Hans Schundler

Common Sense Returns to Seattle: The Head Tax Is Dead

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Posted by Hans Schundler on Thursday, June 21st, 2018, 9:45 AM PERMALINK

Seattle legislators have done everything in their power to make their city the poster child of American socialist utopias. They adopted a massive soda tax last winter, raised the local minimum wage to 15 dollars an hour (the negative impact of which has been well documented), and just months ago passed a $275 head tax on big businesses. In other words, its leaders have made a concerted effort to undermine all that’s enabled Seattle to grow more quickly than almost any other American city.

It seems, however, that this anti-growth agenda has finally met some much-needed resistance. Just two months after unanimously passing the head tax, the city council repealed it (7-2) when Amazon threatened to take its business elsewhere. The decision came a mere two months later than it should have.

To understand the importance of this overturn, some context as to the outrageousness of the law is necessary.

Seattle voted to raise its minimum wage to $15 per hour in 2014 presumably with the intent of raising wages for its workers. Therefore, it may come as a surprise that the cited cause for imposing a head tax just four years later was to address rising wages as a problem facing the city. Because companies like Amazon, who employs 40,000 Seattle residents, decided to offer their workers more, lawmakers blamed their wage increases for rising housing prices and a shortage of affordable options. In response, they levied a tax costing Seattle’s biggest employers $47 million annually with the collected revenue to be aimed toward subsidized housing.

Amazon, usually not hesitant to cow-tow to liberal demands, was quick to point out that the city had already greatly increased its spending on affordable housing, having no marked impact on homelessness. The company exposed local lawmakers, reminding them that Seattle spending “far outpaces the Seattle population increase over the same time period. The city does not have a revenue problem — it has a spending efficiency problem.” Starbucks also chimed in, denouncing local government for continuing to “spend without reforming and fail without accountability…”

The city council thankfully heeded the warnings issued by its largest businesses. It avoided a massive growth slowdown and job flight because evidently even it understands that Seattle’s true success has stemmed from private sector growth, not the “Fight For 15” or any other government gimmick.

In the future, however, common sense legislation should not require fight or flight standoffs between Seattle and its businesses. Politicians should not say to companies, as ATR President Grover Norquist put it, “If you bring jobs to Seattle, the tax and spenders in the city will tax them. A little now. More later. Better to invest in a different city, perhaps a different state." City leaders should take a different route. They should realize that alleviating homelessness comes not from punishing job growth, but from unleashing growth and the prosperity it brings.


Photo Credit: Daniel Schwen

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ATR Urges Rhode Island Lawmakers to Put Their Constituents First and Reject HB 8013

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Posted by Hans Schundler on Friday, June 15th, 2018, 3:33 PM PERMALINK

With about a week before the Rhode Island legislature adjourns the 2018 session, there is House-passed bill that Americans for Tax Reform is urging state senators to  approve and send to Governor Gina Raimondo (D) before heading home for the summer. There is also a Senate-passed bill that ATR is urging House members to reject.

The good bill approved by the House in a unanimous 69-0 vote, HB 7575, would repeal the state requirement to acquire a permit in order for a person to braid hair for a living. The bad bill approved by the Rhode Island Senate that ATR is urging House members to not take up in the final week of session is Senate Bill 2679, a protectionist piece of legislation that expands governmental restrictions on the auto repair industry and market in a way that will lead to higher prices for consumers.

The House companion to this misguided bill, House Bill 8013, which awaits consideration by the House. If passed, the bill changes state law to increase the amount of time insurance companies are precluded from using aftermarket parts for accident repairs, which reduces costs for consumers, from 30 months to 48 months. It also expands these restrictions to include all collision repair items, not just body parts as did prior law. One section even demands that insurers comply directly with the recommended repair processes of original manufacturers. Such heavy regulation will make it much more expensive for insurers to provide coverage.

HB 8013 supporters say the bill will better protect consumers. The reality, however, is that it will propel the state’s already steep property damage costs to the front of the pack. The auto body lobby — which has notably donated over $16,000 to the bill’s sponsors in the Senate — claims that the higher costs born by insurance companies will translate into safer vehicles, but the parts now preferred by insurance providers already undergo inspection by the Certified Automotive Parts Association, meeting the same standards as those of original manufacturers.

Common sense reveals that the true motive for these restrictions is not benevolent concern, but political plunder. Auto shops and manufacturers want to limit the variety of available products and mandate specific procedures so that they receive fatter checks from policy bound insurance companies. And while they get the government to force more cash into their pockets, insurance providers will be forced to raise premiums on Rhode Island taxpayers. 

Unfortunately, this legislation merely falls in line with the patterns of the last decade. Years of special interest lobbying for laws that pick economic winners and losers have saddled Rhode Island drivers with some of the nation’s highest costs. State residents already pay the 4th highest collision premiums and the 9th highest state and local tax burden in America. The last thing they need is a coercive bill that will enable auto shops and manufacturers to price gouge everything from windshield wipers to headlights. But that is what they may get from lawmakers, as removing competition from the repair market both slashes cheaper alternatives and jacks up the already lofty prices of original parts.

HB-8013 drastically limits choice and freedom between providers and buyers, ballooning prices for the drivers of Rhode Island. The sponsors of the bill know as well as anyone what the consequences will be if it passes. Unfortunately, as is often the case, they benefit from adhering to the concentrated interests of a few at the expense of the wellbeing of many.

ATR is urging the House to adjourn without taking up HB 8013. If HB 8013 comes up for a vote in the final days of session, ATR urges Rhode Island lawmakers to vote NO.


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