Washington Policy Center
3404 4th Avenue South
Seattle, WA 98134
(206) 937-9691
www.washingtonpolicy.org

Date: March 28, 2005

David Tuerck, Executive Director
The Beacon Hill Institute at Suffolk University
8 Ashburton Place
Boston, MA 02108

Re: Effectiveness of STAMP model in Washington state.

Dear David,

You asked us to send you a short letter about our experience in using Beacon Hill's STAMP economic model and whether we would recommend its use to other groups.

We had great success using the STAMP computer tax model to show Washington lawmakers and the people of our state how proposed tax changes would affect the economy and job creation. In particular, we were able to provide quick, in depth analysis on the impact of legislative proposals to raise the state sales tax, and to impose new taxes on cigarettes, candy and liquor. A number of legislators commented to us about the timely and useful information we provided, especially on estimating job losses. At one evening event I had a conversation with a House leader who asked about the effect on the state economy of increasing the cigarette tax. I told her I would send an answer the next day. By morning she had a detailed e-mail
from us with the answer, developed from our STAMP analysis. She then distributed it to the other members of her caucus. Soon afterwards we used the same analysis to send a formal Legislative Memo to all legislators, the Governor and the capitol press corps.

On a separate topic in which STAMP was very useful to us, Washington policymakers have debated for years over whether to impose a state income tax (we already have one of the highest sales taxes in the nation). In
2003, a major, year-long effort was made by the Tax Structure Study Committee, a blue-ribbon panel created by Gov. Locke and chaired by Bill Gates, Sr. (Bill Gates' father), to push for a state income tax. Washington
Policy Center was one of the few groups involved with the panel and its news coverage to argue against such a tax on policy grounds. And we were the only group which, because of our use of the STAMP model analysis, was able to show the specific harm to Washington's economy that would result from the creation of an entirely new way for state government to tax its citizens.

Having the STAMP model on hand enabled us to provide the public with a fresh and relevant perspective on the Tax Structure Study Committee's numbing and complicated policy-making process. We entered two of the
specific income tax recommendations from the Committee's final report into the model and immediately released the results. STAMP results showed the first recommendation (a graduated tax of between 2.2% and 6%) would decrease total state employment by 66,899 jobs and reduce real disposable income by
$1.14 billion. The STAMP analysis showed the second recommendation (a flat income tax of 6.7%) would result in a net job loss of 150,216 and a drop in disposable per-capita income of $4.6 billion. During the public debate,

Washington Policy Center was the only independent organization able to produce firm numbers about economic impact. The only other source of data for the public was Mr. Gates' Study Committee, which had already officially announced that it supported an income tax. In the end the legislature decided not to enact a state income tax.

These are just a few examples of how we used the STAMP model. We also used data from the model for press releases, editions of our regular "Policy Notes" publication, in our study on state budget recommendations, and as talking points in speeches and media interviews. We also greatly appreciate the help you and the staff at Beacon Hill gave us once we had the model in place. Using STAMP is fairly straightforward, but your cheerful assistance whenever we had a question made it especially so. We highly recommend its use by other interested groups.

Sincerely,

Paul Guppy
Vice President for Research