Our state has an estimated (and mind-boggling) 700 tax breaks and loopholes in its tax code. If the legislature is serious about investing in the priorities that help Washington’s communities thrive – like schools, job training programs, and public health clinics – it needs to follow the lead of the House Democrats whose budget would clean up the tax code by getting rid of unnecessary tax breaks.
A growing chorus of people in Seattle and throughout the state are demanding tax reform, and lawmakers in both chambers should be taking them seriously. Washingtonians are calling for an end to tax breaks that drain state investments away from our communities in order to serve corporations and special interests. They are asking why our state hasn’t fixed its upside-down tax code – in which middle- and low-income people pay up to seven times as much in-state and local taxes as the wealthiest 1 percent as a share of income. And they’re asking why our state is leaving money on the table by giving wealthy Washingtonians a tax break on the capital gains profits they make on the sale of high-end stocks and bonds.
It’s time to reform our state’s tax code to favoring special interests at the expense of everyone else.
Not all state tax breaks are bad, of course. Some help strengthen small businesses, while others help families who are struggling to make ends meet. But in all too many cases, they are outdated, misguided, or simply unnecessary. Consider the tax break originally enacted to benefit the timber industry that now actually helps big oil extractors. You read that right. Big oil. Or the preferential tax rate for prescription drug resellers that was initially put in place to attract drug wholesalers to relocate to our state, but that now goes even to those who operate out-of-state warehouses. Again, yes, you read that right: pharmaceutical companies who don’t even operate in our state. And of course, it’s no secret that Boeing received the biggest corporate tax break in U.S. history in 2013, then promptly started laying people off and shipping jobs out of state the next year.
These kinds of tax breaks prevent our legislature from having enough money for schools and other essentials that make up the foundations of communities. They siphon money out of our state budget and into the coffers of companies and individuals who already get a special deal from the most upside-down tax code in the nation.
Which is why community members statewide are sounding off about tax reform at town halls and rallies, in Olympia, on social media, and in their local papers. Like for example, this past President’s Day, when more than 500 people showed up at the state capitol in the rain to demand that lawmakers invest in education equity – in part by cleaning up the tax code. Or a few weeks ago, when more than 60 Washingtonians, many of them parents with kids in tow, trekked to Olympia for an early morning hearing to testify in support of the House tax reform proposal (which would wisely scale back and eliminate certain tax breaks, like the one on capital gains). Or the fact that thousands of people wrote and called their legislators in support of the House proposal and against the Senate’s budget proposal, which would add more tax breaks to the tax code.
And of course, we can’t forget the hundreds who have shown up to legislative town halls this session to call for tax reform. Or the thousands of Washingtonians taking to the streets of Seattle this past weekend to not just demand that Trump release his tax returns, but also to declare that it’s time to clean up our state’s upside-down tax code.
State lawmakers must listen to these voices of everyday Washingtonians – rather than prioritizing the voices of big corporations and special interests who, let’s be frank, will always ask for ever-more special deals to increase their own bottom line.
Washingtonians deserve schools where all kids have access to current learning tools. Parks and trails that are well-maintained. Public health programs that keep our communities healthy.
If we want these priorities for all Washingtonians, then lawmakers must get rid of unnecessary tax breaks that make it continually harder to fund them.
Misha Werschkul is the executive director of the Washington State Budget & Policy Center, and Sumayyah Waheed is the director of All In For Washington.