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Money in Politics: The Best Tax Break Half a Million Dollars Can Buy

The first in a series of articles exploring the influence of corporate money over our political system.

When Microsoft filed pay disclosures with the Securities and Exchange Commission last year, it reported a $670,000 bonus for company CEO Steve Ballmer. But the company didn’t mention how Ballmer spent the bulk of that check – on a $425,000 campaign contribution to oppose a state income tax for the very wealthy.

With this hefty check, Ballmer helped defeat a ballot initiative that would have helped shore up state revenue and equalize Washington’s tax system, which tilts heavily in favor of the rich. The measure, Initiative 1098, would have created a state tax on income exceeding $200,000 (for individuals) or $400,000 (for couples) a year. It also would have reduced property taxes and eliminated business and occupation (B&O) taxes for many small businesses.

The potential revenue – estimated at more than two billion a year – would have been invested in education and health care. Now, in the face of a massive state budget shortfall, both schools and clinics are on the State Legislature’s chopping block.

Due to loss of state funds, nurses are being laid off and joining the unemployment line. Tuition at public universities is skyrocketing. The state has cut dental care, leaving many Washingtonians with no choice but to let their teeth just rot in their mouths. To add insult to injury, the bleak revenue picture is leading to the closure of libraries and local and state parks – quality-of-life investments that make a real difference in a community’s future.

As it stands now, Washington’s tax system likely remains the most regressive in the country. As of 2007, the state’s poorest residents – those earning under $20,000 a year – were paying 17.3 percent of their income in taxes, compared to just 2.6 percent for those at $537,000 or more. The higher people’s income, the smaller the share they pay in taxes.

It’s worth noting that Ballmer’s $425,000 campaign contribution could be much more than he would have paid had the income tax been adopted. But it’s still pocket change for a man whose net worth was recently estimated at $13.1 billion, putting him in the club of the world’s top 35 billionaires.

Ballmer’s wee $425,000 bonus is still almost half a million dollars – the equivalent of more than a $322 per hour wage. It’s also a lot steeper than Washington’s (2009) median hourly wage of $18.37, which is less than what many families need just to make ends meet.

So how did one of the world’s richest men explain his opposition to paying an income tax in a state that’s clearly hurting? Ballmer wasn’t talking, but Steve Mullin of the Washington Roundtable decided to speak for him. “[He’s] reached the same conclusion that many others have, which is this is really bad for the economy and really bad for job creation,” Mullin said.

As always, the richest among us want us to believe that lining their pockets with cash is good for the rest of us. It’s a softer version of the kind of extortion companies like Microsoft use to squeeze huge tax breaks from the State Legislature, year after year. Washington state would do better by standing up to this pressure. Yet, with a former Microsoft exec now heading the state’s Department of Revenue – the agency charged with collecting taxes – it appears that Steve Ballmer has his company and himself well insulated.

“Local schools in the state need to be the No. 1 source of talent for Microsoft,” Ballmer was quoted saying back in 2003 (thanks, Publicola.com.) “Taxpayers in this state have to come to grips with the notion that says we need to invest more in our education system overall.”

Perhaps Steve Ballmer really does believe that we – through the vehicle of our state government – should invest in creating a secure, healthy future for our families and our communities. He’s got the right idea. He just doesn’t think that rich people and their corporations should contribute.

This year, the Washington Legislature will have an opportunity to begin closing some corporate tax loopholes, a step toward equity. Let’s hope our electeds decide to represent the state as a whole, and not just our billionaires and their corporations.

photo courtesy

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