Let’s take a brief break from our run of posts regarding the massive corruption and fraud in government programs along with our political class insanity thread and return to one of the hottest topics we have been covering over the past few years, coverage that has intensified recently: which major city or state government will get to bankruptcy court first?
Our primary cities in the race to bankruptcy include New York City, Chicago, Los Angeles, San Francisco, and newcomer, Seattle. The state governments that we think are soon heading into bankruptcy include New York, New Jersey, Illinois, and California with Washington state a newcomer to the race.
The reason for returning to this topic in the midst of our corruption series is because there have been some significant developments in the race to bankruptcy court. However, before reviewing the latest news and seeing which state or city is making the best progress towards government bankruptcy, let’s review how these cities and states got themselves into this financial death spiral position to begin with:
A government entity keeps expanding its budget, eventually putting pressure on the tax revenue stream it receives.
At some point, rather than cut government spending or make its programs more efficient financially, the politicians in charge raise taxes to meet the ever growing government expenditures.
The raising of taxes causes some residents and businesses to leave the city or state for less tax burdensome areas, reducing the tax base and reducing the revenue stream.
Rather than cut expenses and become more efficient to match the reduced tax revenue stream, politicians in the above cities or states raise the tax burden even more.
This causes more residents and businesses to flee the city or state, further reducing the tax base and tax revenue stream.
At some point politicians panic and raise taxes more and start cutting vital government services (e.g. police, fire, education) in order to try and balance government spending against the shrinking tax base and revenue stream.
The reduction in quality of government services in particular and quality of life in general drives more residents and businesses out of the area.
Eventually, the expenses, costs and financial liabilities outstrip the reduced tax stream and bankruptcy occurs.
Okay that’s the process. Let’s see what is going on in the newest and possibly the strongest contender for bankruptcy court.
1)We have previously reported on how the mega-rich residents of Seattle have not only moved themselves but some have also moved huge chunks of their businesses out of Seattle:
Amazon co-founder and billionaire , Jeff Bezos, has moved from Seattle to Florida.
Starbucks founder and billionaire, Howard Schulz , has moved from Seattle to Florida.
Zillow founder and billionaire, Rich Barton, has moved from Seattle to Nevada.
A primary driver for the moves are pretty obvious: why stay in a city and state that constantly raises taxes on the wealthy, and the not so wealthy, when they can easily move their lives to states like Florida that have a much lower tax burden: no state income tax, no state or local capital gains tax, lower gas taxes, etc. And when they move they not only shrink the tax base of cities like Seattle, they take the economic impact and employees with them which reduces local economic growth.
But it is not just the super rich who are fleeing Seattle:
Dave and Leigh Anne Clark started up a company named Auger when they lived in Seattle.
He was a former Amazon exec so the couple probably are quite comfortable and well off, but certainly not in the Bezos/Schulz/Barton range.
They started up a supply chain software company and then they moved the company from Seattle to Texas, a state with no state income tax.
The company has already raised $150 million in capital and already has some Fortune 500 clients.
Their goal is to build a $100 billion company according to news reports, a company that will not now reside in Seattle.
According to Clark: “Seattle had a much richer network of technology infrastructure, so we started the team there, built the technology stack, and established our core development center there.But we knew when it came time to really start building out how we go to market and how we manage customers, we wanted to come back to Dallas.”
He went on to discuss the availability of tech talent in the Dallas, Texas area that will more easily help the business to expand.
Another day, another company that has left Seattle, taking its present and future tax stream and economic impact with them. Seattle politicians are slow to realize that they no longer have cornered the market on technology talent, that talent has migrated to Texas and Florida. And once that out migration has started and taken hold outside of Seattle, it is next to impossible to reverse that trend.
In other words, the financial death spiral is alive and gaining speed in Seattle.
2)But it is not just giant tech companies, smaller tech companies, coffee companies, other large companies that are moving employees, operations, and headquarters out of Seattle. Consider the following story, in the words of its owner, of why a small business in Seattle, The Pie Bar, has given up and has shut down its Seattle operations:
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To everyone who reached out regarding my post a few days ago, thank you. Today, I want to have a very honest conversation about what it actually takes to survive as a small business owner in Seattle right now.
Over the last 13 years at Pie Bar, we haven't just been struggling with economic challenge we’ve been surviving on our own:
8 years ago: Assaulted outside our Ballard shop. Police arrived and told me their "hands were tied." The officers wanted to help, but city policies had handcuffed them.
6 break-ins & thefts: Had windows smashed, generators stolen, and my personal belongings taken. When I tracked my stolen computer, police were so spread thin it took 4 days for a call back.
Ballard closure: Between constant crime, customers and employees not feeling safe, we were forced to close our Ballard shop after 12 years.
The absolute final straw happened recently.
As we were loading the Pie Bar food truck food for the biggest event of my career (2026 FIFA World Cup) a man physically assaulted me and my employee for turning on our generator. My employee had to pretend a pen in his pocket was a knife just to get him to back off. The attacker ripped out our generator cord and destroyed our electrical panel.
I called the assault line two times to press charges, and no one has been able to call me back because the department is stretched way past its breaking point.
We have moved a branch of our operations to Bellingham. Being in a safe city made me realize something heartbreaking: I had become so numb to the chaos in Seattle that I forgot what it feels like to feel safe as a business owner.
I want to be completely clear: I am not throwing our frontline Seattle police officers under the bus. These men and women are being hamstrung every single day by the policies of Mayor Katie Wilson and city leadership. When city hall ties the hands of law enforcement and fails to support them, it isn't just the officers who suffer, it's the small business owners, our workers, and our neighborhoods who are left totally unprotected.
Small business owners pay high taxes, work 80 hour weeks, and put everything on the line. We are not replaceable.
Stop hamstringing our police, turn on the cameras, and keep the citizens of Seattle safe. When Seattle was onstage for the World Cup you cleaned up the city and implemented safety protocols. How do we come together as a community and make the Emerald city great again?
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“We are not replaceable.” What a great summary of what is happening in Seattle and other declining cities around the country: businesses, big and small, have decided it is time to get out, the high burden of taxes and over regulation, the declining and unsafe quality of life, are too much. And as they leave and are not being replaced, they take tax dollars and economic power with them to other areas of the country where life is easier, safer, and more financially sound.
3)How did Seattle, and other faltering cities, get so screwed up financially? A report from Charlie Harger of the Seattle Morning News lays out the path to the financial death spiral:
The city of Seattle’s budget has increased by 40% since 2019.
That is an average of about 5% a year, far higher than inflation.
According to the Census Bureau, the median Seattle household income went up only 16% over that same period.
The city government faces a $175 million deficit this year despite the 40% increase in budget.
Half of a city tax (Jumpstart) that was supposed to support low income housing is now used to plug budget gaps in the overall city budget, an obvious stop gap, short term solution.
As a result, the city government is considering raising taxes even more, which will likely drive more businesses and residents out of the city and increase the budget gap.
One lone member on the city council proposed the following, reasonable fixes to the budget: budget from the top priorities, not just roll over last year’s budget line items and programs, question whether some city programs need to be eliminated, and rework the payroll tax to prevent businesses from leaving town.
None of his suggestions got any traction.
The Tax Foundation says Seattle has the largest tax burden of any major city in the country and the city government wants more taxation.
Bellevue , Washington is ten miles outside of Seattle and many residents and businesses have fled to Bellevue to escape Seattle taxes, crime, and homelessness.
According to the Downtown Seattle Association, property taxes in Bellevue have fallen 16% since 2019 while Seattle property taxes have risen 48%, a whopping 64 pint difference.
Bellevue’s business office values have held steady over the past few years while Seattle's business office values have dropped by almost 50%.
Payroll taxes in Seattle cost a business over $9,000 a year per employee while the payroll tax in Bellevue is $0.00
Mr. Harger gets it: you cannot tax your way out of a budget deficit without decimating your tax base which, in turn, creates a financial death spiral. The numbers he lists above are reality, something the Seattle politicians obviously do not understand or do not want to face.
However, the numbers don’t lie and the financial death spiral is in place and accelerating in Seattle. Thus, it is now our contention that Seattle is now in the lead in the race to bankruptcy court and will go belly up before the other prime candidates, i.e. New York City, Chicago, Los Angeles, and San Francisco.
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Vote Now!!!! Go to to the following link and vote on which state or city government you think will go bankrupt first:
https://www.facebook.com/profile.php?id=61592458935721
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If you agree that we need to deseat every member of Congress for their lack of success and accomplishment, then please consider going to the following petition link to help the cause:
https://www.change.org/p/deseat-congress-reset-freedom
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