Editorial: Taxpayers deserve a down payment on tax reforms

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By the editorial board of the Herald

Reforming the state’s tax system wasn’t high on the to-do list for this session of the Washington State Legislature — it’s due next year, after the soon-to-be released from a report by the bipartisan Tax Structure Task Force that includes state lawmakers and others who have spent the past several years considering proposed changes to the composition of state taxes.

But with unexpected – and welcome – news of better-than-expected revenues and a projected surplus of $8 billion or more over the next four years, calls have been made – with generous to more modest proposals – to make some a portion to state taxpayers. .

Among the most generous, proposed by State Sen. Mona Das, D-Kent, and quickly backed by many Republicans, was Senate Bill 5932, which would bring a full 1% reduction in sales tax. of the state, reducing the state’s share of the tax. to 5.5% from its current 6.5%.

A more modest proposal, House Bill 2018, sponsored by Rep. Dave Paul, D-Oak Harbor, calls for a three-day sales tax holiday that would exempt purchases under $1,000 from state sales tax. , scheduled around Labor Day weekend when parents are deep in their back-to-school shopping. Eligible items would include clothing, computers and electronics, appliances, healthcare equipment and over-the-counter medications. Still taxed this weekend: alcohol, tobacco, cannabis, travel and restaurant meals.

The Legislative Assembly will not have the opportunity to consider more comprehensive reforms this session, even though it took them directly from the task force report. This will require the coming year to find a tax package that rebalances state revenues to address the inequities and inefficiencies of the current mix of taxes, including sales tax, property tax, business tax and professional and proposals for new taxes which could replace others.

Even if it waits until next year, this reform is necessary. Washington state has long been criticized, due to its overreliance on sales tax, as having the most regressive tax system in the nation. The Institute for Taxation and Economic Policy ranked Washington last for tax fairness, based on the percentage the state’s lowest-income families pay in taxes compared to how little the wealthiest in the country pay. state pay in taxes.

But if they can’t do it all this session, lawmakers can give taxpayers a down payment on next year’s reforms.

Das’s proposal for a full 1 point reduction in the sales tax rate did not receive much support from fellow Democrats; he was not heard by the committee. Without further reforms to offset the revenue loss, the state budget would potentially see a reduction of about $2 billion under the proposed tax rate. And Gov. Jay Inslee and Democrats have already outlined spending that has an eye on the state’s surplus to make needed investments across the state.

Even 1 percentage point of sales tax is a significant portion of state revenue. Of the state’s total tax revenue for 2020 of $26.83 billion in 2020, about 45% – $12.1 billion – was generated by sales taxes, according to the state Department of Revenue. ; Another 11%, or $3 billion, came from the sales tax on tobacco, alcohol, and the state tax on gasoline and diesel fuel.

Still, it is now appropriate to remove some of the tax burden from state residents, Das said last month.

“We need to put money back in people’s pockets if we are to fully recover from the high public health and economic cost of this pandemic,” she said.

If not a full one-point reduction, a smaller 2/10th percentage reduction, bringing the state sales tax down to 6.3%, would still bring about $612 million to taxpayers, as the Washington Policy Center recently recommended in a YouTube. video.

Whether it’s a three-day sales tax holiday or a more permanent reduction in state sales tax, lawmakers should view aligning these stars as an acknowledgment of strength. of the state’s economy and the role that families and businesses in the state have played in making it strong. .

This editorial was produced by the editorial board of the Daily Herald (Everett). The Herald is a sister newspaper to this Sound Publishing title.

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