Seattle Press on Line - Washington's Tax Reform Should Start with Closing Corporate Exemptions

Seattle Press Guest Editorial

Washington's Tax Reform Should Start with Closing Corporate Exemptions

By Joe Szwaja

Aug 15, 2002 -- In the 2002 legislative session, lawmakers were faced with severe revenue shortfalls resulting from the double blow of economic recession and Tim Eyman-led tax limits. Painful decisions had to be made in the process of cutting $700 million from the state budget. Educators, health care workers, folks living with disabilities, children, seniors, human service workersand others all felt some of those pains, as these groups were forced to compete for scarce funds.

School districts were lucky to break even, with the legislature using one hand to increase funding for voter-mandated teacher pay raises and reductions in class size while taking away equal or greater sums from education budgets with the other hand. College students faced tuition hikes as state universities and colleges lost funding. Disabled citizens lost benefits. Children's programs like Head Start and the Early Childhood

Education Program lost funding. Seniors lost out as Medicaid reimbursements to pharmacies and nursing homes were cut. Painful choices, but in these difficult times, what else could lawmakers do?

Well, for one thing, they could have looked to an enormous source of revenue that remained virtually untouched while the pain was being doled out: state tax exemptions. While people with genuine needs are suffering, our state continues to exempt more potential tax revenue than it collects. So we have a state tax system with more holes than substance. Swiss cheese looks rock solid in comparison.

Many of these tax breaks clearly do not serve the public interest. Take, for example, the sales tax exemption for chemical fertilizers and pesticides. Exempting approximately $67 million of tax revenue during the 1999-2001 biennium, these tax breaks benefit the manufacturers of agricultural chemicals and favor large-scale agribusiness, which is massively dependent on chemical inputs, over family farms. Environmental quality suffers, as runoff from farms is one of the leading causes of ground and

surface water contamination. Subsidizing agricultural chemicals encourages their use at a time when consumer demand for organic foods is rapidly expanding. State government should be encouraging a transition to sustainable agriculture rather than subsidizing continued use of chemicals.

The Washington State Green Scissors campaign, bringing together a coalition of taxpayer and environmental groups, has identified this exemption and several other loopholes that should be closed for the sake of the environment and the taxpayer. (See www.foe.org/foenw/e4e/wags.html for further information.)

Indeed, if anything, agricultural chemicals should be subjected to additional taxes to go toward funding programs which reduce the substantial environmental harm which they cause. Who should pay for the costs of environmental damage, the polluter or the public? Shifting our tax structure to encourage environment-friendly practices and discourage harmful ones, as outlined in Northwest Environment Watch's Tax Shift, works on the principle that the polluter pays. Besides helping pay for mitigating the effects of pollution, increasing taxes on harmful practices create positive economic incentives to do the right thing.

Other significant tax breaks accrue to soda pop manufacturers, warehouse and grain operators, software manufacturers, coin-operated laundries and car washes. Such breaks often reflect private interests and campaign donations more than the public interest, and these should be scrutinized carefully.

Corporate tax breaks account for many millions of dollars of lost tax revenue. How much exactly? We don't know, because government agencies are not required to track such exemptions in Washington State. As a first step in closing loopholes, we should begin tracking such numbers, as well as assessing the public benefit received from such breaks, as the states of Minnesota and Maine have begun to do, and as the Washington State Labor Council has called for in our state.

Campaign donations from private corporations create a strong incentive for tax breaks that favor private profits over public interests, leading to the crazy quilt of corporate giveaways that we have today. State lawmakers need to commit to protecting human and environmental welfare over corporate welfare. Special tax breaks must be held up to public scrutiny, and our legislators held accountable, so that we may better meet the genuine human and environmental needs in our state.

The Green Party is committed to changing our state's tax structure, which is now, believe it or not, the most regressive in North America. (Source: Tax Shift published by Northwest Environment Watch. For more information, check www.northwestwatch.org). As a party outside of the big money game that dominates state politics, we in the Green Party are in a good position to push for a more equitable and environment-friendly way to collect tax revenues and to open up revenues for essential programs in the process.

Reader Comments

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Jim Dawson	Nov 11, 2002	Kent	Driver
Is this not ironic the first thing that our State wants to do is cut what hurts those that pay thier salery. I Know that I am not going to change your mind but the majority "as the votes show" have no more to give to the elete of this country "Government". There is a Union that is going to be starting in this state that is going to unite all of Washington and coalate an investigation on all spending in our State, making all State employees accountable for thier employment. How hard can it be. This State waste more money on the non esentials "Stadiums"which was voted down instead of the children whom keep getting raped by thier own State legislation! Congestion is not the issue, people can leave earlier or take a bus. Keep an eye out because this Union is going to have the financial funding and the legal power to change all of Washington from the top down!