Dec 10, 2006

Change the tax, change the land-use

Here's a thought: Let's change our Washington State tax system. The way it is now, we pay 8.8 or 8.9 percent sales tax. That's much too regressive a tax. Better: A state income tax. You know, Bill Gates' father thinks we need a state income tax. Aside from the fact that it's way regressive, a sales tax leads to many other unintended consequences. Did you know that for many cities, the sales tax is a good 50 percent or more of their operating income? So, this encourages cities to create elaborate ecomonic development departments whose main goal is to attract business. What's wrong with that, you ask? Here's what: the largest businesses bring in the most sales tax. But not just any type of business. The classifcation that brings in the most sales tax to cities? Auto dealerships and big box retail. So what happens? Cities encourage auto dealers to come to their towns, creating these huge parking-lot businesses that sprawl forever. And they bring in these huge warehouse-sized block buildings that house the Depot businesses like Costco, Home Depot, Office Depot, etc. So how does the customer get to these businesses? By car or SUV, of course! That creates more CONGESTION. And where do the employees of those businesses live? Close by? Usually, they're commuting 'cause they can't afford to live close by since they're only making $8.50/hour. Instead, what we should be doing is encouraging better paying jobs, cleaner industries, and live-work arrangements with a higher density focus in urban areas. This way, changing the taxing structure encourages better land-use planning decision-making, which leads to cleaner, less congested cities.