Steve Zemke and I went to Olympia on Friday and met, briefly or longer, with about a dozen legislators, including Maralyn Chase, Bob Hasegawa, Gayle Tarleton, Frank Chopp, Reuven Carylye, Cindy Ryu, Joe Fitzgibbon, Judy Clibborn, and Tana Senn. We spoke about tax fairness and accountability for tax loopholes. We had in-depth discussions with a few of the legislators.
We presented to various legislators, and their aides, the list of signers of the MoveOn petition Let’s fix our unfair tax system in Washington State. Statewide over 3900 people have now signed that petition. Many of the signers wrote passionate and incisive comments, which you can read here; we gave to the legislators and aides comments from their constituents, broken down by LD.
Steve Zemke spoke with legislators and aides about his idea for a tax expenditure budget, which would require the legislature biannually to approve or reject the many tax preferences on the book. Every year JLARC (the Joint Legislative Audit &Review Committee) makes a report and recommendations on tax preferences. But the legislature rarely acts on these recommendations. Current practice is to let the tax preferences continue forever; the legislature isn’t required take a vote on whether to continue any of them.
Senator Chase has submitted a tax expenditure budget bill, SB 5938, which is still alive but is getting little attention in the state Senate, due to the ascendancy of the so-called Majority Coalition, under control of Rodney Tom and the Republicans.
We are hoping that House leaders will promote the idea of a tax study commission and that the Senate will go along with it.
The commission would evaluate our inadequate and unfairly regressive tax system and make recommendations concerning issues such as a carbon tax (regressive), the gas tax (regressive), and a capital gains tax. Next year there is likely to be a carbon tax on the ballot; the carbon tax will likely be “revenue neutral” because that is likely the only way to garner support from Republicans and conservative Democrats. See Carbon Washington.
Along similar lines, one idea that might be considered is to pass a revenue-neutral tax shift from the sales tax and the B&O tax — both of which are regressive — to a capital gains tax. Such a tax shift wouldn’t address the need for more revenue (e.g., to fund K-12 education, per the McCleary Supreme Court decision), but it would make our tax system more fair.
The commission might be modeled after the 2002 Gates Commission: Tax Alternatives for Washington State: Report to the Legislature. The Gates Commission was authorized by the legislature in Section 138, ESSB 6153, with these committee members.
We also attended a Finance Committee work group meeting, which discussed accountability for tax preferences.
Dana Lynn of JLARC showed a spreadsheet comparing the information various states collect and publish, online or offline, about the performance of tax preferences.
Sixteen states do no evaluation at all of tax incentives. Washington State is one of nine states that reviews tax incentives, although it rarely acts on the reviews.
Greg LeRoy, Executive Director of Good Jobs First, testified remotely about Making Economic Development Tax Credits Transparent. His group analyzed 240 “megadeals” in which state legislatures gave away $75 million or more in tax preferences. The number of such giveaways has risen sharply since 2008. The average cost to the state per job is $465,000. The Boeing tax break is the largest given to date. But there are hundreds of older tax breaks.
LeRoy gave Washington a grade of D for transparency, D- for Job Creation/Quality, and D+ for Enforcement/Clawbacks.
The testimony to the Finance Committee on tax accountability is available on TVW here.
We heard Tim Eyman defend tax advisory votes at a Government Operations & Elections Committee hearing. Critics of the tax advisory votes have characterized them as push polls paid for by the taxpayers to promote his anti-tax positions but that have little real value. The Clark County auditor testified against tax advisory votes.
Reuven Carlyle challenged some of Eyman’s facts about whether legislative actions actually raised taxes. Carlyle said two of the votes did not actually raise taxes. But Eyman ignored the question and responded with boilerplate anti-tax rhetoric. Nobody asked a follow-up question We thought that committee members were suspiciously polite towards Eyman.
To people like Eyman, ending tax breaks for rich corporations is equivalent to raising taxes.
Steve Zemke is former Chair of the King County Democrats and is current director of Tax Sanity.
Zemke and I made a similar trip to Olympia on Nov 7, when we met with a smaller number of legislators and for 40 minutes with three of Gov. Inslee’s budget aides.