Seattle income tax would push out the rich? Not true, expert says

Oct 31, 2017, 10:48 AM

income tax, tax plan, billionaires...

Demonstrators stand together in Seattle in support of an income tax on Seattle's top earners. (AP Photo/Elaine Thompson)

(AP Photo/Elaine Thompson)

The Seattle City Council passed an income tax knowing that it would be challenged in court. It rekindled a debate over whether such a tax would be beneficial for Washington state.

Gregoire: Washington has no ‘appetite’ for income tax

One of the main arguments against an income tax, especially one constrained to city limits, is that people who make enough to be taxed will just move. But that isn’t necessarily the case, Stanford University Professor Cristobal Young says.

Young, who studied tax return data over more than a decade, says there is little tax migration happening with high-income earners.

“People have made claims that there’s nothing more mobile than a millionaire and his money,” he told Seattle’s Morning News. “These kinds of statements sort of sound true, but turn out to be wrong.”

The middle and lower classes are more likely to move. What drives people out is — not surprisingly — economic factors. If you don’t make enough to live where you are, you are more likely to move. High-income earners, on the other hand, can not only afford to live where they want with a “strong economic fit,” they also likely have ties to business that they want to remain near, Young says.

This means the arguments for an income tax may be worth listening to. People in support of taxing those in higher income brackets say it would make the state’s current system less regressive — lowering the burden of sales and property tax.

The Seattle council passed a measure earlier this year that taxes individuals who earn $250,000 or couples earning $500,000.

Young says Washington state is “out of step” with the rest of the country. The state’s taxes “look a lot more like a red state tax regime,” he said.

“It’s a bit surprising. Arguments have been: don’t trust Olympia because they will come for you.”

Though some businesses have hinted that they will leave the region if Seattle or the state imposes an income tax, arguing that it would make it more difficult to do business, Young says that may be all talk. It’s like when Liberals threatened to move to Canada when Donald Trump was elected president.

“Of course they aren’t. It’s just a thing to talk about.”

Dave's Commentary

Dave Ross on KIRO Newsradio 97.3 FM
  • listen to dave rossTune in to KIRO Newsradio weekdays at 5am for Dave Ross on Seattle's Morning News.

Dave Ross

kristi noem book...

Dave Ross

Ross: Gov. Kristi Noem’s new book includes alleged meetings with dictators, dead dogs

Did South Dakota Governor Kristi Noem meet with North Korean dictator Kim Jong Un as she claims in her new book?

11 days ago

Image: Sound Transit tested train service on the 2 Line between southern Bellevue and Microsoft for...

Dave Ross

Ross: We built it, and they had better come

About 17,500 people attended the opening of the Eastside light rail line. It shows a curiosity about getting to Redmond without driving there.

16 days ago

Photo: A pro-Palestinian demonstration takes place outside the link light rail station at the Unive...

Dave Ross

Ross: Does the right to protest outweigh the right to learn?

When does a protest cross the line? I can answer that. When it devolves into violence, obviously it crosses a line.

18 days ago

privacy pods...

Dave Ross

Ross: Tracking employees’ vital signs at work via privacy pods, what could go wrong?

I saw a Bloomberg story about the latest innovation to reduce your stress level at work: Privacy pods.

2 months ago

car culture...

Dave Ross

Ross: Are we killing car culture? Or is car culture killing the US?

I don’t think the question is whether we're going to "kill" our car culture. The real question is can we stop our car culture from killing the U.S.?

2 months ago

drivers data insurance...

Dave Ross

Ross: As cars release driving data to insurance, is your driving my business?

Every move you make, every swerve you take, every lane change you fake – someone’s watching you. Do drivers have a right to keep driving data private?

2 months ago

Seattle income tax would push out the rich? Not true, expert says