Tag Archives: tax breaks

Need to raise $1.7 billion in revenues

Advocates should be loud and assertive about the need to raise revenues. Governor Gregoire has said she would raise only $700 million of the deficit, about one-third in revenues, and balance the rest with cuts to essential services.

The King County Democrats take the position that we should raise two-thirds in revenues and cut one-third in services. The amount of the revenue goal will determine what kind of revenues are considered. It will be less painful to vote for a few large taxes than many small ones.The Governor has said she wants to address tax breaks. I suggest the legislature start with the largest non-performing tax break. That would be Boeing’s 2003 $3.2 billion (over 20 years) for promising 1,200 additional jobs. Instead, last year alone they laid off over 10,000.

The Seattle Times on Sunday Jan. 4th ran an article about other states rescinding their nonperforming tax breaks and demanding refunds, or “clawbacks.” We want to see that here, too. We don’t appreciate being played for fools.

Extending the sales tax to all services, not just professional services, would do the most to fill the deficit gap. It would also be, in effect, progressive tax, since low-income people tend to hire few lawyers, accountants and financial advisers. I’ll bet most moderate-income people would prefer to pay sales tax on haircuts, rather than see 65,000 people lose Basic Health plans. According to the Rebuilding our Economic Future Coalition, a recent poll showed that–after hearing how deep the cuts in services would be–65% of Washingtonians supported increasing revenues.

Legislators should also use this crisis as an opportunity to take needed steps toward an income tax for high-earners, couples making over $500,000. This 1% tax would be constitutional if Washington law defined income as different from property. Sens. Adam Kline and Rosa Franklin’s SJB 8205  addresses this and should be given an early hearing.

Most of all, Democrats should take courage, and note that Seattle passed the Seattle Housing Levy in a time of economic downturn by its biggest margin ever, 68%. Trust the voters to know that you’re doing the right thing.
(This post first appeared as a comment on the Northwest Progressive Institute blog.)

Senators Murray and Cantwell Vote for Another Tax Break for Wealthy

Maybe Senators Patty Murray and Maria Cantwell are angling for the endorsement of the Seattle Times next time they’re up for election. They are certainly not working for most of the citizens in Washington State when they voted last week to raise the Federal estate tax exemption for the very wealthy.

Senators Murray and Cantwell joined forces with all 41 Republicans and 8 other Democrats in a Senate vote that would remove $91 billion over ten years from the Federal budget. As the blog Working Life said, “Ten Senate Democrats Lose Their Minds, Vote for Estate Tax Cut”

“Now, c’mon, this is entirely absurd. We already have the widest gap between rich and poor in many generations. Republicans (and some Democrats) are trying to cut the Administration’s proper and wise investments in infrastructure and wise energy efficiency programs. And, in the midst of all that, the Senate does what? Votes to cut the estate tax (which effects only the richest Americans) thanks to the votes of ten Senate Democrats. This is the definition of insanity.”

As the New York Times notes today in an editorial entitled “Guarding the Family Fortune” :

“…as the unemployment rate hit a 25-year high and nearly one in 10 Americans was receiving food stamps, 10 Democrats in the Senate joined all 41 Republican senators to cut estate taxes for the wealthiest families….With economic pain and suffering on the rise, how do the senators justify a big tax cut for multimillionaires?”

Who are the other Senators joining this Reagan/ Bush era philosophy of trickle down economics – that you can’t do enough to help the wealthy because they keep the county growing? They are Senators Lincoln Blanche (Arkansas), Max Baucus (Montana), John Tester (Montana), Evan Bayh (Indiana), Mary Landrieu (Louisiana), Ben Nelson (Nebraska), Bill Nelson (Florida), and Mark Pryor (Arkansas).

As the Center on Budget and Policy Priorites states:

“This proposal is both fiscally irresponsible — it would pave the way for a significant increase in long-term deficits and debt — and unnecessary to protect small businesses and farms, nearly all of which are already exempt from the tax under the 2009 estate tax rules, which President Obama has proposed to extend. The amendment also would lead to significant reductions in charitable contributions, while benefiting only the wealthiest 0.28 percent of estates.”

As the NY Times editorial cited above states:

Under today’s estate tax, which is retained in both the House version of the budget and in President Obama’s version, 99.8 percent of estates will never owe any estate tax. That’s because the tax applies only to estates that exceed $7 million per couple or $3.5 million for individuals, and a vast majority of American families are not and never will be that wealthy. “

It seems to me that Senator Murray and Senator Cantwell are missing the larger picture. Washington State voters recently voted to retain the state estate tax to help fund schools. With the increased concentration of wealth in a very small percentage of the population, it’s time for the wealthy to give back some of the money they made thanks to benefits of the US economic system that made it possible. After all, they can’t spend it after they’re dead. But they can do whatever they want with it while they’re living.

Tax Exemptions Run Amok in Olympia

Over the last three years Washington State Legislators has passed 61 measures to extend or create new tax exemptions. These exemptions have removed almost a half billion dollars from the 2007 – 2008 biennial budget.

The Economic Opportunity Institute has documented what has happened in a detailed report they issued last year, entitled “Adding up: New Tax Breaks in Washington 2004-2006″

These exemptions are really expenditures and represent a loss from potential revenue available for use by the Legislature in preparing the current budget for the state. Yet the exemptions do not appear as expenditures or potential revenue anywhere in the current budget process.

Once every 4 years a separate report is issued, independent of the budget documents, as if these exemptions do not exist as potential revenue for consideration in determining budget priorities.

Last year when I asked former House Finance Committee Chair Jim McIntire if he knew of any tax exemption that the Washington State Legislature had repealed in the last legislative session he sheepishly said no. Unfortunately most legislators don’t view these special interest tax exemptions as expenditures and potential sources of revenue that the Legislature should consider when preparing a new budget.

Rep. Sharon Tomiko Santos is proposing to change that. She is the prime sponsor of HB 1827. The bill is very simple. It says that, as part of the budget process, a report of the current tax exemptions and their costs must be included along with the state budget.

It is an important step to hold the legislators accountable for their decisions regarding giving tax exemptions and their impact on the state budget. Passing HB 1827 would represent an important step in opening up the budget process to more public scrutiny and would give taxpayers a better understanding of where expenditures are being made, especially as regards special interest tax exemptions which remove revenue from other needs like health care for children or education.

Senator Pridemore has introduced the same legislation in the Washington State Senate as SB 6054.

The Washington State Tax Fairness Coalition has made this legislation one of their top priorities in this legislative session. They have set up a web page where you can easily contact your legislators to let them know this is something you also think needs to be passed. Click here to go to their page now.