Tuesday, February 06, 2018

I Need To Pull My Investments Out Of Washington State

I came across this article in the Wall Street Journal, "Rent Controls, a Bane of Landlords, Are Gaining Support as Costs Soar."

It included this piece of information:
"In Washington State, lawmakers in the house and senate have proposed legislation to remove a statewide ban enacted in 1981 that forbids local jurisdictions from enacting rent control. The bills aren’t poised to be voted on this year, but Brett Waller, director of government affairs at the Washington Multifamily Housing Association, said he expects them to come under serious consideration for a vote in the next session." -- L. Kusisto
This tells me that I have about a year or two before our state legislature gives the municipality where I own rental property the ability dictate my rents, and thereby destroy the value of my property.

Why would this destroy it? Because the value of a property that a landlord cannot set the rent prices on becomes less to potential buyers.

And this is only the latest attack of bad economics that has been occurring within our state lately. There's a move on to tax capital gains earned by Washington residents; there are repeated attempts by municipal governments to use a stacked, partisan state Supreme court to create a statewide income tax; some of these same municipal governments have proven to be dumb enough to impose "sweetened beverage taxes" that failed elsewhere already; our current governor wants to add $3.3 billion in new taxes to "battle carbon;" there's no end to the assumption that businesses can simply be ordered to pay more and more to employees, even when they're not working; and this is a state where businesses pay an income tax on their gross receipts (so even if you have a business loss, you can end up owing money to this state!). They will no doubt dream up even more ways to fleece us in the future.

Put all of this together, and it says to me that the political winds in Washington are blowing in a direction that will harm capital. So, it's time to get my assets out of here before much of this takes effect. Whether you lean left or right, the fact of the matter is that these kinds of antics drive away investment, which means a reduced market for whatever you may hold in this state, which will lead to a decline in the value of what you own. The market doesn't care what your politics are, only what the future expected returns on your assets are.

And of course less investment means less business, which means reduced tax receipts to the state and municipal governments here, which means it will be harder for them to pay on their debt obligations.

Any Washington state municipal bonds that I may have, I'm dumping them before it's too late, too.

There's family obligations holding me in place here for now, but once those pass, I'm out of here. I can see no future for my money in Washington state, and that means there's no future here for me either.
"Capital goes where it's welcome and stays where it's well treated." -- Walter Wriston


Unknown said...

In order to keep your business contact and long term contracts, couldn't you just move across the Idaho or Oregon border and avoid this?

Paul E. Zimmerman said...

The Oregon border, possibly, given where specifically I'm located. My near-term concern is the rent control thing, as that could hurt the equity I have in my rental property right now, a problem if I try to unload it to escape what might be coming. Then of course down the road the income would be hurt. As for my business here, by the time I'm in a position to leave for a less punitive place, I'd probably have wound it down anyway.

A domestic or foreign destination, that will be the question then.

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