[Plura-list] Washington State's capital gains tax proves we can have nice things

Cory Doctorow doctorow at craphound.com
Sat Jun 3 04:04:22 EDT 2023

Read today's issue online at: https://pluralistic.net/2023/06/03/when-the-tide-goes-out/


Today (June 3) at 1:30PM, I'm in Edinburgh for the Cymera Festival on a panel with Nina Allen and Ian McDonald:


Monday, June 5 at 7:15PM, I'm in London at the British Library with my book *Red Team Blues* for an event hosted by Martha Lane Fox:


On Tuesday, June 6, I'm doing a remote panel on interoperability for Rightscon:


On Wednesday, June 7, I'm keynoting Re:publica in Berlin:


On Thursday, June 8, I'm at Berlin's Otherlands books:



Today's links

* Washington State's capital gains tax proves we can have nice things: We just need to tax the rich.

* This day in history: 2008, 2013, 2018

* Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading


👩🏽‍🦱 Washington State's capital gains tax proves we can have nice things

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 interest rate hikes:


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*. 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.

The thing is, a factory or a store can still operate if the owner goes missing - but without workers, it shuts down immediately. Everything you depend on - the clothes on your back, the food in your fridge, the car you drive and the coffee you drink - exists because someone did something to produce it. Those producers are punished by our tax system, while the people who derive a "passive income" from their labor are given preferential treatment.

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. 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.

(Sidebar here to say that market-based pensions are a scam, a way to force workers to gamble in a rigged casino for the chance to enjoy a dignified retirement; the defined benefits pension, combined with adequate Social Security, is the only way to ensure secure retirement for all of us)


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 spedning:


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.

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

Washington State plutes moved because they relished living in well-kept, cosmopolitan places with efficient transportation, an educated workforce, good restaurants and culture - none of which they would have to pay for. They forgot Karl Marx's famous saying: "There's no such thing as a free lunch."

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. 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. 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.

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.

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. All but two of America's "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.

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

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, 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*:


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:


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

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 Bill Gates and Jeff Bezos. And then there's clowns like Steve Ballmer, star of *Propublica*'s IRS Files, the man whose  creative accounting let him claim $700m in paper losses on his basketball team, allowing him to pay a mere 12% tax on $656m in income, while the workers who made his fortune on the court paid 30-40% on their earnings.


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


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.

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*.


👩🏽‍🦱 This day in history

#15yrsago John McCain vows to continue Bush’s illegal warrantless wiretapping program https://www.wired.com/2008/06/mccain-id-spy-o/

#10yrsago OccupyGezi: the People’s Bulldozer https://occupygezipics.tumblr.com/post/52008000563/peoples-bulldozer-chases-police-toma-vehicles-in

#10yrsago Meet austerity’s millionaires https://www.theguardian.com/politics/2013/jun/01/top-earners-millionaires-inequality-city-finance

#10yrsago Gas-mask dervish: #occupygezi https://twitter.com/joeman42/status/341492885650292738

#5yrsago Private equity bosses took $200m out of Toys R Us and crashed the company, lifetime employees got $0 in severance https://www.washingtonpost.com/news/business/wp/2018/06/01/how-can-they-walk-away-with-millions-and-leave-workers-with-zero-toys-r-us-workers-say-they-deserve-severance/

#5yrsago Bernie Sanders rallies Disneyland employees for a $15 minimum wage https://thehill.com/homenews/senate/390430-bernie-sanders-disney-needs-moral-defense-for-having-hungry-workers-while/

#5yrsago UK consumer review magazine Which?: your smart home is spying on you, from your TV to your toothbrush https://web.archive.org/web/20180603221154/https://www.which.co.uk/news/2018/06/which-investigation-reveals-staggering-level-of-smart-home-surveillance/

#5yrsago America is the world’s first poor rich country https://eand.co/why-america-is-the-worlds-first-poor-rich-country-17f5a80e444a

#5yrsago Zuckerberg blows off Facebook shareholders’ demand for transparency, says he’s committed to transparency https://www.mercurynews.com/2018/06/01/corporate-dictatorship-facebook-shareholders-get-their-turn-to-grill-mark-zuckerberg/

#5yrsago Illinois votes to eliminate inmates’ doctor visit co-pays, equivalent to one month’s wages https://www.themarshallproject.org/2018/05/30/the-580-co-pay


👩🏽‍🦱 Colophon

Today's top sources: Kottke (https://kottke.org/).

Currently writing:

* A Little Brother short story about DIY insulin PLANNING

* Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FIRST DRAFT COMPLETE, WAITING FOR EDITORIAL REVIEW

* The Bezzle, a Martin Hench noir thriller novel about the prison-tech industry. FIRST DRAFT COMPLETE, WAITING FOR EDITORIAL REVIEW

* Vigilant, Little Brother short story about remote invigilation. ON SUBMISSION

* Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION

* Spill, a Little Brother short story about pipeline protests. ON SUBMISSION

Latest podcast: The Swivel-Eyed Loons Have a Point https://craphound.com/news/2023/05/14/the-swivel-eyed-loons-have-a-point/

Upcoming appearances:

* UCL Peter Kirstein Lecture, Jun 1 (London):

* Cymera Festival, Jun 3 (Edinburgh)

* Red Team Blues with Martha Lane Fox at the British Library, Jun 5 (London):

* Rightscon, "Interoperability: from buzzword to a map of solutions," Jun 6 (Costa Rica):

* Re:publica keynote, Jun 7 (Berlin)

* Otherland event for Red Team Blues, Jun 8 (Berlin)

Recent appearances:

* How To Save News Media From Our Tech Overlords (Canadaland)

*  Most AI is not artificial or intelligent (with James Bridle)

* This Machine Kills

Latest books:

* "Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com

* "Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com

* "Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The *Washington Post* called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html

* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59 (print edition: https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)

* "Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html

* "Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.

Upcoming books:

* The Internet Con: A nonfiction book about interoperability and Big Tech, Verso, September 2023

* The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023

This work - excluding any serialized fiction - is licensed under a Creative Commons Attribution 4.0 license. That means you can use it any way you like, including commercially, provided that you attribute it to me, Cory Doctorow, and include a link to pluralistic.net.


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