Wednesday, April 21, 2010

Reporter's Notebook

Paul Leonard can be reached at

The myth of job-killing taxes

Reporting on job creation in Clark County is a bit like tracing the story of a detective novel, one beset with twists and turns. Only in this case, it isn’t a murder or big-ticket heist that begs to be solved – rather, it’s a hunt for where the jobs are (or aren’t) in a region desperately looking for good economic news.

However, on the jobs front, good news has definitely been hard to find. In Clark County, the economy shed 200 positions in March, raising the unemployment rate to 14.8 percent, according to a labor market report released last week by the Washington State Employment Security Dept.

Virtually all sectors remain weak in terms of job growth: retail, construction – even sectors once protected from the full impact of recessions past, like professional services. The economic situation has become critical enough for the state to recently designate Clark County as “distressed,” entitling some job-creating projects to sales tax relief.

All of these negative facts and figures prompt the question, posed here in classic detective novel fashion: Who-dunnit?

According to regional economist Scott Bailey, at least one suspect can be crossed off the list of job-killing culprits. “Taxes have a relatively small impact on job growth,” Bailey told me last Friday, in a conversation on the impact of targeted tax increases recently passed by the Washington State Legislature.

That goes for tax increases elsewhere, as well. Bailey pointed to the lack of positive economic benefit to Clark County from the passage of initiatives 66 and 67 in Oregon, despite assertions to the contrary by business interests on both sides of the Columbia River (including this column, in which I panned the Beaver State ballot measures as setting a ‘dangerous regional precedent’). “If tax rates are relatively equal to other states, you are not going to see much impact,” Bailey said.

This is not to say that taxes are not important in terms of economic and job growth. But what this region really needs is an honest assessment of our weaknesses. And taxes – no matter how unpopular– aren’t one of them.

In fact, there are some local institutions deserving of more tax dollars, not less. According to Bailey, one of the region’s chief assets in the coming recovery are our solid education and skills training facilities – engines of future job growth, such as WSUV and Clark College, that deserve broad-based community support.

And despite the assertion of thousands of Tea Party protestors last week, the overall tax burden on individuals in 2009 was one the two lowest since 1955, according to the Center on Budget and Policy Priorities. The other was 2008, coincidentally the year when the Tea Party anti-tax movement began.

Make no mistake: struggling small businesses still need tax relief.

But they also need a skilled workforce, adequate infrastructure and economic development funding provided by a fair and equitable tax system.