In the debate about how the legislature should balance the budget* one of the main liberal arguments is that we should close the loopholes that have accumulated in the tax system over the years. At least have a look at what ones are and aren’t working any more. It makes sense, after all that what the legislature passed 10, 20, 30 years ago or more in better economic times may not make sense today when put against the tough budget reality. But don’t worry, Representative Ed Orcutt knows better. Not how to balance the budget, silly: what to call the loopholes.
As the Legislature contemplates how to deal with a multi-billion dollar budget shortfall, one of the more common phrases heard around the Capitol is “closing tax loopholes.” While this may seem admirable on the surface, a closer look reveals a complex economic system that can’t be oversimplified by catchy special interest sound bites.
Special interest = struggling families who have lost medical and dental care, and or schools.
Special interest ≠ out of state banks that pay millions of dollars less because of these loopholes.
For most, the term “loophole” conjures up images of shady characters in smoke-filled back rooms scheming for ways to buck the system. But here in Washington state, we don’t have “tax loopholes” we have tax incentives.
If you use a different word, it makes it OK.
Why is this clarification important? Because these tax incentives have been enacted via very deliberate legislative action.
No lobbyist has ever influenced any tax cut bill, you see. And any tax break that ever once made sense will forever make sense again.
In order to be passed into law, a tax incentive must be subjected to: a public hearing; amendment; a majority vote of committee members; and then subjected again to amendment and a 50-vote requirement to pass from the House floor. It then has to go through the same rigorous process in the Senate (with a 25-person vote requirement). If it passes both the House and Senate, it still must be signed into law by the governor. Often, these proposals receive far more than the 50 and 25 votes needed. So, it is a rigorous and difficult task for a bill to be passed and enacted.
The same process will also apply to any repeal (except it may also go to the voters or have to be 2/3 of the legislature). So, problem solved.
Furthermore, this process is done publicly with bill hearings announced in advance and testimony taken in public meetings. Anyone can now access any hearing via TVW webcast. There is no hiding. And lobbyists for the groups who are now calling for the repeal of these policies had every opportunity to testify against the proposals. Did they? Weren’t the bills still passed – and these incentives enacted – because of their benefit to our economy?
Well, our economy looks very different than it did when those loopholes passed. So it makes sense that we would see if they still make sense. We also enacted the social safety net to benefit our economy, not to mention to keep the most vulnerable safe. By the logic of the previous paragraph, we can’t dismantle that, since it had hearings and passed the legislature, etc.? And our schools have been funded by previous legislatures, and there’s even a clause about a paramount duty.
The fact is these incentives have been beneficial to workers, employers and communities throughout the state. Thousands of jobs with high wages and benefits have been created and many jobs in manufacturing have been saved. They worked because a lower tax rate brought businesses to Washington that would not have come otherwise.
Instead of actual facts to back this up, could you please give me an example you pulled out of your ass?
Which would you choose, a tax rate of 0.5 percent on $10 million or a 1.5 percent rate applied to $0? I choose the 0.5 percent rate as it creates jobs and generates revenue. The higher rate does not because many of those economic activities would gravitate toward more competitive states. That means the lower rate has actually protected or enhanced the funding for many of the programs that special interest groups are now trying to protect. Repeal of these incentives would leave employers with little option but to lay off more workers. Can we really afford that? Our efforts should be to create jobs, not destroy them.
If we rescind the loophole for banks, THERE WILL BE NO BANKS TO TAX IN WASHINGTON!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!111!!!!
Over the last few years, true loopholes have been examined and eliminated. The improper use of reseller certificates to get building materials tax free for personal use, and tax avoidance have both been thoughtfully – and rightfully – repealed.
It’s only a loophole if I don’t support it.
Proposals to end our current tax incentives are by definition tax increases. Voters clearly said ‘No!’ to that last fall, and with good reason. Any tax increase would lead to job losses in our state and further delay the rehiring of workers by any employer affected by such a tax increase.
Well to the extent that you can divine anything about closing loopholes from that, they said they wanted either 2/3 of the legislature to vote on it or to put it to the people. So, if enough of your colleagues support it, then it can pass. So vote to close loopholes and problem solved.
A repeal of these incentives would further hamper our economy’s recovery and devastate our state and household budgets. We need to get past the misleading rhetoric of impropriety and look for better ways to get our budget balanced and to get Washington working again.
By cutting Basic Health and education. QED!
* No mention of if we should balance the budget, because you know in times of crisis, why would we want all options on the table?