Action Alert on ESSB 5513 to Increase Tax Exemption Transparency and Accountability

Posted on by February 26, 2018
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Action Alert on WA ESSB 5513 to Increase Tax Exemption Transparency and Accountability.

ESSB 5513 on Tax Exemption Transparency and Accountability was passed last week by the Senate on a 47/0 vote. It is now in the House.

Your help is needed now.  Please contact your LD State Representatives to urge support for ESSB 5513 bill.  To contact your own Representatives and leave a comment click on this link ESSB 5513 Washington State Legislature website at www.leg.wa.gov , click on “find a bill”, type in 5513, and on the bill page click on the link “comment on this bill”

Also contact Rep. Larry Springer on the House Finance Committee and urge he support this bill without amendments to weaken it.  His e-mail is larry.springer@leg.wa.gov

ESSB 5513 would  take a significant step forward in providing more updated and current information to the Governor, the Washington State Legislature and the Public regarding Tax Expenditures aka Tax Preferences. The Senate Bill Report on ESSB 5513 has a good summary of what the substitute bill does:

“Summary of Engrossed First Substitute Bill: 

The DOR Tax Exemption Report (Report) is updated every two years instead of every four years. The Report must include recommendations by JLARC and the Commission if the tax preference has been reviewed. 

The November budget outlook materials must include the projected fiscal impact of discretionary tax preferences in the current biennium and subsequent biennium. The summary must separate discretionary tax preferences by category—business incentive, agriculture, nonprofit, etc.—as provided in the DOR Report.

The Governor’s budget documents must include a detailed listing of discretionary tax preferences and the listing must be included on the websites of the Office of Financial Management, Economic Revenue and Forecast Council, and Office of the Governor. The listing must provide the following information:

-a brief description of each discretionary tax preference;

-prior and future estimated fiscal impacts for each discretionary tax preference; 

-the stated public policy objective, if any, of the discretionary tax preference; 

-and any recommendations by JLARC and the Commission with regarding to continuing, modifying, or eliminating the discretionary tax preference. 

Discretionary tax preference is defined to be a tax credit, exemption, deduction, or preferential tax rate, which is not required by the state constitution, United States Constitution, or federal law. ”

www.Taxsanity.org   like on facebook –  Tax Sanity Steve Zemke – Director

Testimony on ESSB 5513 before WA House Finance Committee

Posted on by February 26, 2018
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Comments to House Finance Committee on ESSB 5513  Feb. 22, 2018

Steve Zemke Director – Tax Sanity

Tax Sanity recommends passage of ESSB 5513. Updating the Department of Revenue’s Tax Exemption Report every two years instead of four years is important to have this information available for writing the state’s biennial operating budget. It will help to increase transparency and accountability of tax expenditures.

This bill is in line with the recommendations of the National Conference of State Legislatures which wrote in a 2014 document entitled “Tax Expenditure Budgets and Reports; Best Practices” that:

“To ensure that policymakers and the public have a full understanding of deviations from “normal” tax policy and the impact of those deviations on state revenues, there should be a protocol, codified in statute, which specifies that tax expenditure reports should:

  1. Be easily accessible and available on-line
  2. Be completed in time for budget and policy decisions.”

They further outline specifically what should be in the report.

More information is no guarantee, however, that the Legislature or a Governor will be more accountable in using this information for the public welfare and benefit.  They also wrote:

“While better tax expenditure budgets and reports are a critical first step, the data in these reports must be reviewed and evaluated in order to produce better public policy making. Here, too, there are some “best practices.”

Tax expenditures should be an integral part of the state’s budgeting process, subject to a comparable regular review and approval process as other expenditures. All tax expenditures should be reviewed regularly …

Evaluations should be based on measurable goals and draw clear conclusions on the effectiveness of the tax expenditures. …

The Governor and appropriate legislative committees should review the reports to determine whether tax expenditures should be continued, modified or eliminated. This should be part of the state’s normal budgeting process.”

This is what was proposed in HB 1500, SB 5513. This substitute bill ESSB 5513 takes another step toward more transparency and accountability but the responsibility remains on the Governor and the Legislature to use this information in its budget deliberations to consider the best use of our state tax revenue in both expenditures in the operating budget and off budget tax expenditures known as tax preferences in this state.

Washington State currently expends more revenue through its tax exemption system that it collects as revenue for the general operating budget. Ninety per cent of the tax exemptions have no sunset provisions. This is a broken system and needs to change.

ESSB 5513 passes WA State Senate Unanimously. Now Awaits a House Vote

Posted on by February 19, 2018
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The Washington State Senate passed ESSB 5513 by a 47/0 Vote on Feb. 13, 2018. The bill has been sent to the House for a vote..ESSB 5513 is a substitute bill that has removed the provision that discretionary tax exemptions must be voted on as part of the biennial budget process every two years. It is still a significant step in trying to make Washington State’s almost 700 tax exemptions more transparent and accountable.  ESSB 5513 would require the Washington State Department of Revenue to update its Tax Exemption Report every 2 years instead of 4 years. The Governor’s Budget forecast documents must include a listing of all discretionary tax exemptions (some 450) and their fiscal impact on the proposed state budget in terms of potential revenue not collected.

Here is a summary of the ESSB 5513 as reported by the Senate Ways and Means Committee:

Summary of Engrossed First Substitute Bill:

The DOR Tax Exemption Report (Report) is updated every two years instead of every four years. The Report must include recommendations by JLARC and the Commission if the tax preference has been reviewed.

The November budget outlook materials must include the projected fiscal impact of
discretionary tax preferences in the current biennium and subsequent biennium. The
summary must separate discretionary tax preferences by category—business incentive, agriculture, nonprofit, etc.—as provided in the DOR Report.

The Governor’s budget documents must include a detailed listing of discretionary tax preferences and the listing must be included on the websites of the Office of Financial Management, Economic Revenue and Forecast Council, and Office of the Governor. The listing must provide the following information:
– a brief description of each discretionary tax preference;
prior and future estimated fiscal impacts for each discretionary tax preference;
– the stated public policy objective, if any, of the discretionary tax preference; and
– any recommendations by JLARC and the Commission with regarding to continuing,modifying, or eliminating the discretionary tax preference.

Discretionary tax preference is defined to be a tax credit, exemption, deduction, or
preferential tax rate, which is not required by the state constitution, United States
Constitution, or federal law.:

ESSB 5513 is scheduled for a hearing in the House Finance Committee on Thursday Feb. 22nd, 2018 at 3:30 PM. If you can not attend to testify, please call or send e-mails to the legislators in the House.Finance Committee, urging them to vote this bill out of committee so that the full House can vote on it. also contact your own Legislators. The remaining session is short. Do not assume your Representatives know about this bill or that it will pass in the flurry of bills demanding attention at the end of the session. Please help by contacting  Legislators today. Thanks.

 

Committee Members

Representative e-mail Phone
Lytton, Kristine (D)
Chair		 kristine.lytton@leg.wa.gov (360) 786-7800
Frame, Noel (D)
Vice Chair		 noel.frame@leg.wa.gov (360) 786-7814
Nealey, Terry (R)
Ranking Minority Member		 terry.nealey@leg.wa.gov (360) 786-7828
Orcutt, Ed (R)
Asst Ranking Minority Member		 ed.orcutt@leg.wa.gov (360) 786-7990
Condotta, Cary (R) cary.cordotta@leg.wa.gov (360) 786-7954
Dolan, Laurie (D) laurie.dolan@lwg.wa.gov (360) 786-7940
Pollet, Gerry (D) gerry.pollet@leg.wa.gov (360) 786-7886
Springer, Larry (D) larry.springer@leg.wa.gov (360) 786-7822
Stokesbary, Drew (R) drew.stokesberry@leg.wa.gov (360) 786-7846
Wilcox, J.T. (R) jt.wilcox@leg.wa.gov (360) 786-7912
Wylie, Sharon (D) sharon.wylie@leg.wa.gov (360) 786-7924

You can also leave messages for your own Legislators by going  to the bill page for  ESSB 5513 and looking  to the right on the page you will see a box to “comment on this bill”  Thank your Senator for voting to pass this bill  (It was a 47/0 vote) and urge your two House members to vote to pass this bill.  Thanks

WA SB 5513 – the Tax Exemption Transparency and Accountability Act

Posted on by January 25, 2018
Reply

Testimony in support of SB 5513 – the Tax Exemption Transparency and Accountability Act

Washington State Senate Ways and Means Committee, Jan. 18, 2018

Steve Zemke – Tax Sanity

 Thank you for this opportunity to testify on this legislation.

This is the fifth year this bill has been before you and each year it picks up additional support.  Senate SB 5513 has 14 sponsors and its companion bill in the House HB 1500 has 33 sponsors. This is almost one third of our state Legislators.  

 Legislation to create a Tax Expenditure Budget has been increasingly supported by numerous groups in our state, including the Washington State Budget and Policy Center, All in for Washington,   Washington State Labor Council,  League of Women Voters of Washington, Washington’s Paramount Duty,  Washington State Democratic Party,  Washington Education Association, SEIU 775, Northwest Progressive Institute, Washington Federation of State Employees, Washington State Council of Firefighters,  Faith Action Network, Puget Sound Advocates for Retirement Action, and others.

 Why are these groups supporting this legislation? Because they believe that a system of tax expenditures that gives away more in revenue from the tax base than it collects is a broken system.  They believe that tax exemptions need transparency and accountability and fairness. That does not exist now.

 Tax Exemptions, preferences, deductions, credits, and deferrals are off budget expenditures. They lack the transparency and accountably that exists for other expenditures the state makes as part of the biennial budget process. According to the Department of Revenue’s projection in their 2016 Tax Exemption Report for the 2015 to 2017 biennium they projected that while the state would collect some $7.4 billion in B&O taxes, they would exempt from the same tax base some $11.4 billion. This gap has widened since the last biennium.

Including the rest of the tax exemptions in their report, the Department of Revenue projected that off budget tax expenditures would total almost $40 billion while only collecting revenue totaling some $32.6 billion.

Of the 694 tax exemptions in that report about 450 are discretionary.  The Department of Revenue projected that in the 2017 to 2019 Biennium that of the $54 billion in projected tax expenditures, some $30 billion would fall into “potential revenue gains”. 

  This legislation does not mandate wholesale repeal of tax expenditures.  It asks for accountability and transparency and biennial review and gives the legislature the ability to act to end exemptions if they do not meet the priorities of government the same as expenditures in the regular biennial operating appropriations budget must.

 Concern about the current system includes a quickly dated Tax Exemption report by the Department of Revenue that is only updated once every 4 years.  Most other states in the country update their report every 2 years or less. California updates their Tax Expenditure report every year.

Companies like Microsoft, Starbucks, Expedia, Adobe and Boeing all must report to their stockholders every year and issue quarterly profit and loss statements.  Their financial statements are scrutinized by their stockholders. It does not make sense that Washington State only updates its Tax Exemption Report every 4 years. It will next be updated in 2020. It should at a minimum be updated two years just as the state biennial budget is..

Only 73 of the 694 listed exemptions in the 2016 Tax Exemption Report have sunset provisions. This means 89% of the tax expenditures have no sunset provision and never require the Washington State legislature to ever vote on them again. Meanwhile all expenditures in the regular operating appropriations budget are scrutinized and voted on every 2 years with adjustment made in the 2nd year of the biennium.

 Also in the Tax exemption report, 54 exemptions are listed as “unable to disclose” the amount of revenue involved.  Businesses and other entities are benefiting from state tax law in getting exemptions and lower or no taxes. The public has a right to know the value of these exemptions. 

 The public has a right to know that these exemptions are creating jobs or providing valuable services to Washington State citizens just as they expect expenditures in the regular budget appropriations bill to produce.

  We require that accountability in the regular budget appropriations process – we don’t say we’re spending state revenue but the public doesn’t have the right to know because the recipient doesn’t want us to know what they are getting.

 With the current lack of accountability and transparency and sound fiscal review and evaluation as to whether current tax expenditures meet the state priorities of government and have clear measurable objectives as to their effectiveness in meeting state needs, taxpayers and citizens in this state increasingly believe state government and the legislature are not doing their job.

. Please step up and vote to fix this broken tax expenditure system that severely lacks needed transparency, accountability and sound fiscal management of our total state budget.

 Steve Zemke

 Director Tax Sanity

steve@taxsanity.org

www.taxsanity.org

Hearing Jan 18, 2018 on SB 5513 -The Tax Exemption Transparency and Accountability Act

Posted on by January 25, 2018
Reply

SB 5513 will have a Hearing in the Washington State Senate Ways and Means Committee on Thursday, Jan 18, 2018 at 3:30 PM  in  Senate Hearing Room 4 in Olympia. The information below explains the legislation and can also be cut and pasted to be an information handout.

End Tax Exemptions as Off-Budget Spending

By Adding Them as Tax Expenditures to the State Budget!

 Why is SB 5513 /  HB 1500 – The Tax Exemption Transparency and Accountability Act needed?

Washington State is currently giving away more revenue in tax exemptions than it is collecting from the same tax base. Of some 694 exemptions, ninety percent have no sunset provision. This is a broken system.

We don’t generally think of them as such but tax exemptions, preferences, deductions, credits and deferrals are off budget expenditures. They lack the accountability and transparency that exists for other expenditures the state makes as part of the biennial budget process.

Taxpayers deserve to know who is receiving these tax expenditures, how much money is involved and for what reason they are given.

Washington State has created some 694 tax exemptions over the years. Over 450 of these are discretionary tax exemptions, not required by Federal or State constitutional law.

According to the Washington State Department of Revenue’s  2016 Tax Exemption Study, while the State expected to collect some $7.4 billion in B&O tax revenue in the  2015 -2017 biennium, it exempted from collection some $11.4 billion. When sales and use taxes were included with the analysis, the results are similar – the state expected to collect some $18.9 billion in revenue from sales and use tax, while exempting some $16.9 billion in revenue.

Including property tax exemptions the 2016 Department of Revenue Report projected that in total, Washington State will see as off budget tax expenditures almost $40 billion in tax exemptions this biennium while only collecting revenues of $32.6 billion for the Legislature to fund its biennial budget.

HB 1500 introduced by Rep. Gerry Pollet and 32 other sponsors would require the governor to propose and the state legislature to adopt a tax expenditure budget every 2 years as part of the biennial omnibus operating appropriations act. The companion bill, SB 5513 has been introduced in the WA State Senate by Senator David Frockt with 13 other sponsors.

SB 5513 / HB 1500 would give the Washington State Legislature an opportunity to periodically evaluate the need and effectiveness of the state’s tax exemptions in meeting current state needs. They would do this at the same time they are making budget decisions about prioritizing other state expenditures for public services as part of the biennial budget appropriations process.

What would SB 5513 / HB 1500 – the Tax Exemption Transparency and Accountability Act do?

 This measure would require new and existing discretionary tax exemptions to be authorized every two years in a tax expenditure budget. It will add much needed transparency and accountability to the hundreds of exemptions and preferences, along with their cost and how each decision to spend money on an exemption or preference is a choice to expend funds for this purpose with particular beneficiaries.

The tax expenditure budget would detail the fiscal impact, purpose, and effectiveness of each tax exemption in meeting the state’s priorities of government in the state budget.

 Tax exemptions not included in the tax expenditure budget would expire at the end of the calendar year in which the budget is adopted.

 Action item- Contact your Legislators and urge them to enact the Tax Exemption Transparency and Accountability Act.

Urging your Legislators to pass SB 5513  and companion bill HB 1500  is easy. You can leave them a message by going to http://www.leg.wa.gov, entering 5513 or 1500 for the bill number after clicking the bill information link and then clicking on “comment on this bill.”

Or call the Legislative hotline at 1-800-562-6000 and leave a message to your legislators and the Governor to support SB 5513 and HB 1500 to create a tax expenditure budget as part of the biennial budget appropriations process. And be sure to thank your legislators if they are a sponsor of this legislation. Their support is appreciated.

 Legislators sponsoring HB 1500 – Pollet, Farrell, Appleton, Tarleton, Ryu, Wylie, Santos, Marci, Doglio, Jinkins, Orwall, Tharinger, Stonier, Kagi, Fitzgibbon, Kloba, Stanford, Berquist, McBride, Ortiz-Self, Goodman, Dolan, Cody, Pettigrew, Riccelli, Sells, Hudgins, Kirby, Lovick, Frame, Peterson, Ormsby, Pellicciotti

Legislators sponsoring SB 5513 – Frockt, Hasegawa, Miloscia, Rolfes, Saldana, Keiser, Wellman, Conway, Chase, Billig, Kuderer, Hunt, McCoy, Darneille

For more information:

Contact Steve Zemke – Director – Tax Sanity,

steve@taxsanity.org, www.taxsanity.org ,   Facebook – Tax Sanity

 

Wisconsin Gives Foxconn $3 Billion Tax Break

Posted on by July 31, 2017
Reply

Foxconn grabs $3 billion tax break from Wisconsin. As the New York Times reports

“Foxconn’s plan for a $10 billion factory in Wisconsin is certainly good news for President Trump and Republican politicians Gov. Scott Walker and Speaker Paul D. Ryan, whose district the plant would call home.

But the deal with Foxconn, the Taiwanese electronics supplier, comes with a heavy price tag for Wisconsin taxpayers: $3 billion in state tax credits that dwarf the typical incentive package companies receive from local governments.”

Washington State currently gives away more in tax expenditures (tax breaks) than it collects as revenue from the same tax base. Wisconsin is obviously following the same route.  However the real question is whether these huge tax breaks to lure business to a state make sense or are just more corporate welfare for Big Business at taxpayer expense.

As the New York Times article goes on to mention:

“Over all, the subsidies for the Foxconn plant, which would produce flat-panel display screens for televisions and other consumer electronics, equal $15,000 to $19,000 per job annually.

That compares with $2,457 per year in the usual incentive arrangement, according to Timothy J. Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich. The new Foxconn jobs are expected to have an annual salary of at least $53,000 plus benefits, according to Mr. Walker.

“It’s a very, very costly package, and I’m skeptical that the benefits justify such big incentives,” Mr. Bartik said. “This is well beyond the typical deal.”

Instead of Foxconn paying $53,000 per year to their workers, they have the state pick up $15,000 to $19,000 of that cost.  What a great deal for Foxconn and its stockholders.

As noted by Greg LeRoy:

“If Foxconn lives up to its investment commitment and receives the full $3 billion tax break, it will be the fourth-largest incentive deal in United States history, according to Greg LeRoy, executive director of Good Jobs First, a nonpartisan nonprofit research group in Washington that tracks economic development subsidies.

“We can only describe this as a gift from Wisconsin taxpayers to Foxconn shareholders,” Mr. LeRoy said. “This is a guaranteed loser for the state.”

Whatever happens to the the old Republican mantra of conservative economics that the goal of the  free enterprise system and limited government meant that they did not pick winners and losers? It certainly looks like they picked Foxconn to be a winner and state taxpayers to be the losers here.

Tax Sanity Urges House Finance Committee to pass HB 1500

Posted on by February 5, 2017
Reply

Testimony in support of HB 1500 – the Tax Exemption Transparency and Accountability Act

Washington State House Finance Committee, Jan. 31, 2017

Steve Zemke – Tax Sanity

 

Thank you for this opportunity to testify on this legislation.

This is the fourth year this bill has been before you and each year it picks up additional support. HB 1500 has 33 sponsors this year and its companion bill in the Senate SB 5513 has 13 sponsors. This is almost one third of our state Legislators.  Legislation to create a Tax Expenditure Budget has been supported by numerous groups in our state, including the Washington State Budget and Policy Center, the Washington State Labor Council, the Washington State Democratic Party, SEIU 775, Northwest Progressive Institute, Faith Action Network, Puget Sound Advocates for Retirement Action, and others

Why are they supporting this legislation? Because they believe that a system of tax expenditures that gives away more in revenue from the tax base than it collects is a broken system.  They believe that tax exemptions need transparency and accountability and fairness. That does not exist now.

Tax Exemptions, preferences, deductions, credits, and deferrals are off budget expenditures. They lack the transparency and accountably that exists for other expenditures the state makes as part of the biennial budget process. According to the Department of Revenue’s projection in their 2016 Tax Exemption Report for this 2015 to 2017 biennium they projected that while the state would collect some $7.4 billion in B&O taxes, they would exempt from the same tax base some $11.4 billion. This gap has widened since the last biennium.

Including the rest of the tax exemptions in their report, they projected that off budget tax expenditures would total almost $40 billion while only collecting revenue totaling some $32.6 billion.

Of the 694 current tax exemptions about 450 are discretionary.  The Department of Revenue projected that in the 2017 to 2019 Biennium that of the $54 billion in projected tax expenditures, some $30 billion would fall into “potential revenue gains”.  This legislation does not mandate wholesale repeal of tax expenditures.  It asks for accountability and transparency and biennial review and gives the legislature the ability to act to end exemptions if they do not meet the priorities of government the same as expenditures in the regular biennial operating appropriations budget must.

Concern about the current system includes a current quickly dated Tax Exemption report by the Department of Revenue every 4 years.  Most other states in the country update their report every 2 years or less. California updates their Tax Expenditure report every year.

Companies like Microsoft, Starbucks, Expedia, Adobe and Boeing all must report to their stockholders every year and issue quarterly profit and loss statements.  Their financial statements are scrutinized by their stockholders. It does not make sense that Washington State does not have more accountability and transparency in its tax expenditures as part of sound fiscal policy.

Only 73 of the 694 listed exemptions have sunset provisions. This means 89% of the tax expenditures have no sunset provision and never require the Washington State legislature to ever vote on them again. Meanwhile all expenditures in the regular operating appropriations budget are scrutinized and voted on every 2 years with adjustment made in the 2nd year of the biennium.

Also in the Tax exemption report, 54 exemptions are listed as “unable to disclose” the amount of revenue involved.  Businesses and other entities are benefiting from state tax law in getting exemptions and lower or no taxes. The public has a right to know the value of these exemptions.  We require that accountability in the regular budget appropriations process – we don’t say we’re spending state revenue but the public doesn’t have the right to know because the recipient doesn’t want us to know what they are getting.

With the current lack of accountability and transparency and sound fiscal review and evaluation as to whether current tax expenditures meet the state priorities of government and have clear measurable objectives as to their effectiveness in meeting state needs, taxpayers and citizens in this state increasingly believe state government and the legislature are not doing their job. Please step up and vote to fix this broken tax expenditure system that severely lacks needed transparency, accountability and sound fiscal management of our total state budget.

Steve Zemke

Director Tax Sanity

steve@taxsanity.org

www.taxsanity.org

End Tax Exemptions as Off Budget Spending by Adding Them to the State Budget

Posted on by January 26, 2017
2

 End Tax Exemptions as Off-Budget Spending

by Adding Them as Tax Expenditures to the State Budget!

Washington State HB 1500 -the Tax Exemption Transparency and Accountability Act of 2017 will have a hearing in the State House Finance Committee on Tues. Jan 31st.  Please attend the hearing or comment on the bill on line at www.leg.wa.gov.

 Why is HB 1500 needed?

We don’t generally think of them as such but tax exemptions, preferences, deductions, credits and deferrals are off budget expenditures. They lack the accountability and transparency that exists for other expenditures the state makes as part of the biennial budget process.

Taxpayers deserve to know who is receiving these tax exemptions, how much money is involved and for what reason they are given.

According to the Washington State Department of Revenue’s  2016 Tax Exemption Study, while the State expects to collect some $7.4 billion in B&O tax revenue in the current 2015 -2017 biennium, it exempts from collection some $11.4 billion. When sales and use taxes were included with the analysis, the results are similar – the state expects to collect some $18.9 billion in revenue from sales and use tax, while exempting some $16.9 billion in revenue

Washington State has created some 694 tax exemptions over the years. Over 450 of these are discretionary tax exemptions, not required by Federal or State constitutional law. These discretionary tax exemptions will account for over $28.3 billion in B &O and sales/use tax revenue not collected in the current biennium..

Including property tax exemptions the 2016 Department of Revenue Report projects that in total, Washington State will see as off budget tax expenditures almost $40 billion in tax exemptions this biennium while only collecting revenues of $32.6 billion for the Legislature to fund its biennial budget according to the Department of Revenue.

HB 1500 introduced by Rep.Pollet and 32 other sponsors would require the governor to propose and the state legislature to adopt a tax expenditure budget every 2 years as part of the biennial omnibus operating appropriations act. A companion bill, SB 5513 has been introduced in the WA State Senate by Senator David Frockt with 12 other sponsors.

HB 1500 / SB 5513 would give the Washington State Legislature an opportunity to periodically evaluate the need and effectiveness of the state’s tax exemptions in meeting current state needs. They would do this at the same time they are making budget decisions about prioritizing other state expenditures for public services as part of the biennial budget appropriations process.

What would HB 1500 /SB 5513 – the Tax Exemption Transparency and Accountability Act do?

 This measure would require new and existing discretionary tax exemptions to be authorized every two years in a tax expenditure budget. It will add much needed transparency and accountability to the hundreds of exemptions and preferences, along with their cost and how each decision to spend money on an exemption or preference is a choice to expend funds for this purpose with particular beneficiaries.

The tax expenditure budget would detail the fiscal impact, purpose, and effectiveness in meeting the purpose of each tax exemption.

 Tax exemption not included in the tax expenditure budget would expire at the end of the calendar year in which the budget is adopted.

Contact your Legislators at www.leg.wa.org and urge them to support the Tax Exemption Transparency and Accountability Act.

 Action item – Urging your Legislators to pass HB 1500 and companion bill SB 5513 is easy. You can leave them a message by going to www.leg.wa.gov, entering 1500 or 5513 for the bill number after clicking the bill information link and then clicking on “comment on this bill.” Or call the Legislative hotline at 1-800-562-6000 and leave a message to for your legislators and the Governor to support HB 1500 and SB 5513 to create a tax expenditure budget as part of the biennial budget appropriations process. And be sure to thank your legislators if they are a sponsor of this legislation. Their support is appreciated.

 Legislators sponsoring HB 1500 – Pollet, Farrell, Appleton, Tarleton, Ryu, Wylie, Santos, Marci, Doglio, Jinkins, Orwall, Tharinger, Stonier, Kagi, Fitzgibbon, Kloba, Stanford, Berquist, McBride, Ortiz-Self, Goodman, Dolan, Cody, Pettigrew, Riccelli, Sells, Hudgins, Kirby, Lovick, Frame, Peterson, Ormsby, Pellicciotti

 Legislators sponsoring SB 5513 – Frockt, Hasegawa, Miloscia, Rolfes, Saldana, Keiser, Wellman, Conway, Chase, Billig, Kuderer, Hunt, McCoy

 

 

 

 For more information:

Contact Steve Zemke – Director Tax Sanity, steve@taxsanity.org , www.taxsanity.org,  

2017 Tax Exemption Transparency and Accountability Act to be Filed in Legislature

Posted on by January 15, 2017
Reply

Tax Exemption Transparency and Accountability Act 2017

Representative Gerry Pollet and Senator David Frockt are filing updated versions of the Tax Exemption and Transparency Act that we filed in previous sessions of the Washington State Legislature. In the 2015 – 2016 Legislative session it was HB 1239 in the House and had 26 sponsors. The Senate Bill was SB 5492 and had 12 sponsors.

Why is this legislation needed?

Tax exemptions, preferences, deductions, credits and deferrals are off budget expenditures. They lack the accountability and transparency that exists for other expenditures the state makes as part of the biennial budget process. Taxpayers deserve to know who is receiving these tax exemptions, how much money is involved and for what reason they are given.

According to the Washington State Department of Revenue’s  2016 Tax Exemption Study, while the State expects to collect some $7.4 billion in B&O tax revenue in the current 2015 -2017 biennium, it exempts from collection some $11.4 billion. When sales and use taxes were included with the analysis, the results are similar – the state expects to collect some $18.9 billion in revenue while exempting some $16.9 billion in revenue

Washington State has created some 694 tax exemptions over the years. Over 450 of these are discretionary tax exemptions, not required by Federal or State constitutional law. These discretionary tax exemptions will account for over $28.3 billion in B &O and sales/use tax revenue not collected in the current biennium.

Including property tax exemptions the 2016 Department of Revenue Report projects that in total, Washington State will see as off budget tax expenditures almost $40 billion in tax exemptions this biennium while only collecting revenues of $32.6 billion for the Legislature to fund its biennial budget. .

The taxpayers of this state have a right to know:

  • Who is getting these tax breaks?
  • How much money is involved?
  • Are these tax breaks benefiting the public?

Since these tax breaks affect the overall revenue available to the state and shift the tax responsibility onto those who don’t get the tax breaks, taxpayers have a right to know the answers to these three questions.

To be able to answer these questions, there is an urgent need to increase the transparency and accountability of Washington State’s prolific use of tax exemptions.

This legislation would do that by requiring the governor to propose and the state legislature to adopt a tax expenditure budget every 2 years as part of the biennial omnibus operating appropriations act. This would give the Washington State Legislature an opportunity to periodically evaluate the need and effectiveness of these exemptions in meeting current state needs. They would do this at the same time they are making budget decisions about prioritizing other state expenditures for public services as part of the biennial budget appropriations process.

 What would the Tax Exemption Transparency and Accountability Act do:

 This measure would require new and existing discretionary tax preferences to be authorized every two years in a tax expenditure budget. It will add much needed transparency to the hundreds of exemptions and preferences, along with their cost and how each decision to spend money on an exemption or preference is a choice to expend funds for this purpose with particular beneficiaries.

The state biennial omnibus operating appropriations act would be required under this measure to include a tax expenditure budget to approve new and existing discretionary tax preferences, including exemptions, deductions, credits, and deferrals. The tax expenditure budget would detail the fiscal impact, purpose, and effectiveness in meeting the purpose of each tax preference. Tax preferences not included in the tax expenditure budget would expire at the end of the calendar year in which the budget is adopted.