Thread by @doctorow

Washington State enacted a 7% capital gains tax levied on annual profits in excess of $250,000, and made a *fortune*, $600m more than projected in the first year, despite a 25% drop in the stock market and blistering #InterestRate hikes:

theurbanist.org/2023/06/01/les…

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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

pluralistic.net/2023/06/03/whe…

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Capital gains taxes are levied on "passive income" - money you get for owning stuff. The capital gains rate is *much* lower than the income tax rate - the rate you pay for *doing stuff*.

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This is naked class warfare: it punishes the people who make things and do things, and rewards the people who own the means of production.

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A factory or a store can operate if the owner goes missing - but without workers, it shuts down immediately. Everything you depend on - clothes on your back, food in your fridge, the car you drive and the coffee you drink - exists because someone did something to produce it.

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Those producers are punished by our tax system, while the people who derive a "passive income" from their labor are given preferential treatment.

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The Washington State tax is levied exclusively on annual gains in excess of a quarter million dollars - meaning this tax affects an infinitesimal minority of Washingtonians, who are *vastly* better off than the people whose work they profit from.

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Most working Americans own little or no stock, and the vast majority of those who do own that stock in a retirement fund that is sheltered from these taxes.

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(Sidebar to say, market-based pensions are a scam, a forcing workers to gamble in a rigged casino for the chance of a dignified retirement; #DefinedBenefitsPensions and adequate #SocialSecurity, are the only way to ensure secure retirement for all)

pluralistic.net/2020/07/25/der…

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Washington's tax was anticipated to bring in $248m. Instead, it's projected to bring in $849m in the first year. Those funds will go to public school operations and construction and infrastructure spending:

seattletimes.com/seattle-news/p…

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That is to say, the money will go to ensuring that Washingtonians are educated and will have the amenities they need to turn that education into productive work.

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Washington State is noteworthy for not having any state personal or corporate income tax, making it a haven for low-tax brain-worm victims who would rather have a dead gopher running their states than pay an extra nickel in taxes.

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But places that don't have taxes can't fund services, which leads to grotesque, rapid deterioration.

Washington State plutes moved because they relished well-kept, cosmopolitan places with efficient transportation, an educated workforce, good restaurants and culture.

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None of which they were willing to pay for. They forgot Karl Marx's famous saying: "There's no such thing as a free lunch."

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The idea that Washington could make up for the shortfalls that come from taxing its wealthiest residents by levying regressive sales taxes and other measures is mathematically illiterate wishful thinking.

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When the one percent owns nearly everything, you can tax the shit out of the other 99% and still not make up the shortfall.

Meanwhile: homelessness, crumbling roads, and crisis after crisis. Political deterioration.

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Cute shopping neighborhoods turn into dollar store hellscapes because no one can afford to shop for nice things because all their income is going to plug the gaps in health, education, transport and other services that the low-tax state can't afford.

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Washington State's soak-the-rich tax is ironic, given the propensity of California's plutes to threaten to leave for Washington if California finally passes its own extreme wealth tax.

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There's a reason all these wealthy people want to live in California, Washington, New York and other states where there's broad public support for taxing the American aristocracy: states with rock-bottom taxes are failed states.

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All but two US "red states" are dependent on transfers from the federal government to stay in operation. The two exceptions are Texas, whose "free market" grid is one nanometer away from total collapse, and Florida, which is about to slip beneath the rising seas it denies.

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Rich people claim they'd be happy to live in low-tax states, and even tout the benefits of a desperate workforce that will turn up to serve drinks at their country clubs even as a pandemic kills them at record rates.

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But when the chips are down, they don't want to reply on a private generator to keep the lights on. They don't want to repeatedly replace their cars' suspension after it's wrecked by potholes. They don't want to charter a jet to fly their kids out of state for an abortion.

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This is true globally, too. As Thomas Piketty pointed out in *Capital in the 21st Century*, if the EU and OECD created a wealth tax, the rich *could* withdraw to Dubai, the Caymans and Rwanda.

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But they'd eventually get sick of shopping for the same luxury goods in the same malls guarded by the same mercenaries and want to go somewhere, you know, *fun*:

memex.craphound.com/2014/06/24/tho…

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We're told that Americans would never stand for taxing the ultra-rich because they see themselves as "temporarily embarrassed millionaires." It's just not true: soak-the-rich policies are *wildly* popular:

balanceourtaxcode.com/wp-content/upl…

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Washington's tax windfall is fascinating because it reveals *just how rich* the 1% actually are. Warren Buffett says "when the tide goes out, you learn who's been swimming naked." Washington's new tax is a tide that reveals who's been swimming with a gold bar up their ass.

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It's not surprising, then, that Washingtonians are so happy to tax their one percenters. After all, this is the state that gave us modern robber barons like #BillGates and #JeffBezos.

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Then there's clowns like #SteveBallmer, star of @propublica's #IRSFiles, whose creative accounting let him claim $700m in paper losses on his basketball team, paying a mere 12% tax on $656m, while the workers on the court paid 30-40%:

pluralistic.net/2021/07/08/tuy…

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Ballmer's also a master of #TaxLossHarvesting, who has created paper losses of over $100m, letting him evade $138m in federal taxes:

pluralistic.net/2023/04/24/tax…

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These guys aren't rich because they work harder than the rest of us. They're rich because they profit from our work - and then, to add insult to injury, pay little or no taxes on those profits.

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Washington's lowest income earners pay six times the rate of tax as the state's richest people. When the wealthy squeal that these taxes are class warfare, they're *right* - it *is* class war, and *they started it*.

eof/