Posts tagged ‘washington state’

Making Bussiness Too Hard

My company exited business in Washington State about 3 years ago, and since then I have routinely turned down new business opportunities in the state.  The workers comp system is expensive, the sales and lodging tax regime is both expensive and complicated, and minimum wage rates are set to crack $10 an hour, and are indexed in some raise that they seem to rise substantially every year.  The state made it very difficult to manage a fleet of vehicles in the state, and generally made it clear that they would rather me not doing business there.  So I don't.

And apparently, Boeing has come to the same conclusion.

Legislation for the Benefit of One

What follows is by no means the worst excess of our Congress.  But it is an interesting demonstration of how Congress attempts to disguise legislation that is intended to help just one important contituent.  The program looks moderately innocuous:

[T]his year's farm bill contains a special-interest provision you've
probably never heard of "” the Qualified Forestry Bonds program. This
provides federally funded tax-credit bonds for forest purchases that
meet the following four criteria:

The forest must be adjacent to U.S. Forest Service Land;

Half of the parcel must be turned over to the U.S. Forest Service;

It must include at least 40,000 total acres; and

It must be subject to a "native fish habitat conservation plan approved by the United States Fish and Wildlife Service."

Well, it looks like it might be some land acquisition scheme by the US Forest Service, though by my observation they really aren't staffed or resourced to manage the land they already have.

But here is the truth of it:

But this farm-bill provision offers a lesson on how things are
sometimes done in Washington. Only one parcel of land in the entire
United States meets the criteria set for the Qualified Forestry Bonds
program. You see, the U.S. Fish and Wildlife Service has approved
exactly one "Native Fish Habitat Conservation Plan,"
covering a 1.6-million-acre parcel that reaches from western Montana
into eastern Washington State. And that parcel is owned by the Plum
Creek Timber Company, the single largest private landowner in the
United States.

The Tony Soprano Test

I must say that I find this state Supreme Court decision from Washington State terrifying.  It is interesting that the State of Washington has exactly the same proprietary attitude over the garbage business as does the Mafia in New York:

In a decision released this morning, the Court stated that hauling
construction waste is not a private enterprise and "is in the realm
belonging to the State and delegated to local governments." The court
found specifically that the provision of waste hauling service is a
"government service" and constitutional protections do not apply to
government-provided services.

I don't know the Washington State constitution, so it may indeed mention "construction waste hauling" as an enumerated power of the government.  If it does not, and by "constitutional protections do not apply" they mean the US Constitution, then this is a stunning over-reading of said document.  Nowhere, in the US Constitution at least, is there a provision for the government providing services of any kind, much less construction waste hauling. 

Dark Days for Free Speech

Nearly every day brings new evidence of what a threat to free speech campaign finance "reform" laws have become.  I found this bit from Brian Anderson very depressing, but not surprising:

Consider what's going on in Washington State as an early warning.
Early in 2005, the Democrat-controlled legislature passed"”and
Democratic governor Christine Gregoire signed"”a bill boosting the
state's gasoline tax a whopping 9.5 cents per gallon over the next four
years, supposedly to fund transportation projects. Thinking that their
taxes were already plenty high... some citizens organized an initiative campaign,
as Washington law allows, to junk the new levy: No New Gas Tax.

Two popular conservative talk radio hosts, Kirby Wilbur and John
Carlson, explained why the gas tax was bad news and urged listeners to
sign the 225,000 petitions necessary to get the rollback initiative on
the November ballot, though they played no official role in the
campaign and regularly featured on their shows defenders as well as
opponents of the tax hike. With the hosts' help, the petition drive got
almost twice the needed signatures, but the ballot initiative, strongly
opposed by labor unions, the state's liberal media, environmental
groups, and other powerful interests, narrowly lost.

Meantime, however, a group of pro-tax politicians sued No New Gas
Tax, arguing that Wilbur's and Carlson's on-air commentaries were
"in-kind contributions" and that the anti-tax campaign had failed to
report them to the proper state authorities. The suit sought to stop
NNGT from accepting any more of these "contributions" until it
disclosed their worth"”though how the initiative's organizers could
control media discussions or calculate their monetary value remained
unclear. The complaint also socked NNGT with civil penalties,
attorneys' fees and costs, and other damages...

The real target of the suit was clearly Wilbur and Carlson, or, more
accurately, their corporate employer, Fisher Communications. If NNGT received the "contributions," that meant Fisher had sent
them by broadcasting Wilbur's and Carlson's support for the initiative.
Washington law limits contributions in the last three weeks of a
political campaign to $5,000. Depending on how one measured the dollar
worth of on-air "contributions," Fisher could thus face big fines and
criminal sanctions if it let Wilbur and Carlson keep talking about the
gas tax. "Thankfully, Fisher assured us that we could keep
talking about the subject on the air, and we did," Wilbur says. The
judge ruled in favor of the pro-tax pols, though he finessed the $5,000
limitation problem by ruling only on the "contributions" that occurred
prior to the campaign's last three weeks.

I find this offensive.  And expect similar "in-kind" donation logic to be coming to a blog near you.  And while Democrats may short-sightedly cheer as long as this logic is applied against conservative talk radio, this "in-kind" logic is a Pandora's Box that will be very hard to close.  For example, lets say my wife's reading club organizes 200 women to go out to a 3-hour rally to support Hillary Clinton.  In doing so, the club just mobilized 600 "man"-hours for Ms. Clinton, which at $10 an hour, which is a low value for a professional person's time, is worth $6000.  Have they violated the law?  Or, lets say a lawyer who normally bills $300 an hour spends all day Saturday and Sunday marching in a rally for George Bush.  Is he over the limit?

We are in the absolutely terrifying and historically unprecedented position of having had Congress pass a law that no citizen (except a few media people and a few government licensed political groups) can criticize a member of Congress by name within 60 days of an election.  And the Supreme Court signed off on this travesty!

I'm Confused About this Interstate Commerce Thing

In Raich, the Supreme Court determined that marijuana grown, harvested, and consumed at the same house in California constituted interstate commerce and therefore was subject to federal rather than state regulation (via the Consitution's commerce clause).

However, apparently cigarettes purchased over the Internet from an Indian Nation within the boundaries of NY state and consumed in Washington state are not interstate commerce and are therefore subject to Washington State sales tax:

On Thursday, a federal judge ordered tribal Internet
cigarette vendor Scott Maybee to turn over his list of Washington
customers who purchased cigarettes through his Web site,
SmartSmoker.com between November 7, 2004 and April 1, 2005, writes the Buffalo News.
The Washington Department of Revenue is sending letters to those
appearing on Maybee's list asking for full payment of uncollected taxes
from their purchases.

Actually, it is probably not sales tax involved but "use tax", the cutesy way most states get around limitations on taxing interstate commerce.  Basically, they invented a thing called use tax that applies only on goods that you use in state and on which no sale tax was paid to any state.  While the use tax legal evasion is common to most states,  I have written before about other such cute evasions Washington State uses to collect taxes where they are not supposed to.

Defending Your Enemy When They Are Right

There is a tendency in politics, once you have an enemy, to attack that enemy no matter what position they take.  Conservatives of late have (rightly) attacked Liberals for being un-supportive of Iraqi democracy, just so they can embarrass their arch-enemy GW Bush.  However, conservatives can be guilty of the same thing. 

Ed Morrissey of Captains Quarters has been on Governor (of Wisconsin) Jim Doyle's case for historically opposing and promising to continue to oppose reforms in election controls, despite very suspicious voting numbers in Milwaukee.  In this case, Captain Ed has done a great job bringing focus to election fraud and "over-vote" issues in Milwaukee, E. St. Louis, and Washington State, especially since the MSM has preferred to focus on potential "under-vote" issues in Ohio and Florida.

However, in piling on Mr. Doyle, I fear that Morrissey has put aside his political and/or philosophical beliefs in favor of giving his enemy another good bludgeon.  His post points out that:

executives involved in a controversial health-care merger gave Doyle over $28,000 in donations shortly after he allowed the merger to go through. Critics at the time wondered why Doyle didn't ask for common-sense economic concessions

OK, lets take this in two parts.  First, lets look at Doyle's decision on the merger.  The article says that Doyle is being criticized basically for NOT holding two companies for ransom.  Often anti-trust law is used as "merger tax" to extract some sort of pay-off from the parties, in the form of reduced prices or a spun-off properties or whatever.  However, no matter what you call it, this is a bribe the government is demanding to let individuals carry forward with a private business transaction.  Usually this bribe is waved around by some politician in order to score some populist political points toward their next reelection (the Europeans and Elliot Spitzer are both good at this).

Is this really what Morrissey thinks Doyle should have done?  As a libertarian, I find that conservatives' support for truly free market capitalism sometimes runs hot and cold, but I would generally expect a conservative to oppose this kind of extortion and interference with the free market.  So does Morrissey really think Doyle did the wrong thing?

The second part of the story, of course, are the campaign contributions.  First, I would argue that if Doyle's merger decision was not wrong, then donations based on this decision are not wrong either.  Many, many companies out there donate to politicians who promise to keep the government off their back.  I certainly do - does that make my contributions graft?  Finally, Morrissey admits that

These donations do not appear to have broken any laws, although the timing strongly suggests some sort of payoff

Look at it the other way around:  If Doyle HAD extracted concessions to approve the merger, it would not have strongly suggested a soft of payoff, it would have been a definite payoff.

Captain Ed- I enjoy your site immensely, even when I disagree with it.  It is OK for you to say that Doyle made the right decision on the merger without backing off of him over the election issue -- just as it is OK for those of us who had concerns about the war in Iraq to gleefully support that country's return to democracy.

Washington State is Grabbing from the Feds

By Federal law, U.S. Federal Government lands and property are exempt from state and local property taxes, just like sales to the U.S. Government are exempt from state sales taxes.  This means that, for example, the feds don't have to pay property taxes to Wyoming for the buildings and improvements in Yellowstone National Park.

Most states may sulk about this but they live with it.  However, a few of the most tax-avaricious states, including California and Washington, have found partial way around this. 

I just got my "Leasehold Excise Tax Return for Federal Permit or Lease" from the state of Washington.  What the heck is this?  First, some background.  My business runs campgrounds under concession contract with the US Forest Service in Washington State.  These concession contracts are legally like leases, in that I lease the facilities for a percentage of sales payment in return for running them for-profit.  Washington State can't charge property taxes on the campground itself, since its Federal property, so they charge a steep tax on the rent we pay to the Federal Government.  In Washington, the tax this year is 12.84% of the rent payed.

Yes, that's right.  The state only charges this special tax for rents payed to the US Government. No other rents get taxed.  The tax exists for no reason other than to get around the limitations on taxing the US Government's property.

If asked, Washington would piously state that, oh, we aren't taking any money from the feds, we are taking it from private entities.  Yes and no.  Yes, I as a private entity, I am paying it.  But, given how I bid for these leases, the state tax clearly comes right out of the Feds hands.  When I bid this project, I figured out what rent I could pay the government, and then backed out how much I would have to pay Washington State and bid the lower sum to the Feds.  In this case, Washington State is very clearly taking money right out of the US Government's pocket.

And for what?  Washington State provides no services or utilities to the campground.  The US Forest Service provides the fire protection, its own law enforcement officers, its own water and sewer systems, and its own roads.  There are no residents on the property, so no one associated with the property is using schools or other services.  And, because of sky-high sales and lodging taxes in Washington (from 10-12.5% of sales for camping), the properties are already contributing a ton to state coffers.

The Good, the Bad, and the Ugly of State Sales Tax Systems

Note that this is the newest in my series of "real-world" small business issues.  Other posts in this series include Buying a Small Business and Working with the Department of Labor

One of the things I did not mention in my series on buying a small business was the notion of complexity.  Our business manages over 175 sites with 500 seasonal employees in 10 states.  I have friends who own businesses that have the same sales, and more profit, from working alone from their home.  As I often tell people, I love what I do, working in recreation and spending most of my time in National and State Parks, but it is overly complex for the money we make.

The one advantage of this is that, despite being a small business, I get to observe business practices in many parts of the country.  And one business-related practice that varies tremendously from state to state is sales taxes.  (By the way, before I bought this business, I was a strong Federalist.  Putting most regulatory power in the states slows government encroachment.  It also limits anti-business regulation, because states know that such unilateral regulation will just chase employment across state lines, as California has found out.  However, having to deal with 10 different tax and regulatory regimes every day is causing me to revisit Federalism a bit).

Anyway, based on this experience, I will dedicate the rest of this post to my observations of the good and bad of state sales tax systems.

Continue reading ‘The Good, the Bad, and the Ugly of State Sales Tax Systems’ »

OMG -- Wash. State Sales Taxes

Just pulled out the new Washington State sales tax forms to do my September taxes. The form is now 8 (dense)pages long! This is really getting out of control. In contrast, the sales tax forms for Florida (which has other problems, but we will talk about those later) fit on one side of a 3x5 card.

Washington is the worst offender I have seen in at adding jillions of new small targeted sales based taxes. They have become even more complicated than California. The basic sales tax rate varies by industry and by location - and I am not talking about just by county or city but by town. Each of something like 350 towns have their own tax rate. Then there are add-on taxes that don't follow any recognized borders, such as convention taxes and transit district taxes. Then there are lodging taxes, that vary by town but also depend on the number of sites we have in a campground, but of course that threshold number of sites changes by town as well. I have spent litterally hours with maps trying to figure out what rate we collect at for each of our locations. The Washington State tax return takes longer to prepare than any 4-5 other returns we have.