he fourteen tax breaks proposed by the state Senate – despite a revenue shortfall and $1 billion funding deficit in K-12 education – beg the question: can we really afford this?
Some loopholes have their place, but as the state legislature tries to put together a budget that preserves essential state services with limited resources, every new tax break must be scrutinized. Even the most logical loopholes still mean funding siphoned away from education, health care, and critical infrastructure.
Take Senate Bill 5862, which would exempt mint growers and processors from sales and use taxes for the purchase of propane or natural gas, a loss of $300,000 from essential state services. The entire Republican caucus on the Senate Ways and Means committee voted in favor of this tax giveaway, plus Democrat Sen. Brian Hatfield.
Or Senate Bill 5866, which would extend the sales and use tax exemption for hog fuel for 11 more years. This loophole – which will cost the state $63 million over the next two years – was originally created to help the timber industry. But now a few multinational oil companies receive 98% of the subsidy – at a time when their profits are already sky high.
Then there’s Senate Bill 5622, which promises to create “thousands of jobs” in Washington’s airplane retrofitting industry. Maybe this “Boeing exemption” will help to restore some of the jobs being moved out of state?
There’s also Senate Bill 5831, which would provide a tax exemption for gun clubs to buy clay targets. The bill’s Republican sponsors want to exempt gun clubs from paying sales tax on clay pigeons. While the state would only lose approximately $29,000 over the next two years should the loophole be enacted, the bill is a convoluted giveaway to gun clubs.
All of these tax breaks have a purpose – some promote or discourage certain activities, while others simply provide preferential treatment to specific industries/organizations. But in a time of difficult budgeting, should more tax giveaways really be considered by the legislature? Washington’s tax code already has more than 500 exemptions, and when the budget gets squeezed, these importance of these loopholes are rarely weighed against critical budget items like public schools. Instead, state services – like public education – die a death of a thousand cuts.
In the short-run, some of the Senate’s proposed tax breaks may or may not encourage economic activity. But it’s important to remember that low taxation in itself doesn’t fuel economic growth. A favorable business climate requires more, including an educated workforce, critical infrastructure, and a healthy populous. Without these and other critical services offered by state government – all of which cost money – the business climate isn’t so favorable after all.
Tax breaks aren’t free – in this case, they come at the cost of providing high-quality, low-cost primary, secondary, and higher education. So what will it be: clay pigeons or textbooks? Hog fuel or health care?
Originally published at Washington Policy Watch