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Editorial: Washington tax system not broken, just flawed

Sun., March 3, 2013

Washington residents don’t like their taxes. They have repeatedly voted to keep them in check by supporting initiatives that require a two-thirds “supermajority” vote of legislators for increases.

Thursday, the Washington Supreme Court found that requirement unconstitutional, if not unwise. It’s both.

Consider:

Washington has a tax system that in 2011 tapped businesses for almost 57 percent of total state and local taxes, the ninth-highest take among the 50 states. The ranking would be higher still but for the states – Alaska, Texas, North Dakota – that sock it to oil producers.

Washington, because it relies so heavily on a sales tax, shifts a disproportionate share of the tax burden to low-income residents. As more sales move to the Internet and more money is spent on untaxed services, that dependence will become more and more fragile.

Washington law allows for 500 special-interest tax “preferences” – loopholes – for everything from chicken bedding to newspapers. And, yes, there is a difference.

In short, Washington has an imperfect tax system, but probably one not much more dysfunctional than those of most other states. And it’s a considerably less confiscatory system than most. Taxes per capita in 2008-’09 were $4,049, with the state ranking No. 35.

But ridding the system of its biases against business, and the poor, becomes a Rubik’s puzzle if relief from taxation on equipment purchases, for example, cannot be offset by taxing, say, bottled water, an idea voters doused in 2010.

Insisting tax reform be a zero-sum game in which somebody has to lose if somebody is going to win results in an ossified tax system unresponsive to changes in the economy, like the growth of Internet sales.

In his response to the Supreme Court ruling, Rep. Joel Kretz, R-Wauconda, complained, “We constantly see paid lobbyists in Olympia representing special-interest groups that want more taxpayer money for their social programs.”

He did not mention the legion of special-interest business lobbyists intent on preserving every one of the hundreds of loopholes that cost states and localities billions in lost revenue. And any lobbyist worth a paycheck can rally 17 Senate votes – one-third of 50 – to spike a change.

Even when a special commission set up by the Legislature itself to reassess these preferences recommends some be terminated, nothing happens. Take away a preference and you are increasing taxes, and that – until Thursday – required a supermajority.

Supermajority supporters in the Legislature are already getting puffed up about amending the Washington Constitution to annul the Supreme Court’s ruling. It will take a two-thirds vote in both chambers – yes, a supermajority – to put an amendment on the ballot, then just a majority of votes to pass.

But first, let’s see how they remedy what that same court says is chronic state underfunding of K-12 education. Or fund highway and bridge construction. Those are real problems.

How about solving them for a majority of Washingtonians?