A Struggling Economy is No Time to Raise Taxes

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Hundreds of our fellow citizens stepped up to run for elected office during the recent candidate filing week. From local to federal positions, this is an example of our representative democracy at its finest. It’s also a reminder that there are real problems facing us right now, and many of the people solving them will be relatively new to elected office.

The state Legislature already has a lot of new faces, and this November’s election will bring even more newcomers to Olympia.

Newcomers and veterans alike will be looking at an unprecedented drop in state revenue. After years of record growth, policymakers will be looking at a $7.1 billion budget shortfall, according to unofficial figures released last month. In fact, lawmakers might be called back to the Capitol even before the 2021 session begins in January, possibly as early as this summer. There is talk of a special session to address the budget hole after the next official budget and revenue forecast.

Whenever they come back, legislators will face hard choices.

Cutting programs is hard, so there are already calls for tax increases to help sustain state spending. That would be a mistake.

There’s a great degree of fragility in our economy and in communities across the state. With approximately 1.2 million unemployment claims in Washington as of mid-May—and thousands of businesses forced to close their doors, some never to reopen—putting additional burdens on our state’s employers, employees and communities would not be helpful.

Businesses pay more than half of all state and local taxes in Washington, so if they aren’t able to succeed, the state’s tax revenue will continue to fall. And those same private-sector employers pay the wages that sustain the other two major pillars of state tax revenue: sales and property taxes.

As dire as the state’s budget situation might be, our state’s small businesses and other private-sector employers are in far too fragile a position to handle a bigger tax burden.

Let’s be clear: We need to double down on our commitment to grow jobs and help restart the economy. Now is the time to give employers and employees every possible tool to recover, not to add new burdens. Help employees and workers receive training to move into new industries. Invest in infrastructure, including broadband. Pause new rulemaking, as the state did in 2010 during the recession.

The economy is going to look different on the back end. Now is the time to come together as Washingtonians to give the economy the confidence it needs to be strong and dynamic.

You can’t tax your way out of a recession.

But you can grow and build your way out.

Fortunately, that’s exactly what our state’s private-sector employers do. They are creative, dedicated and reliable. As Washington safely gets back to work, businesses will be there to welcome back employees and customers.

As Main Street tries to recover from the pandemic, employers will need help from lawmakers and policymakers at every level. Legislators will need to do all they can to work within the tax revenues that our struggling economy can provide to shore up the budget and help rebuild the economy. It will take creative thinking and an “everything plus the kitchen sink” approach.

Like everyone else, lawmakers and political candidates are just beginning to grapple with the consequences of the COVID-19 pandemic. Businesses are starting to reopen in parts of the state, with new guidelines in place. That’s a good start.

The next step will be for lawmakers, whether they have been in office for decades or just stepped up this year, to do everything in their power to help Main Street businesses not only survive the pandemic, but also make a full recovery. ■

Kris Johnson is president of the Association of Washington Business, the state’s chamber of commerce and manufacturers association.