Cathy Moore Moderates; Council Votes Against Her Tax

Still not a moderate council!

Cathy Moore represents District 5 (North Seattle) on the City Council. 

She recently proposed a two percent Seattle top up to the state tax on extreme capital gains windfalls, to help with Seattle’s obscene budget gaps. 

As expected, her moderate proposal went down in flames, in a lopsided 6-3 decision from the conservative council. Sara Nelson, Bob Kettle, Rob Saka, Maritza Rivera, Tanya Woo and Joy Hollingsworth all voted against the modest measure to tax the rich and provide for some basic needs, despite their huge planned reduction in money earmarked for affordable housing. 

This vote suggests that Seattle maintaining one of the most lopsidedly regressive tax codes in the country remains quite important to Sara Nelson, Bruce Harrell and their crew. Meanwhile, in Louisiana, Trump supporting Republicans are passing legislation to make their tax code look more like Seattle’s (though still probably not as upside down as ours!).

What in the world are we doing?

Was It A Good Tax?

This proposal was a refreshing turn for someone who campaigned as a moderate Dem but has often governed as a conservative Dem, a topic to which I will return below. 

The tax wasn’t a perfect solution, but it would have helped stanch some of the bleeding.

Moore proposed adding 2% to the state’s 7% tax on extreme capital gains (over $262,000), with all the exemptions for houses, farms and small businesses that the state offers. This means the first $262,000 are exempt, every year. Recall that the state capital gains tax was affirmed by approximately two-thirds of voters this November, with even higher margins locally. 

Moore’s tax would have raised between $16 million and $51 million a year. 

The range is so large and unpredictable because it would rely on about 800 people, the timing of their stock sales, their tax “optimization” strategies, and the state of the stock market. All involve a lot of volatility when it comes to predicting how much the tax will yield. 

So as policy goes, it is not a long term, big revenue stabilizer, and it is likely to move in correlation with JumpStart. It is thus not an answer to the longer term structural deficit. 

But it was worthwhile, particularly this year.

The council faced a huge budget deficit, and proved unwilling to deal with it. Instead of keeping their repeated empty promises (“making sure programs accomplish their goals”) they instead added a bunch of spending to their pet issues, and cut back Democratic party priority areas like the Office of Labor Standards. Then they shoveled hundreds of millions of dollars earmarked for affordable housing and green new deal investments into their own pet programs.

Had that extra cash come in and been put into keeping people housed and fed, which was part of Moore’s focus, that would have reduced harm when Harrell and Nelson are busy putting people’s basic needs on the back burner. 

Also, it would have made our extremely poor-punishing/rich-favoring tax code (second worst in the country) a bit better. Not decent, but a bit better! 

Still, longer term, I do think there is a limit to how much juice we can squeeze out of the tax. If the state expands to include people who earn less (say, $100k in gains), I think it would be worthwhile to match that threshhold. This would significantly expand the revenue from the tax, and because of the matching taxpayer base, the required filing, and the existing state infrastructure, it would keep the administrative costs low.

I can imagine a scenario where this brings in upward of $100M a year, but it would still continue to be a volatile source and so cannot be too big a component of fixing the structural deficit.

A Surprise From Cathy

I met Cathy on the campaign trail and I found her interpersonally friendly and I was pleased to hear that she sometimes said sane things like that she understood that using jail to force people intro treatment doesn’t actually work and that we needed to seriously expand housing supply through “Option 5” or “Option 6” for Seattle’s housing plan. In addition, she said she voted for I-135–the Social Housing bill.

I started to worry, however, when she said very different things to different audiences. 

The worry was unfortunately well-founded. On council, she has been a significant disappointment on many frotns. 

She has pushed for a lot of empty, performative action around arresting people in certain geographic areas, forcing people in need farther from available services. She has backtracked on her housing stances, making extremely skeptical statements about the impact of housing supply. And she voted to put I-137(b) on the ballot, which is an obvious way to avoid progressive taxes to fund social housing (which was always openly the plan for social housing), and to instead fund social housing by defunding deeply affordable housing by $10M. 

One area where she has been more moderate: she has been okayish on labor issues. For example she refused to pass Sara Nelson’s Uber-lobbyist-written reduction of minimum wages for delivery drivers, though her own proposed alternative wasn’t exactly great either. Still, in contrast to most of her colleagues, at least she considered labor’s perspective. (This should be table stakes for any Democrat–it’s the right thing to do, and 67% of Americans view labor favorably.)

Her behavior has also been a problem. She got caught making up mean and unsubstantiated stories about her colleague from the dais, and has repeatedly bullied the same colleague in public. When protestors got too noisy during a council meeting, she demanded that police “arrest those individuals” - forgetting that she is no longer a judge who can hold people in contempt, and showing a bit of contempt herself for first amendment rights.

So after all this, I will admit I was surprised and delighted to see her pivoting back to a more moderate focus.

I’ve heard speculation as to why–that this was a reaction to Alexis Rinck’s decisive win and the shifting political winds, or the budgeting process, or the success of the state capital gains tax. Perhaps it was her hope all along. I don’t know.

But I’m delighted to see council-member who have been more reticent suddenly remembering to vote like Democrats, even moderate ones. And Since Sara Nelson’s numbers are in the tank, the days of this council behaving as if it was bought and paid for by big corporations (even if it mostly was) may be numbered.