Current WA tax proposals enacted in many states, new report shows
A new report from the Center on Budget and Policy Priorities (CBPP) finds that at least 33 states have raised revenue to meet public needs in the present downturn. Many of the types of actions being considered by Washington State lawmakers have already been enacted other states.
As part of a balanced approach to our economic problems, lawmakers in Olympia are considering a range of responsible revenue enhancements needed to preserve essential services like health care, education, and child care while the economy recovers. Raising state taxes to maintain these services is a reasonable and economically sound approach that has been adopted by majorities of states in past recessions.
State tax increases in 2008 and 2009 have already generated some $30 billion in new resources to help close recession-induced budget shortfalls.
This year, lawmakers in Olympia have proposed to generate additional resources by eliminating a number of costly business and sales tax preferences. The study found other states have taken similar steps. The first table below shows that 11 states restricted business tax credits, deductions, and exemptions or have taken actions to reduce tax avoidance. Another five states -- Connecticut, Delaware, Nevada, North Carolina, and Oregon – have enacted business tax increases or surcharges. (Both the Washington State House and Senate revenue proposals include temporary B&O surcharges on a range of business services.)
Legislators in Olympia are also considering measures that would eliminate wasteful sales tax exemptions. The second table below shows that nine states have expanded their sales taxes to include previously untaxed products and services. Notably, two states (Tennessee and Wisconsin) extended the tax to certain types of software – an action that is included in the current House revenue package here in Washington.
The current revenue proposal in the Washington State Senate includes a temporary 0.3 percentage-point increase in the state sales tax. So far, the sales tax rate has been increased in eight states during the current downturn. California, Indiana, Massachusetts, and North Carolina increased the sales tax by one cent (1.0 percentage-point) or more. Even Nevada’s 0.35 percentage-point increase is larger than the current proposal in Washington State.
Finally, both the current House and Senate revenue proposals here in Washington include measures to increase the cigarette tax and taxes on other tobacco products. According to the CBPP report, 20 states increased tobacco taxes in 2008 or 2009.
To view the entire report, click here.
