West's New Gold Rush, Tech-Stock Wealth, Leaves Many Behind

Republican presidential candidate Steve Forbes was in Bellevue last week embracing Initiative 695 as a "sterling example" of tax reform.

Forbes is a consistent advocate for the end of the graduated income tax; he'd replace it with an across-the-board 17 percent tax. Forbes says families of four earning under $36,000 a year should not pay any income tax.

Then to cap it off: He suggests a zero tax rate for people who earn money from investments.

It is this last notion that interests me.

We live in a community where folks talk almost casually about people hitting the jackpot after collecting technology stock options. We hear about expensive houses purchased for cash or executives who are now retired - at 40.

This is a new Western legend, another way of digging gold nuggets from California to Alaska. It's a story we can tell ourselves, thinking it might one day come true.

And for a lot of people this dream has already come true.

Consider this paragraph about Bend, Ore., from Alan Thein Durning's new book, "Green Collar Jobs, Working in the New Northwest."

"In the official ledgers of Deschutes County income, `dividend, interest, and rent' ranks larger than any employment sector of the economy, with government transfer programs, such as Social Security, close behind. Between them, these nonlabor sources accounted for 38 percent of the county's total income in 1995."

This tidbit crosses more of our streets than just those in Small Town, Oregon.

"In the entire Northwest, fully 45 percent of the growth in personal income since 1979 has come from nonlabor dollars," Durning writes. "Retirement dollars account for about half this growth, but the region attracts many younger wealthy people as well."

Indeed, about one-third of all personal income comes from investment dollars.

I find these numbers stunning. I don't want to sound anti-investment. I am lucky enough to have a few assets - and believe in the power of compounding interest. If I am honest, I'd even admit that I'd like the option of not having to work.

But I also see work as more than a paycheck or routine. I find it essential - as important as almost any other part of my life.

I also know people who can't work in the sawmill or on the farm the way their parents did. Those operations are dwindling - a sign of the changing times. And in so many ways, the growth in investment-related income is a mirror image of the decline in the West's traditional economic base of resource extraction.

The old industries - mining, cattle ranching and logging - divided us into camps. Some of us worked in a mine, on the land, or in the forest, and others wondered why we had to be so messy when we did whatever we did to send those resources to the cities. All too often, we didn't understand each other.

But those old divisions are nothing compared to a society split between those who work and those who don't need to.

"Middle-class households . . . at least benefit from their homes' rising real-estate values," writes Durning. "But blue-collar families, owning nothing that appreciates over time, fall further behind."

We live in a region building walls so high they touch the sky. A lucky few could hold nearly all of our wealth, while those on the other side could do nearly all the work.

But should we tax only one side of that wall? Will civic discourse be possible if we're so deeply partitioned? Does a society benefit more from stock options and quarterly dividends? Or, is work sacred?

These questions don't surface when politicians talk about a flat tax. Instead of complicated answers, we hear quips about how easy it will be to fill out our tax return on a post-card. At least for those of us who are paid by the hour.

Mark Trahant's column appears Sunday and Thursday on Page A2 of The Times. His phone-message number is 206-464-8517. His e-mail address is mtrahant@seattletimes.com