Facts vs. interpretations in Seattle
In this city, a petri dish of progressivism, a prevailing theory is that when you raise something’s price, people will buy less of it, except when they do not. A related theory is that constitutional and statutory texts should be construed in the spirit of Friedrich Nietzsche: There are no facts, only interpretations.
The city council has voted to impose a tax, effective next year, on sugary soft drinks, raising the price of a 2-liter bottle of soda about $1.18. Presented as a measure to combat obesity, the tax is projected to generate about $15 million a year.
Three years ago, the city council voted — unanimously, of course — to increase the city’s minimum wage incrementally from $9.47 to $15 an hour. It rejected the contention that employers buy less entry-level labor when its price increases. The city commissioned a study from six University of Washington economists ranging from left to right, presumably expecting findings congruent with other studies purporting to show that demand for such labor, unlike demand for sugary sodas, is price-inelastic.
The UW study, however, concluded that the costs to low-wage Seattle workers have been three times larger than the benefits, costing more than 5,000 jobs, and that workers whose wages were increased to comply lost an average of $125 a month as employers reduced their hours. Total restaurant employment did not decline, but employers replaced less-skilled, low-productivity workers with others able to produce higher-value work products. As one of the study’s authors said, “Basically, what we’re doing is we’re removing the bottom rung of the ladder.”
Forewarned about the six economists’ conclusions, the city sought more congenial findings from some University of California, Berkeley, economists known for research that supports the national “Fight for $15” movement.
In July, Seattle’s council enacted — unanimously, of course — a city income tax, setting the rate on incomes below $250,000 at zero, and at 2.25 percent on individuals’ incomes above $250,000 and household incomes above $500,000.
Washington, which has no state income tax, has a law that says: “A county, city or city-county shall not levy a tax on net income.” The council claims it is taxing “total income” as defined on IRS 1040 forms. But that is net income, after deductions and exclusions.
The state’s constitution says: “All taxes shall be uniform upon the same class of property.” Twice the state Supreme Court has held that a graduated income tax is unconstitutional.
A suit challenging the tax notes that cities have only taxing authority expressly granted by the state Legislature. And the tax is explicitly designed to “test the constitutionality of a progressive income tax.”
The council must hope that Washington’s very liberal Supreme Court can be persuaded, in a third consideration of unchanging language, to say that constitutional and statutory facts can be made to disappear in a mist of interpretations.
In 2010, advocates submitted a progressive income tax for a referendum. It lost almost 2-to-1. It lost even in King County, home of Seattle and its Nietzschean city council.
George F. Will is a columnist for Newsweek and The Washington Post.