Eyman tax measure could be blessing in disguise for state

If you can’t beat Tim Eyman — and those who most want to sure can’t seem to — then how about joining him instead?

Eyman’s just-passed Initiative 1366 is said to be putting our political system into a no-win bind. State lawmakers can either cut sales taxes by $1.4 billion annually, blowing a big hole in the budget, or they can capitulate to Eyman’s demands for a tax-limiting constitutional amendment.

“Voters across the state have placed lawmakers in a lose-lose situation,” was how a Vancouver Columbian editorial put it the other day, before arguing lawmakers should just give in to the initiative king.

That Eyman. He has us in another pickle, doesn’t he?

Maybe not. Maybe there’s a third way — one that could be “win-win-win” in that it preserves the state budget, makes taxes fairer and, most important, gives some relief to the poor and working class of the state.

Eyman’s initiative will slash the state sales-tax rate from 6.5 percent to 5.5 percent on April 15, 2016, unless the Legislature first passes a two-thirds tax-vote constitutional amendment. The intent, for him, is to coerce lawmakers to do the amendment.

But there’s nothing in Eyman’s measure that says they can’t go ahead and cut the sales tax, then replace that lost revenue with something else.

In fact doing exactly that has been a long-term goal of practically everyone who has studied our creaky, misguided tax system — efforts that span 50 years of Republican and Democratic governors alike. They all concluded the same thing: The high sales taxes here are uniquely punishing to the poor. A national tax study last spring ranked Washington as the most regressive in the nation by far — meaning nobody heaps the burden on the poor like we do.

Eyman is applying pressure to try to get what he wants. Why not divert that pressure to push for tax reform instead?

It wouldn’t need to raise taxes overall. The idea is that a sales-tax cut is long overdue, but dollar for dollar it must be replaced so as not to crush schools and other state services. They could use the upcoming legislative session to determine what those new taxes might be.

Forget a state income tax. It’s too hot and was rejected by voters a few years ago. But how about a corporate-profits tax? A capital-gains tax? Our state is one of the few with neither of these, which is why we instead specialize in soaking the poor.

Jeff Reifman, an ex-Microsoft multimillionaire who has been decrying the state’s regressive tax scheme for years, was the first to suggest Eyman’s measure is less of a crisis than an opportunity.

“Put aside what you think of him,” Reifman says. “I’m sure it wasn’t his intent, but he’s giving us an opening to do real tax reform.”

The chairman of the House Finance Committee, Rep. Reuven Carlyle, D-Seattle, said the GOP’s “no new taxes” stance probably makes it a non-starter.

“You’re trying to be rational,” Carlyle said. “But the idea that there’s going to be some deeply reflective, bipartisan discussion about tax reform … well in Olympia that’s a very heavy lift.”

OK then, how about this: A group of climate activists called Carbon Washington has more than 300,000 signatures for their measure that, by cosmic coincidence, would cut the sales tax by the exact amount as Eyman does. Except it would replace that cut with a carbon tax. The purpose of Initiative 732 is to curb greenhouse gases while being revenue neutral.

By a fluke, the Eyman initiative and this climate change initiative are complementary. The Legislature must deal with both, this spring. There are timing issues to be worked out, but if lawmakers embraced the spirit of both they could combat climate change, make the tax code smarter and solve the Eyman problem, all in one fell swoop.

Plus Tim Eyman would then be known as the one who finally spurred us to tackle climate pollution. The irony of that alone is reason to consider it.