Published: Tuesday, March 2, 2010
IN OUR VIEW / HOUSE TAX PROPOSAL
The best of terrible choices
At least a general sales tax increase appears dead.
The state House, which released its revenue proposal Monday, rejected a sales tax hike in favor of a laundry list of targeted increases and loophole closures. The Senate had proposed a three-year increase of three-tenths of a penny in the state sales tax, an idea Gov. Chris Gregoire opposed as too big a risk to the fragile economy. She and House leaders are right to nix it. Now the Senate should abandon it.
The rest of the House’s package appears to be a thoughtful mix focusing on the discretionary (elective cosmetic surgery, cigarettes, bottled water, candy and gum), a few professional services (lawyers and accountants are among those taking a 0.5 percent hit in business taxes), and some loopholes that should have been closed long ago (taxing out-of-state businesses that compete here).
The House plan raises about $760 million for the rest of the current biennium to help close a $2.8 billion gap. That’s more than the governor’s proposal ($600 million), less than the Senate’s ($900 million). Now the three camps will hash out a compromise, which they should be able to accomplish by the scheduled adjournment date of March 11.
We’re not fans of raising taxes, but the dramatic drop in state revenues the past two years, combined with a rise in expenses as more low-income people become eligible for assistance and school enrollments grow, makes them a defensible part of the budget solution. Deep cuts are also being made.
Minority Republicans remain adamantly opposed, charging Democrats with chronic overspending and doing too little to prepare for an inevitable shortfall. Their point, while absolutely valid, does nothing to solve the current crisis. It’s an argument for this fall’s elections, not one that gets the budget balanced without cutting too deeply into education and essential social services.
In a session where tax increases were all but certain, the House’s plan best represents a fair, honest approach that carries minimal threat to the economy. It doesn’t repeal the sales-tax exemption on car and truck trade-ins, as the Senate plan does, and it eschews the governor’s proposal to triple the state’s hazardous materials tax and redirect its proceeds from clean-water programs to the general fund.
It also attempts to draw linkages between new revenue and its uses. The sales tax on candy and gum, for example, would help fund public health and children’s dental care.
No tax-hike plan is a good long-term solution, though. Economists agree that revenues likely will remain flat, or nearly so, for the foreseeable future. State government must readjust its priorities. How will be the top issue of the 2010 campaign.
The state House, which released its revenue proposal Monday, rejected a sales tax hike in favor of a laundry list of targeted increases and loophole closures. The Senate had proposed a three-year increase of three-tenths of a penny in the state sales tax, an idea Gov. Chris Gregoire opposed as too big a risk to the fragile economy. She and House leaders are right to nix it. Now the Senate should abandon it.
The rest of the House’s package appears to be a thoughtful mix focusing on the discretionary (elective cosmetic surgery, cigarettes, bottled water, candy and gum), a few professional services (lawyers and accountants are among those taking a 0.5 percent hit in business taxes), and some loopholes that should have been closed long ago (taxing out-of-state businesses that compete here).
The House plan raises about $760 million for the rest of the current biennium to help close a $2.8 billion gap. That’s more than the governor’s proposal ($600 million), less than the Senate’s ($900 million). Now the three camps will hash out a compromise, which they should be able to accomplish by the scheduled adjournment date of March 11.
We’re not fans of raising taxes, but the dramatic drop in state revenues the past two years, combined with a rise in expenses as more low-income people become eligible for assistance and school enrollments grow, makes them a defensible part of the budget solution. Deep cuts are also being made.
Minority Republicans remain adamantly opposed, charging Democrats with chronic overspending and doing too little to prepare for an inevitable shortfall. Their point, while absolutely valid, does nothing to solve the current crisis. It’s an argument for this fall’s elections, not one that gets the budget balanced without cutting too deeply into education and essential social services.
In a session where tax increases were all but certain, the House’s plan best represents a fair, honest approach that carries minimal threat to the economy. It doesn’t repeal the sales-tax exemption on car and truck trade-ins, as the Senate plan does, and it eschews the governor’s proposal to triple the state’s hazardous materials tax and redirect its proceeds from clean-water programs to the general fund.
It also attempts to draw linkages between new revenue and its uses. The sales tax on candy and gum, for example, would help fund public health and children’s dental care.
No tax-hike plan is a good long-term solution, though. Economists agree that revenues likely will remain flat, or nearly so, for the foreseeable future. State government must readjust its priorities. How will be the top issue of the 2010 campaign.
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