Bill Virgin: What’s being taxed has a big influence on voters’ mood at the polls

Staff writerApril 27, 2014 

In commenting about topics discussed in this column or on these pages, readers will sometimes self-deprecatingly say that they don’t know that much about business or the economy.

This is, to use a business expression, selling themselves short. In at least four subject areas they track the economy, and know the trends, with an exactness a Federal Reserve chairman might envy.

One of those subjects is food prices. The second is gasoline prices. The third is home prices (and mortgage interest rates). The fourth we’ll get to in a minute.

They may not be able to list all the drivers of those trends or explain how those drivers are steering prices. Then again, the supposed experts often aren’t any better at offering a coherent rationale for why the economy is or isn’t working.

What those readers do know is that following price trends, and adjusting to them where possible, is absolutely crucial in managing household budgets so that they remain in black ink.

That attention to detail doesn’t matter just to kitchen-table budgeters and planners. The performance of companies, industries and the entire economy depends on what consumers are doing, just as consumers react to what companies, industries and the entire economy are doing to them (that interaction can sometimes dampen or negate trends, sometimes accelerate them, which is why experts have a hard time deconstructing what’s going on).

It’s also hugely important to politics and elections, as we have and will be finding out in a year with a lot of offices and issues on the ballot.

Foreign relations, social issues, education, the environment — sure, those can figure into campaigns and election outcomes. But they only get to be significant issues when economic issues — jobs and prices chief among them — aren’t. Economic issues trump all.

In that framework, consider the outcome of elections in Pierce and King counties this past week.

At first glance, it would appear that Pierce County voters apparently like fuzzy animals (and some of the less cuddly aquatic wildlife) while King County voters don’t like buses (or the people who run the bus system). But that’s too simplistic. That one measure passed handily (according to election-night counts) while the other was rejected by a sizable margin eliminates the explanation that voters are universally mad at tax proposals.

Instead, here’s a thought: The outcomes can be at least partially explained by the nature of the taxes and what’s being taxed. Oh, by the way, that’s the fourth area of expertise for many readers — tax rates.

King County proposed to fund bus service and some road repairs with an increase in the sales tax and a $60 car-tab fee. The sales-tax increase would have hiked the overall take to 10.5 percent, the first in the state to cross the 10 percent threshold.

Short of making one’s purchases in Oregon (which technically triggers a use tax when goods are brought back to Washington, but we all know what compliance with that is like), or finding a website that doesn’t collect sales tax (ditto), or just not buying anything, a sales tax is hard to dodge, even harder to ignore when it’s right there on the receipt. That constant reminder makes a cumulative impression on consumers and taxpayers, and makes sales-tax increases a rough sell, as King County found out.

So don’t homeowners and taxpayers pay attention to what they’re shelling out for property taxes? Yes they do, but the reminders aren’t as constant. Sometimes they’re hardly visible at all if, for example, you make your mortgage principal and interest payment lumped together with an escrow amount to cover property taxes and insurance. Visibility counts more than frequency. Motorists renew license tabs just once a year, but writing that once-a-year check is a blunt-instrument reminder of what they’re paying for those little stickers.

Keep all this in mind as the Aug. 5 primary and Nov. 4 ballots begin to fill with candidates, initiatives and other proposals. Consider not just what’s being proposed by whom but for how much, and where the money is coming from. Then consider how you and your fellow consumers and taxpayers are feeling about job security, home prices, interest rates, the comparative cost of chicken and hamburger at the grocery store, how fast those numbers flash by on the gas station pump.

Those are all the tools you’ll need to prognosticate like an expert the outcome of this year’s election — maybe even better (not that that’s setting the bar very high). Much as they choose winners and losers in business by voting with their wallets, consumer-taxpayer voters will mark those ballots according to the condition of their wallets, and how comfortable they are with proposals to take a larger piece of what’s inside.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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