can continue to transfer and accumulate the Nation’s wealth and resources for its own advantages while most (not all, there appears to be a few rich good guys) of the “One Percent” will endeavor to regulate population via chronic disease management, misery building, guns proliferation, wars and the like.
THE FACTS THAT SUPPORT THIS ABOVE-MENTIONED ANALYSIS
1). The “one percent” has succeeded in buying the majority of democrat-republican mainstream law-makers so as to have to pay very few, if any taxes. And they are “using off-shore channels to hide their money”.
Exhibit # 1: “ In the 1950s, corporate taxes provided more than 27 percent of federal revenues, but by the 1990s this proportion had declined to ten percent. The burden has shifted to individuals. But not all individuals – if you’re rich enough, you might not have to pay any taxes at all. Increasingly, the rich are using off-shore channels to hide their money, at the same time that corporations use partnerships, transfer-pricing and other gimmicks. The IRS doesn’t have the resources to challenge this. One IRS lawyer admitted, “Why do you think we go after the little guys? They can’t fight back.” Lewis, Charles and Allison, Bill and the Center for Public Integrity. “The Cheating of America: How Tax Avoidance and Evasion by the Super Rich Are Costing the Country Billions — and What You Can Do About It”. New York: William Morrow (Harper Collins), 2001. 302 pages.
2). Meanwhile, the super wealthy holds 32 trillion off shore in tax havens representing 280 billions of lost income tax revenues:
Exhibit # 2: “Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues.” (Source).
3). To make matters worse, much of corporate profits goes less into our economy, but gets invested overseas with few if any trickling and healthy effects:
Exhibit # 3: “The US Commerce Department reported that corporate profits hit a record $5 trillion in 2010. Corporations are now sitting on trillions of dollars in liquid assets – which they are investing mainly to buy up assets and create jobs overseas. The Fed recently reported that bank reserves had risen from $2 billion in August 2008 to nearly one trillion dollars in August 2010. The four largest banks (Bank of America, JP Morgan Chase, Wells Fargo, and Citigroup) received hundreds of billions in subsidies from the US tax payers.” (Source).
Exhibit # 4: From “71 percent of the private Wealth of the United States remains in the hands of fewer than 10 percent of Americans, 1 percent own 47.7 percent of all stocks” in 2008 (Source), we now have a situation where the 1 percent owns a lot more wealth while they have recently benefited from 93 percent of the global revenue growth.
The current complex tax system in Washington contains many fiscal inequities, the first of which is the sales tax, which is by definition, “regressive” since it hurts more the low and mid-income categories than the upper-income ones. To make matters worse, tax loopholes, tax breaks and tax exemptions for major corporations in Washington State have skyrocketed 250% from $20 billion per year in 1998 to $50 billion by 2008 and beyond since. While the Inslee Government did propose to target some of these, nothing of significance appears to have been done. Furthermore, over 90% of these tax exemptions benefit the richest one percent and their corporations, with much of this wealth being shipped out of State and even out of the country, creating jobs overseas (ie, “outsourcing”) instead of investing in Washington State or in other States of the Union or in future generations from the sustainability viewpoint. So the rich get richer and the low and mid classes get more pauperized. (9)
This rising inequality is not just a story of those in the financial sector in the greater New York City metropolitan area reaping outsized rewards from speculation in financial markets. While New York and Connecticut are the most unequal states (as measured by the ratio of top 1 percent to bottom 99 percent income in 2013), Washington State is not far behind. As we saw, the unequal income growth since the late 1970s has pushed the top 1 percent of Washington State to take all (100 percent) of the State’s income growth.
One argument that has been used to convince Washingtonians to let both the Republicans and Democrats lead the way is based on the free economy system, characterized by its alleged self-adjusting mechanism. Yet, as keen economists have observed, nothing could be less holistic.
” The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, “I have found a flaw.” Congressman Henry Waxman pushed him, responding, “In other words, you found that your view of the world, your ideology, was not right; it was not working.” “Absolutely, precisely,” Greenspan said. The embrace by America – and much of the rest of the world – of this flawed economic philosophy made it inevitable that we would eventually arrive at the place we are today.” Joseph E. Stiglitz, a Nobel Prize winning economist, is a professor at Columbia University.
(1). 49 of the 50 States of the American Union have duties to balance the Budget. The only that does not is Vermont, the only State that has dared to defy the GMO “gangsters”. I write gangsters because the Monsanto and company directors know that their products causes harm and cancer, but they still buy off politicians and Democrat-Republican law-makers to benefit from tax loopholes and favorable laws, including the recent Dark Act that allows GMO foods to not be labeled and to pre-empt States like Vermont that have anti-GMO label regulations.
(2). This state debt was calculated based on four components: “market-valued unfunded public pension liabilities, outstanding government debt, unfunded other post employment benefit (OPEB) liabilities, and outstanding unemployment trust fund loans.” Truth in Accounting, “Financial State of the States,” September 2015 (Source) Altogether, State governments faced a combined $5.1 trillion in debt, which amounted to $16,178 per capita in the nation. (Source).
(3). In a more recent report, it was written that the unreported retirement liability for Washington State went up to 20 billion dollars. TIA researchers concluded that 11 states had a Taxpayer Surplus in 2014. These are the sunshine states. On the other hand, there are sink hole states, of which Washington State is part. In this field, TIA ranks each state by Taxpayer Burden, or the amount each taxpayer would have to pay the state’s treasury in order for the state to be debt free. The five states with the highest Taxpayer Burden (the Sinkhole States) are Massachusetts, Kentucky, Illinois, Connecticut and New Jersey. Some of the best Sunshine states with taxpayer surplus are South Dakota, Utah, Wyoming, North Dakota and Alaska. (Source)
(4). OFM Revsum database for 2015-17 as of January 2016, adjusted by legislative staff.
(5). State Budget Solutions, “State Budget Solutions’ Fourth Annual State Debt Report,” January 8, 2014 (Source)
(6). http://www.epi.org/publication/income-inequality-in-the-us/Washington State’s ratio between the average of top earners and average of mid-class earners is $1,100,186 $50,372 21.8. Ibid.
(8). Today science has shown that a goldfish has a longer attention span than the average American: “The average attention span for the notoriously ill-focused goldfish is nine seconds, but according to a new study from Microsoft Corp., people now generally lose concentration after eight seconds, highlighting the affects of an increasingly digitalized lifestyle on the brain.”. (Source).
(9). The Economic Policy Institute’s report on social inequality that has been used for this analysis is based on the work of Estelle Sommeiller, a socio-economist at the Institute for Research in Economic and Social Sciences in France, who holds two Ph.D.s in economics, from the University of Delaware and the Université Lumière in Lyon, France. Thomas Piketty and Emmanuel Saez both approved her doctoral dissertation, Regional Inequality in the United States, 1913-2003, which was awarded the highest distinction by her dissertation committee. The Institute for Research in Economic and Social Sciences (IRES) in France is the independent research center of the six labor unions officially granted representation nationwide. Created in 1982 with the government’s financial support, IRES is registered as a private nonprofit organization under the Associations Act of 1901. IRES’s mission is to analyze the economic and social issues, at the national, European, and international levels, of special interest to labor unions. More information is available at www.ires.fr. In addition, Mark Price, a labor economist at the Keystone Research Center, assisted as did Ellis Wazeter. Source
WASHINGTON STATE’S BUDGET ANALYSIS (An extract from the e-book we are writing on Holistic Governance)
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