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Itemizing cost of tax exemptions is expensive in itself

Post by Jordan Schrader / The News Tribune on Jan. 21, 2011 at 3:51 pm with No Comments »
January 21, 2011 5:46 pm

It’s one of the stranger titles of bills filed so far this year: “Making tax law changes that do not create any new or broaden any existing tax preferences as defined in RCW 43.136.021 or increase any person’s tax burden.”

The title is presumably a way to keep the bill from being loaded up with tax cuts or increases. It certainly explains what the bill doesn’t do, so what DOES it do?

Most notably, it lets the Department of Revenue postpone a report on tax exemptions it creates every four years that details how much money the state is missing out on because of tax breaks. It’s due to come out again in 2012, but the department wants to wait until 2014 to save money.

“It takes research resources to compile that, and we’re pretty shorthanded in our research division due to cutbacks,” Revenue spokesman Mike Gowrylow said.

To determine the cost of the state’s more than 560 exemptions cataloged in the report, he said, it takes at least 2,000 staff hours and costs $85,000-$100,000.

But these days, closing tax loopholes is the battle cry of liberal groups trying to stave off budget cuts, and part of their strategy is to shine more sunlight on the tax breaks. The State Labor Council has called for all tax exemptions to go in the annual budget as line items, and for them to sunset if lawmakers don’t reauthorize them.

Liberals aren’t going to like the idea of going backward. In fact, there’s a bill by Sen. Adam Kline, D-Seattle, to make DOR publish its report even more often, every two years.

DOR said it also publishes annual summaries of the tax laws that passed in the most recent year, so there would still be a way for the public to track down the changes.

UPDATE 5:45 p.m.: Kline says the high cost of writing the report is just more evidence of how bad the problem of tax exemptions is:

“That’s an indication we ought to get rid of some of these 568 tax breaks, if it takes a full-time person in state government just to keep track of how much we’re ‘breaking taxes.'”

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