Two tax duels and a unified push to ensure the people’s voice is heard

2023 Washington Legislature, Day 17 of 105

Everett Herald political reporter Jerry Cornfield: jcornfield@heraldnet.com | @dospueblos

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OLYMPIA, Jan. 25, 2023 — Welcome. It’s Wednesday.

The House and Senate are in action today. On the docket are bills that should be noncontroversial and receive broad bipartisan support.

Plowing through the daily pile of newly introduced legislation, I found one I suspect will eventually reach the House floor.

It has an intriguing title — “Establishing the nothing about us without us act” — and 39 Democrat and Republican sponsors.

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First-term Rep. Darya Farivar,D-Seattle, authored House Bill 1541 to ensure those most impacted by a pending government action are are among those in the conversation influencing the decision.

Simply put, the plethora of task forces, work groups, advisory panels and commissions created by lawmakers to sort through complicated issues must include people with real-world knowledge of the subject matter. State law calls it “lived experience.”

Advocacy groups, industry associations, and government agencies don’t get kicked off or shut out. This bill would put more chairs around the table. It means — editorial comment alert — a government which professes to be of the people, by the people and for the people will have to make sure it includes the people.

Booze battle

Washington’s tax code does not treat alcohol equally. Consumers pay significantly higher taxes on adult beverages made with distilled spirits than on wine and beer. Apparently, it dates back to the post-Prohibition era.

Those in the spirits industry want to see a change. Those who make a living selling beer and wine don’t.

On Tuesday, the debate played out in front of the House Regulated Substances and Gaming Committee on House Bill 1344 to add “low-proof beverages” to Washington’s liquor laws. For the unfamiliar, these are cocktails in a can.

The bill defines them as any beverage 16 ounces or less, contains between 0.5% and 7% alcohol but does not include wine, malt beverages, or malt liquor. Sales of these products would be exempt from the retailer license and distributor fees which exceed 20%. Instead there’d be a $2.50/gallon tax imposed.

Such a change could bring the retail price of canned cocktails down to a level closer to competing wine, malt and seltzer products, backers said. Beer and wine makers said large scale distillers don’t need the tax cut as they dominate the market. Craft brewers worry they will get squeezed off store shelves, replaced by cheaper canned cocktails.

Spirits-based canned cocktails are popular. Sales are up 214% in the United States and 491% in Washington in the past 3 years, according to data compiled by IRI and shared with me. IRI tracks consumer spending on alcohol beverage sales for grocery and other “off premise” retailers.

Capital gains showdown

Thursday is a big day as state Supreme Court justices will hear arguments on the legality of the capital gains tax. Their hour long hearing starts at 9 a.m.

In sum, the court is deciding whether the 7 percent tax on the sale or exchange of certain long-term capital assets like stocks and bonds is constitutionally valid.

It is on the books. Those who wrote, passed it and got it signed by Gov. Jay Inslee in 2021 insist it is a legal excise tax. The Department of Revenue is gearing up to start collecting it in a few months.

Opponents insist it is not. A Douglas County Superior Court judge agreed last March, concluding it is an unlawful tax on income. Washington’s constitution requires uniform taxation on property and this one is not.

The case is Chris Quinn et al. vs. State of Washington. You can watch on TVW.

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