Summary of bills to eliminate tax loopholes

A cluster of bills introduced into the Washington State House and Senate would raise revenue for vital human needs by eliminating tax exemptions.  The main obstacle to eliminating exemptions is Tim Eyman’s (unconstitutional) I-1053 and its 2/3 super-majority requirement on legislative votes to raise revenue.

The House bills, HB-2078, HB-2087, and HB-2102,  overlap.  HB-2078 would end tax breaks for out-of-state banks and out-of-state shoppers and would use the proceeds to restore funding for K-3 class size reductions and mental health services.  HB-2087 would fund mental health services by repealing the nonresident sales tax exemption. HB-2102 “proposes a constitutional amendment to be voted on by the State’s citizens in the next general election to permanently repeal the sales tax exemption for nonresidents who are residents of states that do not currently have a sales tax.” (source:  Washington Votes)

The Senate Democrats Blog describes the bills introduced in the Senate:

· SB 5944 (Murray) — Offers a referendum to give voters the opportunity to decide whether the closure of tax loopholes should count as “raising taxes” under Initiative 1053 and therefore be subject to the two-thirds vote requirement for passage in the Legislature.

“I-1053 not only makes it nearly impossible for the Legislature to raise general taxes, but it makes it makes it nearly impossible for us to close unfair tax loopholes,” said Murray. “I’m not sure that this is what the voters intended, so this simply poses the question to them: ‘Should it be harder to close tax breaks for banks than it is to cut health care for kids?’ ”

· SB 5945 (Rockefeller) — Gives all preferential Business & Occupation (B&O) tax rates currently on the books a ‘haircut’ of 25 percent. The bill also repeals tax breaks for investment income of non-financial firms and for mortgage interest earned by banks, and would generate $338 million in the next biennium.

“If all we do in this session is adopt a balanced budget, that in my opinion is not enough,” said Rockefeller. “In a time when cuts are hitting everybody who receives public services as well as those who deliver them, we must call upon the people benefit from tax breaks to share in the sacrifice.”

· SB 5932 (Kohl-Welles) — Eliminates the B&O tax exemption on onetime membership initiation dues or fees for all businesses other than non-profit organizations.  The $4.5 million in savings each biennium would be directed to the Department of Human and Social Services for the purpose of providing hearing aids and eyeglasses for adults enrolled in state medical assistance programs.

“Only 17 percent of tax breaks currently on the books have ever been reviewed,” said Kohl-Welles. “Without thoughtful and comprehensive consideration of all newly proposed exemptions and careful review of existing exemptions, it is impossible for legislators to determine whether taxpayers are being well served by the current system.”

SB 5946 (Ranker) — Business owners and corporate officers are not held personally liable for a host of financial liabilities, including B&O tax, use tax, public utility tax and other excise taxes. This bill increases accountability within the existing tax structure and holds responsible parties liable for these obligations as well. It would save the state $15 million in the coming biennium.

“It’s only fair that those who owe tax revenue pay up,” said Ranker. “Unfortunately, our current policy puts the state last in line, forgoing collection of millions in revenue. This bill is a tool to remedy this oversight and encourage tax compliance.”

· SB 5947 (Eide) — Ends certain livestock tax exemptions, including two loopholes providing heating and outfitting of chicken coups and one provision subsidizing artificial insemination of livestock. Closing the exemptions would save the state $2.5 million in the coming biennium.

“My colleagues this year have spoken at great length to priorities of government – and I agree with this sentiment. I know I am not alone in thinking that when it comes to priorities, housing and keeping our children warm ought to outweigh that of our chickens. It’s a simple choice to me,” said Eide.

The Senate Democrats Blog lists even more bills, which are similar.

It seems odd to me that there are so many similar bills.

Additional reference: Will multi-billion dollar tax loopholes in Washington’s budget go to the ballot?