As we’ve noted in previous posts, Washington’s tax structure, last updated in the 1930s, is riddled with tax exemptions for private industry and relies heavily on a sales tax that hits our low- and middle-income workers hardest.
This not only exacerbates Washington’s revenue problems – a direct result of the recession – it also contributes to a long-term structural deficit that is weighing down economic recovery.
Washington’s sales tax applies to goods but largely exempts services. That was fine back in the 1930’s, but in today’s 21st century economy, consumers spend less on goods and more on services like health care, beauty salons, and attorneys. People are also buying more goods over the internet – often without paying sales tax. Since sales taxes don’t cover these transactions, over time, our public investments aren’t keeping up with growth in the economy.
Washington state needs to expand its tax base in order to fund schools, roads, police services, and everything else we rely on government for.
That’s part of the reason Washington state Senator Karen Keiser (D-Kent) proposed SB 5926, which would restore cuts to in-home care nurses. These nurses care for elderly adults in their own homes – a proven cost-saver that keeps people out of more expensive nursing homes and hospitals. Keiser proposes restoring the cuts by ending a tax exemption for out-of-state shoppers, who currently don’t pay our state sales taxes. Doing so would expand the tax base, raising about $90 million.
From the Public News Service:
The nine co-sponsors of Senate Bill 5926 are all Democrats. Keiser says she tried to get Republican co-sponsors for the legislation, but without success. In the view of many GOP lawmakers, taking a tax exemption away, in effect, creates a tax. To Keiser, it’s a popular refrain, but one that isn’t getting the state anywhere in solving the budget crisis.
“It’s very easy to be anti-tax, and it’s very much ideology among some people, a matter of faith. I don’t agree; I don’t think the public agrees that every tax loophole closure is the same as a tax increase.”
The measure asks voters to decide in November whether shoppers visiting Washington from out-of-state should have to pay the sales tax on their purchases. The bill is in the Ways and Means Committee.
Treating tax exemptions as an expense – and comparing their value side-by-side with other expenses to determine their value – is just common sense. Ignoring the problem will just cause more trouble down the road.
(Full disclosure: Senator Keiser is an EOI Board Member).
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