Job-killing tax increases are not needed

Let’s say this right up front. If the Legislature does nothing this year to raise fees or increase taxes, the state is still expected to take in an additional $2 billion over the current budget cycle. Two billion more without tax increases!

A hospital safety net assessment that hospitals have willingly imposed on themselves as a means to capture federal-matching funds would provide $270 million in additional revenue. If the Legislature agrees to Gov. Jay Inslee’s plan to suspend the Initiative 732 automatic cost-of-living raises for K-12 public school employees, it would free up $320 million. So now, we are talking about nearly $2.6 billion in additional revenue and savings for the coming 2013-15 budget cycle, which begins July 1.

House Republican Budget Leader Rep. Gary Alexander says that’s enough money to balance the state operating budget, provide an additional $1 billion for K-12 education to meet the state Supreme Court’s requirements, fund public safety, and ensure the needs of the state’s most vulnerable citizens are met. Those are our top priorities in the budget.

Under a plan emerging in the House, $180 million would be transferred from dedicated funds and $575 million from the “Rainy Day Fund” (which would essentially wipe out that emergency money) to spend in the operating budget. Even though we oppose those transfers, it would bring revenue up to more than $3.3 billion. But now, as if that’s not enough additional money for state government to spend, House Democrats have gone a step further and passed House Bill 2038, which would increase taxes by $900 million.

Many tax increases in this bill are aimed at Main Street businesses still struggling in this fragile economy. For example, the measure would extend a business and occupation (B&O) tax surcharge on many small businesses, such as hair salons, landscape services and self-employed individuals, which is a $534 million tax increase. It would increase taxes on high-tech research and development firms by $79 million, interstate trucking by $63 million, travel agents by $15 million, prescription drug sellers by $29 million, and those in the import business by $24 million. It would increase fuel taxes by $46 million and add sales taxes to bottled water for a $52 million tax increase (this is the same tax repealed by voters in 2010). In addition, the bill would eliminate the non-resident sales tax exemption, which our retail businesses along the Oregon and British Columbia borders depend upon to attract customers and sales. This proposal does not include $160 million in estate tax (death tax) increases passed several days ago in the House.

We opposed all of these tax increase proposals because they would eliminate thousands of jobs, reduce Washington citizens’ take-home income, and reverse the small gains made in the state’s economic recovery.

Proponents of these tax increases say, “it’s for the kids.” But that’s not necessarily so. The Education Legacy Trust Account where these taxes are directed has been raided in the past by the Legislature, with money transferred to the state’s general fund, and there is nothing to prevent that in the future. The reality is these tax increases would do two things: expand state government and kill jobs.

House Republicans and the Senate Majority Coalition Caucus have produced balanced budget proposals that would significantly increase funding for education, without increasing taxes. As we’ve laid out above, the state has sufficient revenue to take care of its most important priorities without tax increases. Simply put, Washington state does not have a revenue problem – it has a spending problem. Washington needs jobs — not job-killing tax increases — to provide a healthy, sustainable, education-supportive balanced state budget.

Rep. Dan Kristiansen, R-Snohomish, is chairman of the Washington House Republican Caucus. Rep.Elizabeth Scott, R-Monroe, is assistant ranking member of the House Early Learning and Human Services Committee.

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