A Few Thoughts on the New Seattle Soda Tax

Soda Tax Seattle Drink Council City

Seattle Soda Tax

On Monday, June 5, 2017, the Seattle City Council passed a motion which will implement a tax on sugary soft drinks (soda). This new “soda tax” is designed to reduce statewide obesity rates, particularly among children, and to raise additional funds for public projects. Expectedly, the passage of the soda tax has been met with both surprise and opposition as it raises issues regarding personal freedom and the role of government in the marketplace. Let’s look at the basic provisions and purposes of the tax and then discuss some of the arguments both in favor and against it.

Basic Facts

The soda tax was passed by a margin of 7-1; Lisa Herbold was the sole councilmember to vote against the tax. The city will collect 1.75 cents for every ounce of “sugary” soda, such as regular Coca-Cola, Pepsi and so forth. The tax will not be collected on diet sodas and sodas made by smaller distributors.

The tax is set to take effect on January 1, 2018. This date could be pushed forward, however, in the event that a legal challenge or other type of motion takes place in the interim. Prior to the vote on the tax, councilmember Herbold proposed several amendments which she claimed would mitigate some of the potential negative consequences of the tax. All of Herbold’s amendments failed except for her proposal that some of the tax proceeds be used to fund local food banks.

Pros and Cons

The chief architect of the tax, councilmember Tim Burgess, argued that the tax will make a positive impact on state obesity levels. Though the tax may (indirectly) encourage healthier eating habits, many opponents could argue that this tax represents an undesirable incursion by the state on the free market. Regardless of the price, people have a choice to purchase sugary soft drinks, and the tax on soda could easily be interpreted as a financial penalty on personal freedom. The soda tax, therefore, brings up the recurring issue of what role the government should play in preventing certain behaviors in the interest of the wider public good.

When viewed in this fashion, the soda tax acquires a rather lengthy pedigree. Sin taxes, such as those imposed on tobacco and liquor, have been relatively common throughout American history. In the 1920s (and early 1930s), we used Prohibition to guard against the supposedly toxic influence of alcoholic beverages; today, historians almost all concur that Prohibition was a failed experiment, but the issue of what level of responsibility the state has for promoting public health remains hotly contested. Here at HTC, we think it prudent to avoid a definitive stance on the issue; after all, we are not dealing with a ban or severe financial burden, only a small incentive to avoid sugary drinks. HTC is certainly very curious about the impact of the tax and we look forward to seeing hard numbers on whether the tax lives up to its expectations.

Source

Image credit: CapCase

The Sound of Global Warming

Our planet has been undergoing quite a few noticeable changes the past few decades. One of the biggest and most noticeable of these changes is the melting of the planet’s glaciers. Scientists and artists have been making an effort to document this process. polar bear for blog post with font

One way they’ve done this is by recording the sounds of the melting ice. You can read an article curated by Motherboard that provides a really great overview of the different individuals and projects involved in the recording of melting glaciers.

Depending on your expectations of what the sound of a melting glacier may sound like, some of these recordings could surprise you.

There are no huge, ear shattering explosions or anything like that. In fact, most of the recordings are minimal. The sound of icicles dripping … The sound of rushing streams … Ice melting in a cave …

Recordings like this are useful for a number of reasons. For one, they further expand the uses of hydrophonic technoloy as well as other kinds of technology. After all, sonic data on melting glaciers is still data, right?

 

Marijuana is Legal (and in Short Supply) in Washington State

Since this week’s post deals with the legalization of pot in Washington and a few related developments, let’s start things off with a chuckle. Here is how this NBC News article describes the large number of confused applicants requesting marijuana licenses in Washington state. “… [M]any of them [are] apparently dazed, confused, or otherwise befogged by pot’s new bureaucracy.” That’s pretty hilarious.

medical marijuana

The issue is that those applying for the licenses simply didn’t know what is required of them to get a license, and its led to a bureaucratic slow-down for the Washington State Liquor Control Board. Apparently, they received over 7,000 forms from confused applicants.

Another issue, according to Mark Kleiman of BOTEC, a consulting firm hired by Washington state as it was beginning to develop its marijuana laws, is that the way the state has decided to proceed is probably the “second worst way” it could have done so next to prohibition.

“We’re going to have much more drug abuse, and much less revenue for the state,” says Kleiman.

What he means is that the state has set itself up for future revenue issues by copying Colorado’s taxation methods. Tax revenue from marijuana in Colorado is tied directly to price, which while revenue is quite high now (pun intended) one can expect it to fall over time as supply to vendors increases and prices drop.

Kleiman also refers to the strong incentives sellers will have to drive up use and market themselves to clientele. This model is also based on Colorado’s which is characterized by “full commercialization, stores, and taxes based on a percentage of sales—basically the post-prohibition alcohol model.” This way lends itself to creating more and more users and more and more product sold. However, while the intention is that eventually retailers will own the market, presently they must compete with both the black market sale of marijuana as well as medical marijuana dispensaries which are much cheaper than what recreational vendors can sell their product for right now which is about $30 a gram.

Such a high price is due to the limited number of growers in Washington—an issue which goes back to the bureaucratic difficulties mentioned earlier. You can read more about the shortage here.

Remember Huddleston Tax CPAs are Seattle and Bellevue CPAs! If you’re in the marijuana business and you need an accountant, we’d be more than happy to figure out the new tax code for you!

 

 

 

This Summer’s CPE Webinars, Small Business Webcast and the IRS’s Tumblr!

We hope you enjoyed your weekend and you’re looking forward to a great work week despite all the great weather! For your downtime, we present this week’s blog post! It’s chock full of great links and news to keep you up to date on all kinds of stuff! Exhibit A: Did you know the IRS has a tumblr? Who knew?

Sometimes, it’s good to cover a lot of ground especially since there’s so much going on in the world right now–The World Cup begins next week in Brazil, Russia is in Ukraine indefinitely, and tax professionals will be attending CPE webinars! As far as that last bit goes, remember it’s also important to stay grounded.

But seriously, if you’re a tax professional, take a look at the  CPE webinars presented by Thomson Reuters and Bisk CPEasy this summer. “Key Issues in Accounting & Auditing: What CPAs Need to Know” will be presented on June 23, July 28, and August 25 and “Summer Sizzler! Hot Mid-Year Tax Topics for 2014” will be presented June 24, June 30, July 15, and August 12. The courses provide 8 hours of continued education credit and will be presented live, offering you the chance to interact with the presenters. If you’re interested in learning more about these events, follow this link to the CPA Practice Advisor article or click the links in the dates listed to register.

If you’re not a tax professional or even if you are, we’d like to take this opportunity to remind you about Small Business Webcast and all of the great webinars we produce for our members on the site. Our events cover dozens of professional tax and accounting topics and are presented by our expert staff of CPAs. (None of our CPAs has less than 10 years of tax and accounting experience.) Small Business Webcast is also a community where small business owners and professionals  network in their area and worldwide while attending events both live and online to educate themselves. There are over 2,000 members watching webcasts and attending our events at Small Business Webcast. It really is a great resource for anyone looking to grow their business and their business acumen.

Be sure to visit us and register at http://www.smallbusinesswebcast.com/

Well, that’s what we’ve got this week! We hope you were entertained, informed and join us for upcoming events at Small Business Webcast!

 

2014 World Cup Begins This Week in Brazil!

Update 7/10/14: Argentina and Germany will compete Sunday in the World Cup final. After Germany’s thorough 7-1 victory over Brazil in the quarterfinal, which didn’t necessarily send an entire nation into psychological tailspin, many are predicting Germany will take home the FIFA World Cup trophy. Apparently, so is Cortana–Microsoft’s Siri equivalent and 9 year old Nathaniel Hill from Queens. We know, we know all of this sounds a bit strange, but hey it’s the Internet!

Soccer: [sok-er]

noun

a form of football played between two teams of 11 players, in which the ball may be advanced by kicking or by bouncing it off any part of the body but the arms and hands, except in the case of the goalkeepers, who may use their hands to catch, carry, throw, or stop the ball.
1890–95; (As)soc(iation football)  + er7

 

Yes, this week we’re discussing “soccer.” To say were “discussing” soccer really isn’t vague enough for what we’re doing, though. It’s more like here are some random interesting facts related to soccer and the World Cup which kicks off Thursday afternoon.
For example, if you’re interested in a quick history of why Americans say soccer read this brief history from Paul Gerald, a “breakfast guy:
Over in America during [the late 19th century], … in rugby football they were starting to throw the ball forwards and do all sorts of other things, leading to a new game they called American Football. But this was confusing people with Association Football [present day soccer], so they adopted the English slang “soccer” for the latter in about 1920s, and started calling the game where they hardly ever kick it “football.””
If you’re curious as to where the English slang developed, give this note from the Notes&Queries section of the Guardian a quick read. Hint: (As)soc(iation football) + er= soccer.
Ah, linguistic history and sports. The odd couple of every accounting blog.

As we mentioned, furthermore, Thursday kicks off the World Cup … The first game should be a good one considering tournament favorite Brazil is playing, and will be taking on Croatia at the Arena Corinthians in Brazil’s second city of São Paulo, which is rioting like crazy, actually.

The American team arrived in Sao Paulo yesterday and next week will begin play in “the group of death” attempting to battle their way out of an intensely difficult group that includes Germany and Portugal–both of whom have legitimate shots to win the entire tournament–along with Ghana, a good African side that has earned a reputation as destroyer of the American dream. Go USA!

If you’re curious to see all of the World Cup’s drama play out like daytime TV, here’s the television schedule for the entire tournament. You’re welcome.

Be sure to catch a game or two … the tournament only comes around once every 4 years, after all. On the other hand, we’ll be back next week with updates, and we’ll tell you all about it. In any event, stay tuned.

 

Google’s Digital Sundial—Because We’re Human Beings

One of the abiding traits of humanity since recorded history is, well, our tendency to make things sometimes for practical reasons and, sometimes if we’re being honest, for no reason. Map making is a part of that impulse and in its own unique way combines both the practical and the superfluous. We use maps for all kinds of practical things but we also like them. They shrink vast distances down to a manageable size. They open up the imagination. They’re fun. We enjoy a subjective relationship with them which makes a lot of sense considering just how subjective map-making is.

The Euro-centric, North oriented map that seems so practical and intuitive to us nowadays could just as easily look like this:

Upsidedown Map Of The World--Optimized

As this article from The Atlantic points out, “[Maps] are imperfect tools crafted by imperfect human beings.” This means that things like politics, cultural norms, religion, etc. will have an influence. It also means that there is a personal element to the map faces we look at. Google Maps, probably the most comprehensive, simultaneously detailed and flat out useful series of maps the world has ever seen is no different.

This link will take you to 2 15th st. nw which as it happens is the address of the Washington Monument in Washington, D. C. In case your knowledge of American monuments is fuzzy, the Washington Monument is a 500 ft. tall obelisk which means in a certain slant of digital light it is a perfect place for Google engineers to insert a sundial Easter egg. At all times of the day, you can tell time by the direction the shadow falls–“no, srsly.”

Well, that’s it for us this week! Check back here next week for more from Huddleston Tax CPAs!

 

What Hamburgers Say About Your Neighborhood

Last week, we broadcast planetmoney’s story on gTLDs. Read our post about the ever expanding Internet! This week’s post returns to Planet Money for inspiration (because it’s a really excellent source for finance stuff that you can check out here).

EXIF_JPEG_T422

This is a hamburger (in desperate need of “the works”).

Any red blooded American meat-eater will tell you this premise is a “juicy” one: “How Long Would You Have to Work to Buy a Burger in Your City?”

All puns aside, is this is a good question? Sure. Some of the findings are predictable, but others will certainly provide plenty of food for thought! Zing!

If you’re curious, the data was collected by matching average income by zip code with average burger prices.

Across the board, from east coast to west coast, the findings are the same. In higher income areas, it takes considerably less time to earn enough for a burger. Not a surprise, really. This is what the article has to say:

“… Residents in fancy neighborhoods don’t have to work as long to buy burgers, even though burgers are more expensive in fancy neighborhoods.”

For example, in the Upper East Side in Manhattan the average income is a little more than $75 an hour, and burger prices hover around $9 or about $3 more than in surrounding areas with lower income averages. Of course, $3 more for a burger while an increase isn’t astronomical.

So that’s good news, right? Even an expensive burger is still fairly affordable no matter how much you make. Correct! Know why? The ubiquitously low cost of making and selling burgers. It’s pretty cheap.

Which leads us to another conclusion. Uniformity in hamburger costs means hamburgers are not a good indicator of wealth whereas something like housing which varies a great deal by zip code is. But we’re not looking at real estate costs, we’re looking at hamburgers, and there is still a lot to take away from these findings.

brooklyn_sombrebro_company

Hipsters in Brooklyn are broke, pay a lot of money for hamburgers and spend their time making Mexican hats. True story.

In trendy neighborhoods with lower incomes, burger prices may still be relatively high (higher than  expected) because the restaurants in those neighborhoods attract people who earn more. In the real world, these are areas like Echo Park in L. A. and the Lower East Side in Manhattan–you know, trendy places. In Williamsburg, Brooklyn, for example, the average wage is about $29 an hour while burgers still cost as much as they do in Manhattan.

An interesting exercise would be to see if you could predict the neighborhoods where gentrification is an issue  just by looking at the map. Hint: Higher burger costs, lower average income is a good place to start.

All in all, this is a pretty interesting read and the graphs are excellent. All of the information is there. What is it telling you and what do you think of our post? Write us back in the comments section! Thanks and have a great week!

 

 

 

Compressed History of the Eurozone Crisis

In 2010, there was a very serious problem in Europe known as the Eurozone crisis, which was more or less a direct result of the American financial services firm Lehman Bros. going bankrupt.

In the following post, allow us to retrace a quick history of what happened in 2010 and 2011 in Greece, Spain and Ireland, the countries who fared worst during those years. In next week’s post, we’ll take a look at how those countries are doing now.

We’re not offering opinions, but allow us to say that the Eurozone crisis as far as international financial and banking crises go is pretty good reading!

The crisis that would soon erupt into austerity measures, riots and billions of dollars in bailouts throughout southern Europe begins in November 2009 in the small, oil wealthy nation of Dubai on the Arabian peninsula. Officials report that they may be forced to default on their international loans as the basis points to ensure their credit default swaps (CDS) rose by hundreds of points. Eventually, these fears subside, but they have the effect of leading  investors and creditors to wonder if other nations are similarly unable to pay off their loans.

Greece, 2010
As it happens, all roads lead to Greece. The finance minister takes a pay cut. The ruling socialist party declares tax reforms. The country’s credit rating is downgraded. The Greek stock market follows suit and crashes. Strikes break out in Athens. And, all of this before year’s end.

By March, the EU agrees a bailout is necessary.

In conjunction with the pending bailout, Greece passes a series of what are considered harsh austerity measures. These include pay cuts, tax hikes and a pledge to cut down the public deficit from around 13% of the GDP nearer to 9%.

In April, the details for the bailout are finalized. Greece has the option of activating about $30 billion at a 5% interest rate from foreign banks. It claims it is hoping to raise money to cover its debts on its own markets. Later in the month, Greece holds a meeting with the IMF (International Monetary Fund) due to international pressure and finally activates the full EU loan, receiving about €45billion, all of which must be repaid. Greece’s debt is downgraded to “Junk” level. More rioting in Athens. Spring 2011 is the lowest point for Greece.

This Vanity Fair article provides a great broad sight of some previous financial issues in Greece that compounded into the subsequent debt crisis.

Spain, 2010
In 2010, Spain is in the process of making austerity cuts to fund a huge deficit and deal with a 20% unemployment rate. These measures are very unpopular at home. In April, both Spain and Portugal have their debt downgraded. By May, Spain’s Fitch credit rating is cut from AAA to AA+. It is downgraded yet again in September.

That July, Spain’s cajas or small regional banks fail “the Stress Test.” The Eurozone fully expect either Spain and Portugal to be the next to require a Greek sized loan. In October, over 4 million are jobless. In November, Spain elects conservatives who pledge to reduce spending. By April of 2012, after continued budget cuts Spain is really no better off. Next week we’ll take a closer look at what’s causing this.

Ireland, 2010
Ireland has its debt rating downgraded in July, 2010. This is on the heels of a burst housing bubble in Ireland with its banks holding billions of euros of loans no one can repay. This is the beginning of the Irish Banking Crisis. That March, the ECB (European Central Bank) warns it may raise interest rates which would battle inflation on the continent, but would make it very difficult for Ireland to pay off its already sizeable debt. In September, Ireland is in a full-fledged recession. By November, the country accepts bailout money. Throughout 2011, Ireland receives billions and billions from the Eurozone fund and the IMF (International Monetary Fund). At this point, the Irish are lamenting the indubitable passing of the Celtic tiger.

Ireland created this organization in 2012.

We hoped you enjoy our compressed history of this crisis. Maybe things are better, maybe they’re not. Give us a read next week to find out! Or you can give us a call at 425-483-6600 to talk about your taxes!

Source: http://www.theguardian.com/business/interactive/2012/oct/17/eurozone-crisis-interactive-timeline-three-years

The Washington state minimum wage coincidence

There has been a great deal of discussion lately about raising the minimum wage in the US from $7.25/hour to $10.10/hour. In Seatac, WA, the minimum wage is already at $15.00, and other places such as California have raised theirs well above the $7.25 base. Check out the infographic on our website’s front page for a state by state comparison of the minimum wage. Whatever your stance, its a somewhat contentious issue with Democrats pushing for and Republicans pushing against.

This article covering a recently conducted survey of small businesses explains that according to many small business owners raising the minimum wage is a good thing. Many business owners feel a hike in the minimum wage will keep the competition’s labor costs on equal footing with theirs thus preventing any one business with especially low labor costs from outpacing the others. It appears, then, on a micro-level that minimum wage increases are good for the income or at the very least aren’t running small businesses into the ground.

On a wider scale, as this article points, wage increases usually lead to an initial phase of increased unemployment: “Without an increase in the demand for labor—that is, an increase in labor productivity due to better technology, more capital per worker, or additional education—a higher minimum wage will simply price some workers (the least productive) out of the market, and their incomes will be zero.”

On the other hand, it does appear over time a correlation exists between a higher minimum wage and a lower unemployment rate. At least that seems to be the case in Washington state–the state with both the highest minimum wage and the lowest unemployment rate.

As more and more states discuss the issue of raising the minimum wage, it is a good idea to look at both sides and avoid the blustery partisanship that issues like this tend to generate.*

If you have an opinion on the minimum wage issue and found our post informative, feel free to leave a comment in the comment sections letting us know what you think.

*Note: On a totally biased and partisan note: Huddleston Tax CPAs offers great accounting and payroll services so give us a call at 425-483-6600 and hire us this tax season!

Moscow, Sevastopol and Seattle

In the not so distant past (last week?), we linked to a well-informed article from a CPA about Russian versus Western influence on Ukraine in this post. Since then, there have been new developments in that part of the world as you may or may not be aware.

If you are not aware, read on for a quick education. Russia has recently invaded Ukraine to secure a Black Sea port on the Crimean peninsula. In response, Obama declared happy hour, apparently.

This is a fairly major world event, and along with using our blog to educate our readers on who we are as a company and the great tax services we provide our clients, we thought we might bring up these events in a fitting context.

With that said, as a small business in the Seattle area, we found this article on the impact of the Crimean invasion on Washington state’s economy notable.

It appears that if President Obama does indeed follow through with his threats to impose sanctions on Russia for invading Crimea, it could have an impact on the seafood and airplane manufacturing industries in Washington state.

As a small business concerned with other small businesses in the Seattle area, this is certainly something we could all keep an eye on.

Thanks for the read! Tweet us on Twitter @seattletaxman!

Huddleston Tax CPAs of Seattle & Bellevue
Certified Public Accountants Focused on Small Business

(800) 376-1785
40 Lake Bellevue Suite 100, Bellevue, WA 98005

Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.