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Final Budget Doesn't Close Tax Breaks, Instead Extends and Creates New Ones

Posted by michaelm at Jul 02, 2013 02:15 PM |
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Despite over a billion dollars of proposed revenue solutions on the table over the course of the legislative session, policymakers chose to protect special interest tax breaks over families and seniors.

Lawmakers even went the wrong direction by doling out roughly $15 million dollars in additional tax breaks. In total 17 loopholes were either newly enacted or extended including cover charges for dance clubs and  the use of fuel used in oil refineries or other manufacturing and extraction plants.

7_2 tax break table

The final revenue agreement is in sharp contrast to proposals put forward by both the House and the Governor earlier in session. Over $1.3 billion dollars in revenue options were on the table, including the extension of current B&O and beer surcharges along with over $750 million in suggested loophole closures, none of which were closed, and some were even renewed in the  final budget. These are resources that could have been used to more adequately fund education or prevent over $180 million in cuts to programs like WorkFirst or the Housing and Essential Needs program – services that help Washingtonians find and keep work through job search assistance or worker training programs.

7_2 tax break graph

Policymakers did make technical fixes to revenue collections. Adjustments to the way we collect tax revenue were made to avoid future revenue loss. These are important actions, but they do not generate new revenue to meet growing needs, they just keep us even:

  • In response to a court ruling (Bracken v State), an estate tax loophole, which would have allowed married couples to avoid paying the tax, is eliminated, gaining  $160 million
  • To avoid a future lawsuit and potential loss of revenue, equity is established in the taxes paid by residential, wireless, and cable telephone services, raising $85 million

The final budget agreement was a Band-Aid measure that failed to generate the resources needed to make the long-term investments that create jobs and build the middle class. Moving forward, policymakers must choose to close loopholes over special interests.

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