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Spokane shrinks tax subsidy area

It will be harder next year to qualify for tax subsidies to build apartments and condos in Spokane.

The Spokane City Council on Monday reauthorized Spokane’s multifamily tax exemption for another five years. The decision significantly reduced the areas that will qualify for the subsidy and set lower limits to qualify for bonus exemptions when building affordable housing for rent.

Owners participating in the program paid $1.4 million less in property taxes this year because of the exemptions.

Under the program - first approved in 2000 and updated in 2007 - condo and apartment developers pay property taxes only on their land and the value of improvements before starting construction.

State Supreme Court will hear super-majority appeal

OLYMPIA — The state Supreme Court agreed to fast-track an appeal of a case involving the two-thirds majority for tax increases that voters have imposed through initiatives.

The high court said today it will hear the appeal of a challenge to the law by the League of Education Voters, the Washington Education Association and several legislators who filed suit after a bill to end a tax break for large banks received a simple majority, but not the required supermajority. It will take up the case on "an expedited basis" suggesting it could be  heard and decided by the time the next regular session of the Legislature convenes in January.

But possibly not before voters go to the polls in November, with a  new initiative that asks them to extend supermajority for another two years.

The court also refused to grant Attorney General Rob McKenna's request a stay of the judgment issued by King County Superior Court Judge Bruce Heller in May, meaning the supermajority requirement is not in effect now. But because the Legislature isn't in session, that has little practical effect.

Heller ruled the state constitution calls for a simple majority, not a supermajority, to raise taxes. The constitution does require supermajorities for some other things, so if the writers wanted it for taxes, they could have put it in at that time, he said.

Requiring a higher standard  through an initiative is unconstitutional, Heller said. So is the requirement that a tax passed with a simple majority go to voters, which isn't in the constitution.

Tim Eyman, the sponsor of several voter-approved initiatives to enact or re-enact the super-majority and this year's measure to extend it for two years, said he's confident the Supreme Court will uphold the requirement because it has done so  in the past.

But opponents of I-1185 counter that the court has never ruled directly on the issue of the supermajority. Instead it has let the provision stand by refusing to rule on cases because they didn't provide a "justiciable issue", or something which the court had the authority to decide.

Heller's ruling gives the court a justiciable issue. The case involves a bill that would have removed a tax break large out-of-state banks receive for some first mortgages, while leaving that incentive in place for smaller banks. Money collected from the change in tax policy would have been used to reduce public school class sizes in kindergarten through grade 3. The three legislators who later became plaintiffs in the lawsuit, specifically asked if the change could be passed by a simple majority, or if the House could override that requirement, and were told no by House Speaker Frank Chopp in a dialog that foreshadowed the challenge.

Another potential challenge to the supermajority, which involved taxes on roll-your-own cigarette machines, was dismissed this month when both sides agreed to drop the case.

Roll-your-own operations shut down

OLYMPIA — Between the courts and Congress, operators of roll-your-own cigarette machines in Washington are essentially out of business for the foreseeable future. Read the story on the main website by clicking here.

Local option supporters plan initiative for 2014 election

A group of local officials from throughout the state has announced that it'll pursue a local-option tax initiative in the 2014 general election, after determining there wasn't time to make the 2012 ballot. “Our commitment to the success of this effort has not wavered. By adjusting our target to the November 2014 General Election rather than this fall, we will have the time we need to make this a truly statewide effort,” Boise businessman Clay Carley said. Click below for the group's full announcement.

Vick: Why I Back 2/3s Vote Rule

In an op-ed article, Idaho Sen. Steve Vick, R-Dalton Gardens, defends his unsuccessful legislation that would require a two-thirds vote of the Legislature to raises taxes & fees: "When considering taxes and our liberty, I think of a quote from Daniel Webster, during the famous Supreme Court case McCullough v. Maryland, stating “An unlimited power to tax involves, necessarily, a power to destroy.” I believe there is an important relationship between taxes and individual freedom: any time you raise taxes, you take a little bit of freedom away from those you are taxing. Therefore, it is important that the Legislature puts this in place to ensure that proposals which have a deep impact on our liberties are deliberative and have widespread support from our elected representatives." More here.

DFO: I believe this bill would hamstring the already tight-fisted Legislature from reacting responsibly to growing revenue needs for education, social services, corrections, and sundry other budget items.

Question: Do you think the Republican dominated Idaho Legislature already does a good job keeping the state budget in check?

Small business tax cuts to take effect in 2013

If you own a small business and have yet to do your taxes, the U.S. Small Business Administration has some good news.There are 17 small-business tax cuts already signed into law and an additional five are proposed for 2013, the Tri-City Herald reports.

"These tax cuts are available to all types of small businesses, from main street shops to high growth startups," said Calvin W. Goings, assistant associate administrator for the U.S. Small Business Administration, in a press release.

Some of the tax cuts are:

•Start-up entrepreneurs can deduct $5,000 for start-up expenditures.

•If you have bought new equipment, you can write-off a larger portion of the cost of that new equipment this year rather than depreciating the cost over time. The maximum amount a small business can expense on new.

•Tax credits are available for starting or continuing to provide health insurance coverage for your employees, and this applies even if you are self-employed.

•Starting in 2010, the process for deducting the cost of your cell phone and monthly bills was vastly simplified.
For more information, contact the local district office in Washington at sba.gov.<a href='http://www.sba.gov/'>sba.gov</a>

Proposed B&O tax break for startups advances

Legislation that would exempt new Washington-based businesses from the state's B&O tax in their first year of operations has cleared a key Senate committee.

Senate Bill 6327, sponsored by state Sen. Mike Padden, R-Spokane Valley, advanced with a "do pass" recommendation from the Senate Economic Development, Trade and Innovation Committee. It's now waiting for consideration by the Senate Ways and Means Committee.

Under the measure, news businesses with fewer than 25 employees would enjoy the exemption for two years, plus a 50 percent reduction on their B&O tax bill in their third year of operations.“This measure would make it clear to entrepreneurs inside and outside of the state that legislators want our small-business employers to succeed and that Washington is open for business,” said Padden.

Legislative analysts predict the exemption would cost the state about $2.9 million in lost tax revenue in 2013 and $10.6 million in 2014.

The state's business-and-occupation tax, often called a gross-receipts tax, is heavily criticized on both sides of the partisan aisle because it targets gross revenue rather than profits. The rate differs by industry but all companies are given an exemption on their first $250,000 in revenue each year.

Padden and other backers argue that giving new companies a break could help business startups survive those critical first years in Washington, which currently has the nation's second-highest rate of startup failure.

You may not have to pay taxes

"May" being the operative word — but it got your attention. 

The IRS is launching a big push to make sure people know about the earned income tax credit. It's one of the sweetest tax deals around, because it's refundable, meaning the IRS could be in the position of sending you money.

Some 426,000 Washington state taxpayers used the tax credit last year, but the IRS estimates one in five of taxpayers eligible don't use the credit because they don't know about it.

The income limit to qualify starts at $13,660 for a single person with no kids, and tops out at $49,078 for a married couple who files jointly and has three or more kids.

Couple of things to keep in mind: the tax credit doesn't affect welfare benefits. And in most cases, any payment you get won't count against you in determining eligibility for Medicaid, SSI, food stamps, low-income housing or TANF payments.

How do you get it? You have to file a tax return. The IRS has a worksheet to see whether you qualify and for how much; you can find Publication 596 on the IRS website here.There are also thousands of places you can get free tax preparation through the VITA program. Call 1-800-906-9887 for a list.

Shall we hold our breath?

During the special session, both chambers approved a Joint Resolution asking Congress to pass the Main Street Fairness Act, which would require Internet retailers to collect sales tax from their customers, just like brick-and-mortar stores do, and remit those taxes to the appropriate states.

Could be worth hundreds of millions a year for Washington, so it’s nothing to scoff at. But isn’t there something odd about a Legislature, itself divided on taxes, asking a paralyzed Congress to do something about them?
  

Spec Sess Day4: Shin says raise sales tax 1 percent

OLYMPIA — State Sen. Paull Shin, D-Edmonds, is doubling down on Gov. Chris Gregoire's proposal to raise the state sales tax by a half-cent for three years to help rescue state programs from the chopping block.

Shin introduced a bill to raise the sales tax by 1 percent, or one penny on each dollar spent, from June 1, 2012 to June 30, 2015. That would raise an estimated $1 billion to be applied to the gap between scheduled state spending and projected state revenues currently estimated at $1.4 billion. He has two other Democrats in the Senate as co-sponsors.

Also on the tax front, a group of Republican senators have a joint resolution that would make all new tax increases expire after five years.

Jury convicts man of filing false liens

A federal jury on Tuesday convicted a self-proclaimed "sovereign" citizen of filing more than $20 billion in false liens against government officials.

Ronald James Davenport faces up to 40 years in prison and a $1 million fine after being convicted of four counts of filing false retaliatory liens against government officials, but he has no criminal history and likely will receive much less time.

The $5 billion liens against all property owned by former U.S. Attorney Jim McDevitt, U.S. District Court Clerk James Larsen, IRS Revenue Officer William Waight and Assistant U.S. Attorney Rolf Tangvald were filed in retaliation for a 2008 civil suit seeking $250,000 in unpaid taxes from Davenport.

"Rather than properly defend himself in the action, the defendant attacked those he perceived as facilitating the lawsuit," prosecutors said in a trail briefing.

Davenport, then 62, was arrested in June 2010 but has been out of jail and is living in Chewelah, according to court documents.

His ex-wife described him as a vehement anti-tax advocate and told authorities he might "go Ruby Ridge" if the government tried seizing his home for unpaid taxes, according to a previous report. Davenport described himself in court filing as a sovereign, a group of people who typically do not recognize the authority of the federal government.

A sentencing date has not been set.

Idaho Labor will intercept some federal tax refunds

BOISE – Idaho's Department of Labor will start intercepting federal tax refunds headed to more than 5,000 Idahoans next year, to recover nearly $10 million in unemployment benefit overpayments due to fraud or misreported earnings.

To avoid the move, the people involved, who all are being notified, will have to repay the amounts by Jan. 3, 2012, including interest and penalties; agree to a repayment plan; or request a review. For information, call toll-free (800) 672-5627.

 Department official Larry Ingram said the department has collected $23 million in overpayments, interest and penalties since 2007, and has withheld state income tax refunds as part of its collection efforts, but this year will be the first time federal officials have allowed it to tap into federal income tax refunds.

Which piece of pie do we get?

Good evening, Netizens…

 

Have you had a piece of pie lately? Which kind was it: the Republican slice of the pie or the pieces that are left over once the wealthy get their piece of the pie? As David Horsey's cartoon so adeptly shows, it all depends upon how the pie is sliced as to how much dessert you and I will get. As many in recent times have noted, only the wealthiest Americans get the tax breaks obliquely mentioned in the cartoon, not to mention the harsh reality unfolding across the country.

 

What is the cure for this disparity of the pie?

 

We either have to place additional taxes on the wealthiest Americans (yeah, watch the Republicans and Tea Party pass this one!), place a flat tax that taxes everyone equally based upon their relative income levels or tear up the IRS tax code and start over. Given the lack of cooperation evident in Washington, DC, do I realistically think for a minute any of these will pass into law?

 

From my perspective, the biggest problem we have in resolving the breakdown of the tax breaks is simple: eliminate all tax breaks.

 

Of course the biggest obstacle to any of the above is that the top percentile of the wealthiest Americans are in the US House and Senate in far-off Washington. Now someone tell me why they would be in favor equalizing the tax codes, eliminating tax breaks and various loopholes used by the wealthy to avoid paying taxes.

 

Of course, your results may differ.

 

Dave

Sunday spin: Tax the rich? We could do better

The Supercommittee charged cutting the federal deficit got off to a raucous start last week, as protesters cut off one GOP member’s opening remarks with chants that Congress should "tax the rich."

As enticing as that may sound to those who do not consider themselves rich – that is, practically everyone below Bill Gates and Warren Buffett – Congress might be more amenable, and the nation better off, should protesters take up the chant of "tax the obnoxious."

Tax policy has long been a way of discouraging bad behavior, like smoking and drinking. Cigarettes and alcohol cost relatively little to make compared to the taxes and fees the various governments impose, trying to save us from ourselves.

Under that precedent, Congress should levy a tax on television newscasters who misuse the word "literally." The word has become a staple on both national and local news programs, where reporters seem to believe it is interchangeable with really or truly – which it literally is not. For the sake of the children, tax it hard, tax it now.

A source close to the supercommittee said there’s a problem…

Pat Moynihan: The Sensible Center

The late, great Senator from New York, Daniel Patrick Moynihan, was asked back in 1993, when Congress was debating an earlier federal budget deal, if there “would be a fight until death” over taxes. Moynihan, intellect and wit in full flower, came back at NBC’s Tim Russert: “Fight until death over taxes? Oh no. Women, country, God, things like that. Taxes? No.” We may see a grand deal struck this weekend in the long running Washington drama over taxes, spending and debt and it is a safe bet no one will fight until death, even if the rhetoric makes all of what has been going on in the nation’s capitol sound like Armageddon. A deal must be struck. The only Armageddon here would be the shape of national and world economy should the United States of America default on its debt, even for a little while/Marc Johnson, The Johnson Report. More here.

Question: What would you fight to the death over?

No need to sing Auld Lang Syne

Happy new fiscal year, Washingtonians.

Forget about making resolutions, but remember to get a new tab for your boat, or a Discover Pass if you plan to be spending time in state parks. If you’re a state employee, your paycheck gets smaller starting today.

Some restaurant owners get a break, shoppers who come down from Canada don’t. The state’s two-year budgeting cycle starts today, although many program cuts the Legislature approved to make that budget balance will be phased in…
  

To read the rest of this item, or to comment, go inside the blog.

Spec Sess Day 24: ‘Tourism’ tax extension fails

OLYMPIA — The Senate narrowly rejected a plan to extend taxes levied to build Seattle's baseball stadium as a way to pay for expansion of the state convention center, arts and culture programs and housing projects.

By a 24-22 vote, a proposal to continue a tax on hotel and motel rooms and rental cars in King County went down in the face of warnings that voters would be convinced of the adage that there's nothing more permanent than a temporary tax. To pass the Senate, a bill needs at least 25 votes. It could be brought back for another vote sometime Friday if one of the 22 "no" votes switches sides.

The taxes were approved in 1995 to build a new stadium for the Mariners, now known as Safeco Field, during a special session of the Legislature. The taxes were to stay in place until bonds were paid off or 2015, whichever came first.

The bonds will be retired later this year. SB 5958 would have continued charging the taxes until 2015, and redirect the money to expand and renovate the Convention Center in Seattle, Pioneer Square preservation projects, affordable housing projects in Seattle and arts programs. 

“We made a commitment to the people of King County and the state of Washington,” Sen. Mark Schoesler, R-Ritzville, said. “Voters have to know that when we say a tax is going away, it really will go away.”

Special Session Day 8: Tax amnesty pulls in $321 million

OLYMPIA — The state collected $321 million in delinquent taxes from nearly 9,000 businesses through an amnesty program that ended Saturday. The success of the program surprised state officials, who were expecting to pick up about $24 million when the program was proposed in December.
To read the rest of this item, click here to go inside the blog.

Financial experts charged with tax crimes

A Moses Lake couple who runs an financial consulting and insurance brokerage firm have been charged with failing to pay taxes.

J. Scott Vrieling and his wife, Patrica Dionn Vrieling, are each charged with four misdemeanors for allegedly failing to pay taxes from 2004 through 2007.

The charges carry no more than a year in prison, a $100,000 fine and a year of probation.

The Vrielings own Vrieling Financial in Moses Lake. The firm opened in 1949 and provides brokerage and consulting services to businesses and executives.

A grand jury indicted them Tuesday in U.S. District Court in Spokane.

A Valentine’s Day date with the tax man

The Washington Department of Revenue will visit with local business owners in Spokane on Monday (yes, Valentine's Day) to get input on how the agency can simplify the tax process for small businesses.

The visit to Greater Spokane Incorporated's offices, 801 W. Riverside, Suite 100, is part of Gov. Chris Gregoire’s executive order last October to make it easier to do business in the state.

This event is free and open to any businesses, not just GSI members. It will be from 1:30 to 3 p.m.

Information and registration: http://events.greaterspokane.org/default.asp?cale_id=1409&details=true

Bad news in the cards for Romanian witches

Romanian witches perform a ritual in Chitila, Romania

BUCHAREST, Romania – There's more bad news in the cards for Romania's beleaguered witches.

A month after Romanian authorities began taxing them for their trade, the country's soothsayers and fortune tellers are cursing a new bill that threatens fines or even prison if their predictions don't come true.

Superstition is a serious matter in the land of Dracula, and officials have turned to witches to help the recession-hit country collect more money and crack down on tax evasion.

Witches argue they shouldn't be blamed for the failure of their tools.

"They can't condemn witches, they should condemn the cards," Queen Witch Bratara Buzea told The Associated Press by telephone. Alison Mutler, AP Full story.

 I'm pretty the folks who run the Pyschic Hotline have to pay taxes. Have you ever had your palm read or consulted a fortune teller?

Washington starts 3-month tax amnesty for delinquent biz

A three-month amnesty program for businesses with overdue taxes has started in Washington state.

The plan aims to collect revenue now by waiving any penalties and interest. Otherwise, the state Revenue Department could spend months trying to collect those past-due bills.

The program was requested by Gov. Chris Gregoire and authorized by the Legislature during December’s special session.

The Revenue Department estimates the amnesty program could collect about $24 million for the state, and about $4 million for local governments. The state guesses about a fifth of 50,000 delinquent businesses will take advantage.

Businesses have to submit an application by April 18 and taxes have to be paid by the end of April. Details are available at the website paymytax.org.

Favorable poll boosts campaign for cigarette tax hike

Here’s a link to my full story at spokesman.com on how Idahoans overwhelmingly support raising state taxes on cigarettes and alcohol to address the state’s budget deficit, according to a new statewide poll, even as they oppose other tax hikes and spending cuts. The poll, conducted by Moore Information, was released today by a coalition of health groups that launched a push for a big hike in Idaho’s 57-cent-per-pack cigarette tax in the coming year. Backers said a $1.50-per-pack hike would be a “huge win for Idaho’s public health.”

Poll: ‘Narrowly optimistic’ Idahoans don’t want funding cuts or most tax hikes

There’s some very interesting data in the Moore Information poll released today by a coalition of health groups pushing for a big cigarette tax increase in Idaho. Among the results: 47 percent of Idahoans say the state is generally headed in the right direction, while 40 percent think Idaho’s on the wrong track. That’s pretty closely divided; the poll’s margin of error is plus or minus 4 percent. Pollster Bob Moore calls that a “narrowly optimistic” voter mood.

While really big numbers favored increasing taxes on alcohol and tobacco to address Idaho’s budget deficit, respondents strongly opposed raising the sales tax, income tax or gas tax. And by even bigger numbers, they opposed reducing funding for roads, health care or education. You can read the full results here.

Couple gets prison time for tax evasion

A former Colbert couple, who reportedly has made millions from the sale of porcelain figurines, has been sentenced to federal prison for refusing to pay more than $800,000 in income taxes.

Scott D. and Kristin W. Haynes, both 56, were sentenced late Tuesday after pleading guilty to five counts of failing to file tax returns for the years 1999 through 2003. They were arrested June 22 when they traveled to Florida after living for several years on a tropical island in the Caribbean that is part of Honduras.

Kristin Haynes is the artist and creator of figurines sold nationwide under the “Dreamsicles” trademark. Scott Haynes was a 50 percent shareholder in the corporation, from which the couple earned royalties from the sales of her creations.

Read the rest of the story here.

Crapo: Support growing for craft-beer tax cut

Here’s a news item from the Associated Press:  BOISE, Idaho (AP) — Idaho U.S. Sen. Mike Crapo says his bill to cut taxes for small breweries is gaining support, as evidenced by the addition of 24 co-sponsors. Crapo has joined Democratic Sens. John Kerry of Massachusetts and Ron Wyden of Oregon, as well as Republican Olympia Snowe of Maine, as an original sponsor of this push to halve federal excise taxes for smaller breweries. They contend the break to save small brewers about $3.50 per barrel on their first 60,000 barrels annually will leave them more money to invest in workers and supplies. Crapo, a Republican, will be touting his bill this weekend at the Portneuf Valley Brewing Company in Pocatello, though he won’t be sipping a cold, frothy one: He’s a member of the Mormon church, whose adherents don’t drink alcohol. He will join the Idaho Grain Producers Association to discuss the measure’s benefits to agriculture.

6th initiative makes ballot, would cut taxes

OLYMPIA — The sixth initiative to the people qualified for the Nov. 2 ballot this afternoon. Initiative 1107 asks voters to repeal taxes the Legislature levied earlier this year on soda, candy, bottled water and some processed foods.

That means voters will have two chances to undo things the Legislature did: repeal some of the taxes the Democrats passed as a temporary measure to ease the state’s budget problems, and reinstate a two-thirds majority for any tax increase (I-1053).

And they’ll have four chances to do things the Legislature has been asked to do several times, but  has never had the votes to accomplish: end state-run liquor stores (I-1100 and I-1105); add private insurance to the workers compensation system (I-1082); and pass a state income tax for the upper income levels (1-1098).

There will also be three referenda on the ballot: R-52 to approve bonds for energy efficiency projects at schools and colleges; HJR 4220, to amend the state constitution to expand bail requirements and HJR 8225, to change the constitution’s rules on debt limits for the state.

Popkey: Phil Hart Is No Jack Noble

A rarely convened special committee began digging Tuesday into allegations that a Kootenai County lawmaker abused his office in his effort to avoid paying his income taxes. The House Ethics Committee investigation is the first time Idaho legislators have scrutinized one of their own since 2005, when a Kuna lawmaker named Jack Noble slipped into ignominy rather than face likely expulsion by the Senate. But today’s villain is not comparable to yesterday’s. The ethical misdeeds of Phil Hart, a Republican from tiny Athol, are not on the same scale as Noble’s. Hart is guilty of petulant politics and conduct embarrassing to colleagues. But based on what we know now, he doesn’t appear to have committed an offense so grave as to bring his fellows to expel him from the Legislature/Dan Popkey, Idaho Statesman. More here.

Question: Do you agree w/columnist Dan Popkey that Hart is guilty of “petulant politics and conduct unbecoming to colleagues” — but not of conduct worthy of expulsion?


Economy improving, state budget in black from tax hikes

OLYMPIA — Although the economic recovery “lost steam” in May, the state’s economic outlook is slowly improving and the state’s budget no longer awash in red ink.

What’s keeping it in the black, however, are hundreds of millions in new taxes the state expects to collect through mid 2013, and an as-yet unfulfilled promise of $480 million in federal money.

Arun Raha, the state’s chief economist, said this morning the state’s job growth was “disappointing” in May, after several good months of increases when manufacturing and software jobs improved. In May, most of the job growth was from temporary employment for people helping with the U.S. Census.

Some employers are holding off on new hires…

Hart Has Used Session To Hold Off Taxes 4X

Here’s a link to Betsy Russell’s full story today re: how Rep. Phil Hart, R-Athol, has used the legislative session to hold off the tax man four times in the six years he’s served as a state lawmaker, starting his first year in office; and here’s a link to a letter from a Spokane attorney that Hart submitted to the state Board of Tax Appeals to bolster his case. Washington has a very similar legislative privilege clause in its state constitution to the one that Hart cites in Idaho’s constitution, but Hugh Spitzer, who teaches state constitutional law at the University of Washington School of Law, said he hasn’t heard of lawmakers invoking it in similar situations.

Question: What bugs you more — that Rep. Phil Hart owes the IRS about $350,000 in back taxes? Or that he owes Idaho $53,000 in back taxes?