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Senate’s Proposed Tax Breaks Would Cost Big In The Long Run

Posted by Andy Nicholas at Mar 04, 2014 05:35 PM |
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Despite a looming deadline from the State Supreme Court to invest an additional $4.5 billion per two-year budget cycle in Washington state schools by 2018, last week the Senate put forward a supplemental budget plan that included 18 costly new or extended tax breaks.

Although these tax breaks are projected to have a relatively small, $10.3 million impact on the current 2013-15 state budget, if enacted, their costs would balloon to nearly $120 million by the 2017-19 budget cycle (see table).1.




By contrast, similar to a plan put forward earlier this year by Governor Inslee, House leaders proposed to eliminate several wasteful tax breaks and take other actions that would generate more than $280 million by the 2017-19 budget cycle for basic education reforms (see table).

The bottom line is that the Senate’s plan to enact a raft of new tax breaks now is short-sighted, irresponsible, and will only make it more difficult for future policymakers to fully fund basic education and other important investments.

Senate Proposed Tax Actions

The tax actions proposed by the Senate with the largest negative impact in the 2017-19 budget cycle include:

  • Extending a tax break for “server farms” (-$50 million);
  • Extending and modifying tax breaks for high-tech companies (-$39 million); and
  • Enacting new tax and fee breaks for certain liquor retailers (-$11 million).

House Proposed Tax Actions

Tax actions proposed by the House with the largest positive impact during the 2017-19 budget cycle include:

  • Extending the Other Tobacco Products Tax to “e-cigarettes” ($77 million);
  • Changing a sales tax break for Oregonians to a rebate program ($70 million);
  • Eliminating a tax break for oil refineries ($55 million);
  • Eliminating a sales tax break on bottled water ($48 million); and
  • Eliminating a tax break for prescription drug wholesalers ($39 million).

Stay tuned to schmudget. We’ll have more details on tax actions proposed in 2014 over the next few days.

1.Technical note: this analysis examines only proposed tax actions, or changes in tax law that would alter the amount owed by a taxpayer(s) in future years compared to the current year. It does not include other revenue changing actions, such as diverting revenue streams, or so-called “budget driven revenue” measures.  


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Watch the Poverty Forum Video

If you missed the half-day Poverty Forum that we co-hosted with Partners for Our Children in May 2016, you can watch it on YouTube now. It features a range of speakers and panelists talking about policy solutions for addressing income inequality and poverty in our state.

Our Legislative Agenda

Our agenda for the 2015-2017 biennium calls for an equitable, sustainable revenue system in addition to state investments that: promote a world-class education system; sustain a strong middle class; produce living-wage jobs, and ensure that all Washingtonians have equal opportunity to get ahead. 

Testimonies in Olympia

We testified in support of a number of important bills during the 2016 legislative session. Take a look:

  • Our testimony (at the 23:23 minute mark) on the House Bill that would take a two-generation approach to preventing poverty 
  • Our testimony (at the 1:54:09 mark) on the House bill focused on aerospace-related tax breaks
  • Our House testimony (at the 9:25 mark) and Senate testimony (at the 1:44:54 mark) on the two-generation approach to poverty prevention bill 

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