Ranker Explains the Budget and Effect of Loopholes

(This article is a continuation of Senator Kevin [intlink id=”12078″ type=”post”]Ranker’s Report[/intlink] from the Legislature)

Senate and House Budget Comparison

The reductions proposed by the state Senate cut very deep.For a full comparison of the Senate and House budget proposals, click   here:  2011_Budget_Comparison . We are faced with a stark reality and have few options to choose from. This budget is, most regrettably, necessary given our current economic climate. There is not enough to go around – plain and simple.

But while these limitations have produced a budget that may be necessary, I find it simply insufficient to the meet the needs of Washington families and communities. Necessary – but not sufficient

Throughout session, the public has become more aware of the multitude of special tax loopholes built into our state tax code. According to the Department of Revenue, there are over 550 tax loopholes on the books, totaling over 8 billion dollars.These tax loopholes have the same effect on the budgeting of state revenues as expenditures for education, physical and mental health care and criminal justice.

Late last week, several lawmakers and myself stood up and questioned the benefit of maintaining these subsidies during our fiscal crisis. We introduced a series of bills that would close a variety of tax loopholes and book the revenue for the 2011-2013 biennial budget.

While there are many tax exemptions that serve a purpose and positively affect a large swath of Washingtonians, many are out of date and finished serving their purpose long ago. In fact, only 17% of all tax exemptions have ever been reviewed.

We have proposed to target some of these tax loopholes. Those proposed for closure range from bedding in chicken coops to subsidizing private jet purchases and awarding tax breaks to Wall Street banks.

I do not believe that tax loopholes should be privileged under the law or subject to a greater threshold required to modify or end them than other expenditures.
We are in truly unprecedented times and we owe it to our communities and state to provide a thoughtful budget scrutinizing every dollar we spend, be it on health care or special tax loopholes.

If we can close schools with a simple majority vote, then we should be able to close tax loopholes as well.

That is why I am sponsoring a measure to encourage tax compliance within our current revenue stream by increasing corporate accountability. It’s only fair that those who owe tax revenue pay up. Business owners and corporate officers are already held personally liable for uncollected sales tax should their businesses become insolvent

However, they are not when it comes to a host of other financial liabilities, including B&O tax, use tax, public utility tax and other excise taxes.

Regrettably, our current policy puts the state last in line, forgoing collection of millions in revenue. This bill increases accountability within the existing tax structure and holds responsible parties liable for these obligations as well.

In its first two years, my bill would generate over $15 million.

It and a series of others like it are offered as alternatives to the budget. This is the beginning of a longer, ongoing conve rsation about priorities within spending – one which likely will not be concluded this session. So while I ended up voting in favor of the budget, it is my hope that the Senate will vote in favor of this and other similar tax exemption bills that mitigate painful reductions to public services as much as possible.Our valued public services and our children’s future are worth too much to leave anything on the table this legislative session.

As budget negotiations continue to unfold, I will keep you updated on progress of this and other tax loophole bills. Should you have any questions or concerns, please feel free to contact my office at the number below.

As always, it’s an honor to serve you.
Best wishes,

Kevin Ranker