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Sweeping bill would end virtually all tax breaks

Post by Jordan Schrader / The News Tribune on Feb. 24, 2011 at 12:38 pm | 10 Comments »
February 24, 2011 5:28 pm

A long-awaited bill that carves up the state tax code and gores just about every ox imaginable has been unveiled.

Hundreds of tax breaks would be phased out under Senate Bill 5857, introduced by Sen. Jeanne Kohl-Welles with a tip of the hat to a fellow Seattle Democrat, Rep. Reuven Carlyle, for crafting the legislation.

Kohl-Welles said in a news release that eliminating most exemptions to the sales tax and ending special business-and-occupation tax rates would save about $8 billion over eight years. There is not yet an official estimate of the bill’s cost.

The bill is unlikely to go anywhere in its current form. It would require two-thirds votes in the Legislature or approval by voters, which might be equally hostile to a bill that in its current form ends popular breaks like the sales tax exemption for food.

Supporters know that, and say their goal is to add transparency to the tax code by bringing these breaks into the light of public scrutiny. The bill would require exemptions to be treated like spending as part of the state’s budget-writing process. Every two years tax rates would have to be re-examined.

“It’s not about raising taxes or lowering taxes,” Carlyle said in a statement, “it’s about the courage to be philosophically consistent in how we tackle tough budget challenges.”

Under the bill as it stands now, though, taxes would be increased on certain businesses, nonprofits, governments, and individuals, including breaks targeting poor families along with those seen as benefiting the rich. Everything from coal to livestock to movie and TV production would lose its special treatment.

UPDATE 5:30 p.m.: Carlyle said most tax breaks are in no danger from his bill.

Yes, the bill would sunset most tax exemptions, but future Legislatures would then have the chance to re-examine them. “Probably 80 percent of them would be reauthorized within five minutes of coming back up,” he said.

In fact, he said, “Of nearly 600 tax exemptions, an overwhelming majority of them are good, strong public policy that I strongly support and would proudly sponsor to reauthorize. But we’re insulting the intelligence of the public by not requiring tax exemptions to justify their return on investment.”

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