Building an Economy that Works for Everyone

Dick Nelson: Time to scrutinize Washington state’s wasteful tax exemptions

Microsoft is one of many big beneficiaries of state tax breaks. (Photo: Dcoetzee/Wikimedia Commons)

Microsoft is one of many big beneficiaries of state tax breaks. (Photo: Dcoetzee/Wikimedia Commons)

Former State Representative Dick Nelson has a column in the online newspaper Crosscut, in which he calls for heavy scrutiny of Washington’s 500+ tax exemptions — especially those for large corporations.

Nelson, a member of the Revenue Committee when he was a state legislator, notes that Washingtonians are paying a heavy price for corporate tax breaks — a problem that has become even more pronounced due to the lingering recession:

Tax breaks use revenues from all taxpayers to benefit favored economic groups. They involve expenditures similar to those for other state programs and thus should be given comparable scrutiny for need and effectiveness. This is especially important as their number and monetary costs have increased over the years.

Since the state is now facing a deeper and more prolonged economic crisis than earlier anticipated, the legislature should speed up the reviews and eliminate or modify breaks that are obviously ineffective, before axing essential programs.

He cites the work of the Joint Legislative Audit and Review Committee (JLARC), which reviews the economic impact of various tax breaks on the book in Washington:

In the past four years the JLARC, in reviews of 95 breaks spread over 1,500 pages, has recommended that the legislature continue 62 and terminate or allow to expire 12. The committee recommended that the legislature re-examine another 21. The breaks recommended for termination or sunsetting have a total estimated annual cost of $37 million….

Given the low revenue impact of the reviews to date, the immediate imperative is to identify breaks that if eliminated or modified could help fill the current shortfall in state funding for social services. The review process needs to be quickly expedited with the clear purpose of generating 2011-13 biennium revenue. Revenue needs are significant but not huge if the goal is to save the most essential programs.

These tax giveaways, several of which we’ve detailed in previous posts, can be enacted by a simple majority vote of the legislature, but now require a 2/3 majority to be closed — an nearly impossible feat given the legions of corporate lobbyists that occupy Olympia during the legislative session. But Nelson has an idea about that, too – a vote of the people.

Read the full article at Crosscut: State tax breaks for businesses need scrutiny now »

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