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Last week Gov. Christine Gregoire rolled out her proposal for dealing with the state’s $2.8 billion budget shortfall. Today it’s the legislature’s turn.

First up this morning was the Democrat-controlled state senate, which wants to raise $900 million in new taxes in order to help fill that $2.8 billion hole. (Gregoire’s proposal only had $600 million in new taxes—and more cuts to current state programs.)

The bulk of the senate’s proposed tax increase comes from eliminating $518 million worth of “tax loopholes“—which currently benefit, to take just two examples, members of corporate boards and bullion traffickers. The rest comes from a proposed $1 per package cigarette tax (which would raise $86 million) and a temporary 0.3 percent increase in the state sales tax (which would raise $313 million).

It’s worth noting that even this larger proposed tax increase from the senate doesn’t save all the state programs that are on the chopping block right now. Still facing cuts under this proposal: the state disability assistance program, education funding, and nursing homes subsidies, among many other things.

Next up, the budget proposal from the state house, which is expected to be detailed at noon.

Eli Sanders was The Stranger's associate editor. His book, "While the City Slept," was a finalist for the Washington State Book Award and the Dayton Literary Peace Prize. He once did this and once won...

14 replies on “Senate Budget Plan: $900 Million in New Taxes”

  1. Where are the reductions in corporate tax exemptions?

    You know, the ones that drive up taxes for every OTHER tax payer?

    Reduce those.

    That will drive down taxes for the rest of us.

  4. Note that $91m of the $518m in “loophole elimination” comes from requiring people to pay sales tax when they trade a car in to a dealer. Today, you only pay sales tax on the new car price less the trade-in value, since you already paid sales tax on the trade-in.

    It’s a loophole, sure (if you sold your trade-in at market value and used the cash as a down payment, you wouldn’t get a tax benefit). But that’s hardly taxing corporate boardmembers or bullion traffickers; it hits a pretty broad swath of the populace for hundreds or thousands of dollars each. It’s worth at least noticing.

  5. $518 million is only a very small part of what could be CUT in corporate tax exemptions – remember, if there is a tax exemption for one corporation, it drives UP the tax rate for everyone else.

  9. @6: Kind of a simplistic model. If you drive up costs of doing business, some percentage of that will be passed on to consumers in the form of higher prices. I don’t like targeted tax exemptions, but the economics are pretty interconnected, so it’s not like you can take $1B from Microsoft and call it “free” for everyone else. It might be the right thing to do, but it’s not free.

  11. @10 – subsidies are just taxes on another corporation.

    They reduce efficiency.

    Sunset those buggers after five years and put them up for a yes/no vote of the people if they’re so damned important to competition. Line item – one vote per deduction with cost impact over the past five years.

  13. I guess I’ll be doing online shopping out of state even more now. Just bought $1500 of new flooring out of state. Delivered tomorrow, no sales tax, free shipping.

  14. @10: Agreed. You’ll note that I’m opposed to targeted exemptions. However, it’s way simplistic to say “do away with exemptions and the rest of us will pay less tax.” The economic repercussions are complex. Some of us, and some companies, will benefit. Others of us will see reduced wages, increased prices, increased taxes, and lost jobs.

    It’s probably the right thing to do. But it’s no panacea, and it wouldn’t be free of unintended and negative consequences.

    Sound bite logic is rarely relevant in the real world.

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