my name is rich lying on the pastor here at the temple and i wanted to just take a couple minutes to set out what this is all about and i thought i'd give you a little bit of history about why this came about and also kind of a vision of what it could become depending on all of us years ago when i came to seattle about twelve years ago i had this this vision that and it was wrapped around the anti war movement and i felt at the time that the anti war movement was just kind of going in circles and we were ok at at assembling groups of people to go on marches but there was never a follow up and there didn't seem to me to be a strategy and and i just kept asking myself questions about effectiveness and then many of you will know this and then i'm forgetting the groups now but there was snow and what was the answer and there was one more with an s anyway they started squabbling with each other and i i got to thinking well how how can we create something that teaches us the basic social skills of how to compromise with each other and how to listen to each other and how to work together even if we don't agree with each other one hundred percent if we're basically going to the same shore how do we how do we get there and so i i began to retrieve this old model the wonderful nugget from history that many of you might have heard about and many of you might not have as it was the hylander institute and the highlanders and how many of you have heard about it oh ok i'll be i'll be brief i mean there's this beautiful beautiful model of of basically training people in civil rights i mean they were first training union organizers in the deep south and then it and i think it erupted it evolved out of the forty's in the fifty's and then they began training the civil rights the freedom the freedom riders went through the highland or rosa parks was train there martin luther king was train there the brothers got training there the song we shall overcome was written there i believe and so this is this wonderful little nugget of history and i began to ask myself how could we could and it's still around by the way so if you google it it's still there  they're just keep on keeping on of course they were shut down in the sixty's because they were accused of being communists but that's par for the course and i was asking myself well how can we create a hylander a house where basically people know that they could come they could continually you know you don't have to come every week it's not church but you know you could come and but there is a church but it was a place to come to gather to draw strength from each other to strategize to be trained and to keep the movement alive you know throwing kenneling on the fire at all times and a couple of times that i gave a call out a shout out to the city the responses were actually pretty good thirty people would show up one time forty five people showed up and it was basically all one off meetings and the bottom line of these meetings is we'd get around and we'd get excited and we'd talk about what it could possibly be and we were north enders and seattle for the most part and then the question of diversity came up well we're not diverse and the next thing we knew nobody came for a second round and so that vision just kind of withered away i didn't quite know what all to do about that building my own networks and a lot and and then occupy hit and i went up to the camps and i became an occupy chaplain and i was hanging out and i was very excited about occupy i really believe that there was a moment in the window opened and in my language i think the spirit was doing something and and our body politic something happened in america something happened to us all that up  window did get opened and and a belief in democracy and maybe there's something we could do about this massive corruption in our system and then the state then you know shut him down but before they shut him down as i kept going up encampment the dysfunction was pretty rampant towards the end and it was getting pretty unhealthy there at the end and but i asked myself a basic question and that is until the occupy energy is connected to people like me i am middle class i have networks i have power i have privilege i have status until those two come together all the occupy movement and this is my opinion all the occupy movement is going to be is more protests and we need something more powerful than that and that's really what launched this idea and it took me some months to think it through and here's the vision of this what we come i don't know but the vision of common good conversational cafe with maybe a little food thrown  is a place for an ongoing place a weekly place for people to come to get some information yes but then the most important part in the magical part is to break into groups and learn the skills of trust and affection and nurture and respect that it takes to build a movement getting people to just to talk with each other to meet each other and even if there are some disagreements look for the common ground and that's really what this is about and so seven wonderful people responded to an appeal my appeal to them would you come and speak would you be the prop would you would you be the person that draws folks together and would you give us pertin and and relevant information about what i consider at least to be one of the huge issues of our time and that's corporate power and so we created the seven week series where some great people are going to come and they're going to give great information but the magic is going to be after that information is given in the way we learn to discuss with each other i'm hoping personally that out of this out of over time strategy will develop networks will develop new energy will develop and what began in occupy can continue to grow through us and in our own networks and that's the that's the vision of of what this is all about we're in a church a very typical church basement and it's a very wonderful church basement and what a quick vision of what i'd love to be able to see happen here is for this to be a place that gets a little you know we'll paint around here new paint lee and throw some stuff on the walls make colorful make it bright but also eventually get a maybe a nonprofit group maybe roots which is a young adult shelter in this very building maybe they would run a a little coffee stand something out of the that's called the intersect that room back there maybe we would start throwing some pot lucks maybe we'd have a soup and sandwich beforehand so people could gather and eat and then come in and have a discussion jim and i were talking before hand and and expand it's not just about the brain it's about the feeling maybe we can get some more artists in here to seeing an open mike night spoken word having this to be a place to have some cross cultural and also cross class communication and but all that's just the asian and what it will become is whatever those of you who come make it what i'm doing here is there is a real open invitation to to and ask here to help me build something for the good of our city knowing that we're on the north side of seattle and that has great potential and that has some limitations so so i really am appreciative of you coming the seven weeks that we're looking at is going to be great we're going to shut it down in the summer we're going to relaunch in the fall and part of that is we're in seattle and to try to do anything in the summer is a self defeating once what's the blue sky comes out were gone last thing is and i'm about to call jeff up and he'll talk about it a bit more but there is one more agenda and the agenda was this to common hear stuff and even to talk about stuff but not to do something with the stuff you hear is boring to me and so part of this cafe experience is to always attach some sort of action and these actions will evolve and develop with over the course of the seven weeks the big action that that we're getting at in the reason for the corporate theme is this initiative that has been created called i one hundred three jeff will explain that in just a few and if you would like to be a part of that there's writing again right by anita and other places around here there's a place you can sign if you're seattle resident it's a seattle initiative and if you'd like to help yeah their signatures let us know and if you were really want to know more about this after jeff sits down just stick around at nine o'clock and just chat with jeff and i and we'll tell you more about it's pretty exciting stuff lastly if you would take this take take your sheet of paper  just created some guidelines for when we do break out and chat together and these seven guidelines i'm not going to read them you can read them yourself but again a big primary purpose tonight is not simply to listen to a great presentation by alex it's to be able to have a conversation together and so i just call upon the the inner heart of each one of you in the interim leader in each one of you that when you're in little small groups we eventually break apart and have some discussions to be very respectful of the other person to be curious so curious that you want to hear what the other person thinks and to be mindful of preacher mouth that you know you don't have to do all the talking sometimes listening is ok and with that jeff thanks rich for the introduction thanks for putting this whole series together i'm jeffrey's men and i'm coorg izing initiative one of three with a with rich i mean here to introduce alex stone from the economic opportunity institute i first heard about in two thousand and four when i was writing an article for a seattle weekly about what kind of citizen is microsoft and i interviewed one of their researchers marilyn watkins is out there sort of gathering facts about how washington state works how its finances work how it's education system is working how our budget process is working and alex is going to talk a lot more about that what i've seen because you all know that we have you been told we have a budget problem with eagle eyes work what i've learned is that we have a tax fairness problem what i've been reporting on microsoft's nevada tax dodge literally for eight years now and in that time i would say that i haven't been very effective there the amount of money they've saved has just gone up and up and the cuts to education have have grown the stats are pretty dark so i think in addition to a tax fairness problem in washington state which alex will talk about we have an issue with connecting what are some of the core problems in washington state in seattle with our neighbors it's great to see so many of you out on such a beautiful night because you could all be someplace else and i've been very touched seeing the people who come out and care about these issues in the face of things not really going well things not really changing and yet people still care  so i think what we need to be doing is getting other people to understand what these causes are and part of that these common good cafes getting facts and information so that we understand the issues well but part of it is connecting with people  and this is where i'm kind of tricking all of you because with initiative one of three i've actually been out on the streets gathering a lot of signatures and so i've been talking to a lot of people and i thought i was going to hate it i thought it would be such a drag but it actually been really powerful for me because it's a chance one on one with hundreds of people to tell them about what you're concerned about in the state which for me it's about the influence of corporate power and corporate money over the way things are run here  and it's a way to stand up and as an embodied person as a resident of seattle in washington and tell other people that i care enough about these issues to volunteer my time to stand out here and tell you about them and ask you to sign to place i want to three on the ballot so i'm here today in part to ask all of you to consider volunteering to do that same thing which is to learn about i want to three and consider volunteering to get out at events with us and gather signatures we need twenty thousand six hundred valid seattle voter signatures and we're not going to be able to do that in time for the november ballot without a lot of help from you so may and june we're just really trying to get it all done in may and june so we're focusing on all the festivals so next week is the next weekend is the you district street fair and there's a bunch of us that are going to be out here near the church gathering signatures and we'd love to have your help and the same thing with the folklife festival underneath the space needle for four days and nights we're going to be out there gathering signatures and telling people bringing the message that corporate influence is hurting all of us it's hurting education in washington and i want to three is part of changing that and just the process of communicating our concern to people is very powerful and that's what that's what we're out there doing so i hope that after you heard alex talk and if you have more questions about i want to three or you have a great time talking to each other that you'll go to the web site and click on the volunteer button it's right at the top and sign up for one of the days where you can gather signatures so with that i want to introduce alex alex has been with her a couple of years i'm told he i read that he plays rugby i'm not sure about that what you guys think but anyway come on up and tell us about the washington state budget thanks for coming today thanks jeff as jeff said my name's alex stone and with the economic opportunity institute and everybody here  and i'm the communication manager l y is a state policy think tank so to speak we work on middle class issues educational opportunity living wages the state tax structure in the state budget  do work for middle class families so the first thing that i want to talk about is why we have government what is the point of our government in the constitution it states to secure the blessings of liberty to ourselves and our posterity jim songs were particularly poignant given what i want to be talking about but in reality we have government when we think about what we use government for it's to educate our kids or to make sure the foods and medicines that we use are safe it's so we know that we can drive to work and there's not going to be too many potholes although that's sometimes question well here in seattle these these are the things the government provides us it provides a public so this is washington state budget as you can see the big blue area there is k through twelve education this shows that the state spends forty four percent of its resources on k through twelve education i do want to make a note for all you budget hawks out there this is the state's general fund this does not include any of the money that we get from the federal government for food stamps or medicaid or anything like that it also excludes transportation roads and bridges and stuff like that so this is strictly money from the state from state tax revenue and we spend most of it on k through twelve education a lot of money also goes to social and health services to the basic health plan to assisting people with mental disabilit who are developmentally disabled eight percent goes to higher education five percent to corrections and then we've got some general government and servicing the debt so how do we fund the budget how do we pay for all of these things that we like like education and health care and maybe some things we don't like to we do it through the sales tax you can see here the blue bar this is forty nine percent of our state budget is funded by the sales tax wash and states pretty unique in the sense we have a pretty imbalanced state tax structure if you think of our tax structure like a stool it really only has two legs one is the sales tax and the other leg is everything else so when sales tax revenues drop off like they do during a recession we have a lot of problems funding k through twelve education basic health higher education these are things that are really important in terms of the public good in terms of what we rely on government for but when we don't have the tax revenues to fund these things we simply can't do it it's a binary choice here are some of the budget cuts that washington has made i will i know that some of you are far in the back and can't see so i will go ahead and read him off at the bottom we have k through twelve education that's been cut by two point seven billion dollars over the past three years this represents a total of about eleven billion dollars in cuts this is over the past three years the majority of it's come from k through twelve education also from state employee compensation this includes teacher pay health care the basic health plan has been decimated it used to serve about one hundred twenty five thousand people the basic health plan provides health care for folks who are working but who are low income and whose employers do not provide health care it now provides health care for about thirty thousand people one hundred twenty five thousand is what it did less than five years ago higher education one point three billion i'm sure you've heard of all the tuition increases that are happening this is a direct correlation you've got one point three billion dollars cut out of higher education other human services d s h us long term care criminal justice natural resources parks all these things have been cut to ok so why is this happening why do we have all of these cuts happening the reason i put this guy up here this is gov clarence daniel martin who was elected in one nine hundred thirty three as the governor of washington state he was the last person who signed substantive tax reform in our state he signed it the revenue act in the revenue act basically took washington from an agrarian economy to one that was industrial and manufacturing based prior to the revenue act washington state has had mostly just property taxes that's what it relied on in the farmers were getting really upset there was a lot of people moving into urban areas who weren't paying taxes because the only taxes property taxes they got together with their grain sociate they said hey we got to do some about this we're paying all the taxes and those folks in the city aren't paying any well naturally the folks in the city didn't want to pay taxes but they got together and they passed the revenue act of one nine hundred thirty five the revenue act of one nine hundred thirty five instituted a gross be you know tax which is a business an occupation tax on gross sales it's the same exact tax we have today it instituted a sales tax on goods only which is the same exact sales tax we have today it instituted property tax changes that are very similar to the way property taxes are calculated today and it also instituted an income tax that income tax was later found unconstitutional by the supreme court so those tax changes were made and it's pretty similar to the tax system we have now with the exception that we've added about five hundred tax exemptions since then so here's your structural deficit  this is one of the reasons that we're in the situation we're in today washington has a goods only sales tax you only pay sales tax on goods so if you go to see your stockbroker or your counter your lawyer or the veterinarian these are things that typically upper income people use you don't pay sales tax but you do on diapers on cars on other goods as you can see the blue here represents people's purchasing decisions in  nine they were purchasing more food and beverages more other goods that's your diapers in your cars and more services i'm sorry and fewer services now we have a service based economy we have made yet another change we went from a to industrial and now we are changing from industrial to service based but our our tax structure is stuck in an industrial based economy so what happens is people buy more services which are taxed less of other things which are taxed and we have a structural deficit this i think explains the problem pretty well the bottom line is taxable retail sales this is the amount of tax revenue that the state gets when people buy stuff the top line is personal income this is just for washington state washing state does not have a personal income tax if washington state did have a personal income tax you can see the tax revenue would be growing with the economy currently our state tax system does not grow with our economy another reason tax exemptions you heard me mention that we have about five hundred five hundred seventy odd tax exemptions and i call them tax exemptions not tax loopholes because they aren't some loophole that somebody is exploiting these are tax exemptions that have been lobbied for in the state legislature in one by special interest groups there's a couple up here that i put up here there's elective cosmetic surgery for example is not subject to the sales tax in washington state there's a twenty three million dollars tax break for out of state coal that comes into the state there's a forty six million dollars tax break for public utilities for their corporate transportation these are some of the decisions that have been made in the state legislature to prioritize these tax exemptions over funding our public services now i will say there are some tax exemptions that provide a public good they do have a return on investment greater than the than the money that we're giving away but there's no way to verify this there's no sunset provision written into most tax exemptions so if a tax exemption stop serving it's good a company can still claim it without actually providing any benefit to the state reason number two so reason number one is our structural deficit reason number two is inequity in inequality washington's tax structure is built first cruise mcduck i mean he would benefit greatly from living here in washington this is and i know this is tough to see i apologize in advance let me step back here though the bottom line here is the bottom ninety percent of folks and this is their average income since one thousand nine hundred seventy has actually decreased by seven percent everybody else for the top ten percent it's gone up by seventy five percent for the top one percent it's gone up by one hundred sixty six percent and up here it's gone up by six hundred fifty percent for people at the top point zero one category all of the income gains that should come with productivity for the middle class for people who are working have instead gone to the top in their being doled out in golden parachutes and stock dividends and capital gains this is just another variation on that theme you can see that total income in the us is clearly going to the top one percent so washington's tax  structure we don't have an income tax we rely on a sales tax and that means that poor people pay more so somebody whose income is twenty thousand dollars pays the same amount of sales tax on a box of diapers as somebody whose income is two hundred thousand dollars they have a much higher effective tax rate that means that the average state and local tax burden for people who are very poor is seventeen percent in the state for people in the top one percent it's about two point six percent this is know taxes in washington these business and occupation taxes we don't have a corporate income tax we just have a b and o tax and the rates range depending on whether you're selling goods or providing services but as you can see small businesses pay a much higher rate than larger businesses this is not an accident this is because larger businesses have lobbyists they go down to the state legislature and they say hey we don't want to pay sales taxes on the airplanes that we sell in the state pathetically smaller businesses they end up paying most of their taxes in sales taxes and part of the discussion that we need to have in this state is about whether or not we want to incentiv e small businesses whether we think it's good for people to start small businesses fixing our state be a no tax structure is certainly integral part of a complete tax reform discussion in washington ok reason number three so we've got the structural deficit we've got inequity the third reason is inadequacy washington state spending adjusted for both inflation and population is lower now than it's been in decades we spend just over twenty one hundred dollars per state resident annually back in one nine hundred ninety one we spent twenty six hundred and it's been right around that level just until recently  reason for that is because as i've said before our state taxes are not tracking the economy if we had had a state income tax we would have had twelve billion dollars more in this state  budget that would have paid for a heck of a lot more teachers would have paid for lower class sizes it would have paid for lower tuition it would have kept the basic health plan that that's a significant amount of money so here it is an action  this is washington's rank in k through twelve spending per one thousand dollars in personal income we rank forty sixth in the country that's below mississippi per pupil it's at thirty  one so for a state that considers ourselves to be a high tech state we're certainly not investing the dollars in k through twelve education that many of us think that we are this is  washington's higher education spending per enrolled student it's also lower over the past couple decades and it's ever been we're now spending just under six thousand dollars we used to spend upwards of eight thousand dollars per student for the  you dub also used to i'm sorry the state used to cover about seventy percent of the cost of tuition well the student covered about thirty that is now flipped and the state now covers about thirty percent while the student covers about seventy percent this is  as a percentage of family income median income used to be about six percent of median income it was you know i remember my dad telling me that he worked his way through college there's there's absolutely no way that you could do that now unless  i suppose you already have a doctorate it's now twenty percent a family income you just increase tuition by sixteen percent for next year they're going to be at about twelve thousand dollars in june is set to vote on it another tuition increase they increase tuition by twenty percent last year it's going to go up by another sixteen percent this year to be over twelve thousand dollars after two issue and fees so after a four year degree i'm not all that good at math but that's a lot of money so despite these problems that we're having in the state the state legislature has made commitments they've said we're going to invest in education we're going to make sure that every kid  has access to preschool we're going to make sure that no class is over seven hundred students we're going to increase degree and certificate awards at colleges and universities by forty percent all of this by twenty eighteen but the question is how do you do that without money you need to hire more teachers you need to invest in technology you need to make infrastructure upgrades and these things don't come for free so the state has been sued a group of parents got together in two thousand and seven and sued the state and said you are not meeting your paramount duty to educate kids in our state constitution it lists the paramount duty of the state as to make ample provision for the education of all children residing within its borders and the parents one and twenty ten king county court judge ruled in favor of the parents and then just a little bit earlier this year it's called the mccleary case the state supreme court also held in favor of the parents and what they said was that the state is not making it is paramount duty it is not providing ample funding and it is not providing quote basic education and skills needed to compete in today's economy in meaningfully participate in the state's democracy now the state supreme court in an unusual move actually retain the right of oversight over the state legislature to make sure that they implemented reforms by twenty eighteen so back to the taxes this is how we fund lower class sizes health care lower  tuition washington state is on your right hand side here there's your left hand side excuse me with our almost half of our state taxes coming from the sales tax this is the u s average on the other side you see this big green chunk of pie here these are individual income taxes washington state is just one state out of i'm sorry it's one of seven states in this country that doesn't have a personal income tax now most of the other states that have personal income taxes have another source of revenue one of them is nevada nevada allows gambling and this is one of their big sources of revenue alaska they have oil so it is texas so just north dakota  washington has none of these resources and so we are stuck with declining revenues because of a recession and it's not just because of the recession it is indicative of a larger problem  economy is changing we are no longer a manufacturing economy as much as presidential candidates would like to think that we are we are a service based economy and we need to adapt to a state tax structure that will provide the state services that kids and families and parents need in order to fund our democracy christine great to our current the governor of the state just made  statement the other day she said to the candidates who are running we can say no new revenue but the reality is weak we cannot live up to our responsibilities without new revenue this is in response to both candidates on the campaign trail  making wildly outlandish statements about investing in education and not talking about where this money's going to come from the reality is that we need substantive tax reform in washington in order to achieve any of these things we need to reduce our structural deficit we need to create a system that is not as unequal as the one that we have now and not as regressive and we need to create a system that provides ample funding one of the ways to do that is to tax services another way to do that is to in personal individual income tax and lower the sales tax so it's not as regressive we need to address the inequities in our business tax system and we need to make sure that whatever we do raises revenue that is sufficient for the priorities that we have as a state when we think about what we want to do and what we can do together in the investments that we need to make looking towards the future i think that we all realize that education that health care and taking care of the people around us are really priorities that we have in this state and we need a tax structure that reflects those priorities so i feel like i've talked long enough and i'll leave it there  the question is about barriers to implementing an income tax and whether or not a two thirds rule applies if and if an income tax tax were to be passed by the legislature right now because of the two thirds the super majority rule from timmins initiative it would require two thirds of the legislature to approve that if it were to be by a vote of the people it would only require a simple majority fifty one percent of people and then no action by the legislature it would just have to pass on a simple initiative to the people simple majority no action required by the legislature so while we had all the trouble getting it through we don't have that much time was the comment you know i mean initiative ten ninety eight i believe received about thirty seven percent support in this state i think that there probably isn't a widespread understanding of the current state of our tax structure and in what's going on there's also been a failure of leadership in the legislature to lead on this issue this the question is whether you could combine a reduction in the sales tax with a full scale income tax one that affected the middle class as well let me just for those who don't know initiative ten idea was initially of two years ago that would have created a high incomes income tax on people earning i believe over two hundred thousand dollars there's a rule for initiatives that they must be a single subject so it has to be a single subject rule there's some question as to whether or not a tax reform in itself is a single subject so can you do one thing and another thing and another thing and call it a single subject there's a lot of people think that you probably can in income tax either way would be challenged in the courts as i said earlier in income taxes rule and unconstitutional in one nine hundred thirty eight when they  had some weird precedent set for what was considered property since then the precedent that was that that ruling was down on has been overturned so there's a lot of constitutional scholars who think that sure if the people voted in favor of income tax there's no way the supreme court could find it unconstitutional now yes that was the state supreme court who struck down the income tax in one nine hundred thirty five yes i'll go to you first i thought i saw you yes you know actually going on and i talked with rich at the break about some of the some of the reasons that people supported ten ninety eight and some of the reasons that people didn't support the ninety eight and we found that the majority of people who typically would have been split on ten ninety eight voted in favor of it were people who had kids in school who saw the value of lower class sizes who saw the value of more teachers more instruction time of more infrastructure upgrades at schools because that's what ten ninety eight was about it was about investing in education and in health care most of the people who didn't didn't have kids in school or had kids in private school and so there wasn't that sense of community of public good that these other people saw and i think that building that sense and reminding people that we're all in this together that our economy is not going to function well in less we produce a lot of well educated people especially for the type of jobs that are going to be available here twenty thirty years down the line then then we're going to have a big problem i would just say i haven't read tax shift there is there is a of evidence that shows that creating social policy through taxation is good this is what we do with taxing sin taxes you know alcohol tobacco things we don't want people to use we tax more so the question is about the taxation of services so and any possible strategies so the big challenge with taxing services in a way that isn't comprehensive structural tax reform is you have a lot of constituencies think accountants lawyers that train ariens stockbrokers people who don't aren't required to collect sales tax on their services and who would be and these are people who have money they have friends and they have power that is the big impediment i think i think that everybody wants their special carve out just like we have now with all these tax exemptions and that's part of the reason that we are where we are now i think educating people and helping them understand look the reason that you're paying nine point five percent sales tax is because we don't taxi services it's a subsidy we are providing a subsidy to the people who use lawyers and stockbrokers and accountants who don't pay taxes and instead we're paying it on everything else that we buy like cars diapers and helping people understand that saying look we can lower the tax rate we could lower it you know two three four percentage points and if we started to tack services without any loss in revenue so i think it's an education camp address the first part first which is about taxation and how people understand that where their tax dollars go and the east west divide you know there's been studies done that show net in and out taxes and counties king county is a net out state we send a lot more money out of the state then out of the county than we do than we do keep in the county we're one of the few counties that actually does that in fact almost every county on the east side of the mountains is you know for every dollar that they get and that they pay in taxes they get a dollar fifteen back or a dollar twenty back or more and this is the reality and there's plenty of  you if you get on the internet and i can provide some information about that i think the challenge with doing that is then you create this consumer mentality about the public good and about what we're doing and i think that  part of the problem in general is people have a consumer mentality you know they it's the vending machine right i pay money i pay property taxes and i don't have any kids so why is my money going to public schools in that's part of the issue you know it's we're in this we're in this together and that the taxes that we pay here in king county you know maybe they go to pay for roads in spokane maybe some of their money comes to pay for ferries over here and that's just the reality of living in a state in an in a society where we have common goals second part of your question i believe almost every county maybe with the exception of one or two is a net importer of tax money so they pay out less than they receive so if they pay a dollar in taxes they get a dollar fifteen back for example well no because king county is subsidizing them yes yeah ye h in a lot more in some cases in a lot more in some cases there's there's you know there's a lot more poverty over there so the question is about establishing a state banking using the profits to pay for  through twelve education or i know that one legislator bob has done a lot of work on the idea of a state bank in the possibility of a state bank currently the only state that has one i think is north dakota and it was created during the great depression by farmers who got screwed by the other banks and when they lost all their deposits there's some questions about whether or not that would be constitutional in washington  have a different constitution than north dakota but but i know that to change it i know that they are exploring the possibility at the legislative level and bob is doing a lot of good work in that and i don't you know i think it's a definitely idea that needs to be explored i don't i don't know that i could speak to that i think that at any given time politicians may give a different answer i think that there is more support now for structural tax reform and i think a lot of people recognize you know that the same thing that i'm showing you tonight that structural tax reform in order for it to be successful is probably going to have to include an individual income tax so that is also an idea that's been explored and it's a fantastic idea let me stop and say that kudos to you part of the problem is is again when you want to when you're going to gang up so to speak on tax exemptions then you're going to get pressure back you're going to get all the bankers and all of the truckers and whoever benefits and they're going to line up and say no way man in carlisle this past year i believe had a bill to that would sunset tax exemptions i don't think it went anywhere although it would it would have sunset it new tax exemptions i think that what would be more of what would be a very effective way to go about it is to and this is something that we've debated debated in the office in initiative that would require all tax exemptions to prove that they are providing economic benefit to the state and and if they don't then they're ended and it's very simple you know if you want a tax exemption from the state of washing you have to prove that you're providing a benefit and you know like i said some tax exemptions do provide that benefit there's a committee called jay lark the joint legislative audit review committee i think and there are citizen commission that reviews these tax exemptions about a third of all tax exemptions that they review they find are not providing any economic benefit to the state none whatsoever well this group is a citizen commission i think there's about a dozen people on it and they do maybe thirty or forty of these things every year and i think they've gone through about one hundred one hundred two hundred so far the problem is a legislature taking action on these and finding a majority of people who will take action because it's very difficult in tax breaks it requires a two thirds majority yes how about let's give a alex the another round  called citizen microsoft for the weekly and we uncovered that microsoft opened an office in reno nevada to dodge the state's tax called the royalty tax as part of the b n o structure the tax used to be one point five per cent on worldwide sales  of licensed software so like all the windows they get sold to big companies and put on hard drives for dell and stuff like that so in the first story in two thousand and four they were saving about forty million dollars a year i think it risen to like seventy million dollars a year  but this went on for twelve years and around i think two thousand and eight two thousand and nine when the states deficit began to grow up towards two point two five billion i took a look and i ran the numbers again and it turned out that microsoft's tax dodge was approaching a billion dollars over this time frame and in the same period of time the company had earned four hundred eighty billion in revenue now i'm speaking quickly from memory so some of my numbers may be slightly off  but what's interesting is back in one thousand nine hundred eight right when they began this practice they and the other software companies in the state lobbied to reduce the tax rate from one point five percent two point four eight four percent so they cut it by two thirds essentially so when i calculate this now if you include the impact from their lobbying so if you measure their savings from the original one point five percent rate and you look at it over twelve years and there nevada tax dodge it's four point three seven billion dollars that just microsoft on its own has saved from paying into the general fund now when we look at the slide that alex put up about the tax revenue the spending cuts to k through twelve education and higher ed in the last four years under gore's watch four billion dollars ok so that's why i started out by saying today we don't have a budget problem in this state what we have is a tax fairness problem and what we have is in inability to educate people and get them engaged in this process so i started a blog called microsoft tax dodge dot com and i started doing a lot of interviews and well one except with the seattle times which has not yet written about microsoft's nevada tax dodge but what what i started doing was trying to call this issue to the legislature and say hey you've got this two point two five billion dollars deficit in microsoft saved over a billion dollars at the current tax rate in the royalty tax maybe you just close this loophole ask them to pay back some of it and by the way brad smith who's the general counsel of microsoft is always going around he wrote an editorial in february for the seattle times about how education is a top priority and yeah it's sickens me at this point because the seattle times allows him to publish this unchallenged editorial about education's a priority and there's just no money and so his solution is to raise the sales tax so he wants us to pay more ok and where was i so basically i go to the legislature and the guy who runs the chair the finance committee for the democrats who knows his name ross hunter ok so ross worked at microsoft for seventeen years i also happen to work there for eight years but but so ross cheney helped lead the change of the definition of the royalty tax so instead of being a tax on sales to worldwide customers and exposing about thirty billion dollars a year of microsoft's revenue it's now a tax on just sales to washington state customers ok so essentially what happened is they should have been paying this tax on thirty billion dollars a year and now they're they should be paying and they probably have started paying it but it's a tax on maybe just half a percent of that amount so basically he just redefined the tax and then he also included a one sentence clause to give the any company that had been recently field audited by the department of revenue in the last five years now who thinks the department of revenue might actually do an audit of microsoft you know they do it so basically he gave any company that had had a field audit  forgiveness for any tax violations and the so remember our this is the democratic led washington state legislature that just passed this through and then the governor passed it then shortly after that the governor appointed susan  used to work with at microsoft she's an ex microsoft employee to run the tax department now i know what susan's business background is and i know her tax background and that's not a good fit for her and so her husband is i also used to work for and he's the president of the microsoft office division so we have the head of the depart tax department literally and figuratively in bed with microsoft ok then microsoft and boeing started a scholarship fund a twenty five million dollars scholarship fund they're giving five million dollars a year for to fund technology programs at the u because  well the the the the just system here has been so badly defunded so the governor goes out you might have heard earlier this year praising microsoft and boeing for their five million dollar a year contribution which is just disgusting really because she signed the bill to give them over one hundred million dollars a year tax break she's controlling the department of revenue and telling me not to enforce this tax not asking her attorneys to challenge the company to pay what  so that's where we are that's what i started my activism around this issue and what i saw as the democrats who i always thought were pretty good in washington state basically just rolled over and fix the system for microsoft now i wasn't totally surprised because you know microsoft's the hometown company i've been a beneficiary of of their success other people many other people have to but we have a serious tax problem and we have a serious revenue problem as alex pointed out like you know our class sizes i think  they pay full rate six years ago it was two percent ok so we're taking our state educational infrastructure and turning it over to the highest bidder outside of washington that is disgusting and  so that is one of the things that led me to work on an initiative one of three with the rich and to get involved in a different organizing tactic for me i gave up on trying to petition the state legislature i gave up on organizations whose primary strategy is to ask the state legislature to please make things better because i don't think that strategy is working i look around and it's not working and so we're trying to do something different we're trying to get an ordinance which is essentially a proposed law on the ballot to raise the issue of whether corporate influence in inner city is having a positive or negative a fact and allowing the voters of seattle to have a discussion about it through november and vote on it and so that's why rich and i have been so passionately behind this and just to close real briefly what i want to through would do is it essentially would ban corporate spending on city elections so that includes cosco with their twenty two million dollar liquor privatization initiative not being able to advertise in seattle that includes the american chemistry council not being able to spend a million and a half dollars to stop the plastic bag man it would also initiative one three would restrict the corporate lobbying to public forums so you would only be able to talk to officials out in the open so we wouldn't have an n b a arena plan coming that's been half baked by the mare and this private investor that we'd never heard of and just showing up we would be we would be in the conversation from the beginning and the other thing it does is it creates a community bill of rights around issues related to democracy so rights to having citizen oversight of the police rich how your eyes these days after you got pepper sprayed you doing better know we would have rights for nature so we can do things like stop the coal train which have you heard of the coal train yet so so that we don't have a citizens in seattle any rights to stop the coal train except writes for nature on or three would allow any of us to go to court and demand that peabody energy prove how they're going to keep arsenic and all the other poisons from the coal dust leaking into the puget sound it would provide rights for workers it would provide rights for neighborhoods so that's what one of the three is about it's about starting at the city level and also having other communities working with us so bellingham is running an initiative like this and spokane  work with us to do the same thing and for me this is inspiring work because we're making a law and it has effect immediately and there is a great there are some polls out showing that sixty five percent of democrats and republicans disapprove of citizens united so we're all in agreement on this and supreme court approval ratings are now at the twenty five year low so there is a trend of the supreme seeing the supreme court as not representing democratic interests and that is only going to increase so we are we feel like we're position with initiative one and three with the tide so i need to wrap up again if you would go to the website and click on the volunteer boughton or refer people to it that would be great thank you very much