New State Budget Takes Aim at Your Wallet
From Sen. Val Stevens - http://src.wa.gov/stevens/news.htm
When the Democrat majority suspended I-960, the door to new taxes flew wide open – and they marched right through.
Suspending the two-thirds requirement for the Legislature to pass new taxes allows the Democrats to pass taxes all by themselves. As a result, we have a new sales tax, a hefty new cigarette tax, a higher convention center tax, and many new business and farming taxes.
Still looking for more, majority leaders decided to end about a dozen tax exemptions aimed at making Washington companies more competitive. That decision will definitely cost us jobs. On the local level, this includes sales tax exemptions that will hit businesses hard.
Altogether, these measures will cost taxpayers about $1 billion in state and local taxes during the next year and more than $2.2 billion in 2011–13.
A temporary sales tax hike? No, I don’t buy it either.
The Democrat budget calls for a .3 percent increase in the state sales tax. It is supposed to be in effect for three years, from June 2010 to June 2013. Have you ever heard of a state sales tax being reduced after three years? Me neither.
Also, since sales taxes are harder on low-income Washington families, they can apply for a tax exemption refund. The refund is equal to 5 percent of the Earned Income Tax Credit in year one; 10 percent in year two. But they will have to know the filing procedure. In the meantime, businesses will experience yet another decline in non-essential purchases.
Cigarette tax revenues go up in smoke.
Smokers already pay a $2.02 cent tax on a $5 wholesale pack of cigarettes. Now it will be $3.02 tax adding up to a whopping $8.02 a pack.
Interestingly, experts say this nearly 50 percent tax increase is expected to generate only 23 percent more revenues. Why? Because smokers will either quit smoking – or buy cigarettes on the black market to avoid taxes.
Tax “loopholes” bill will cost jobs
We’re in a serious recession, unemployment is high, foreclosures are up and small businesses are hanging on by a thread.
So what does the Democrat majority do? They remove dozens of tax exemptions for small businesses and farmers, calling them “tax loopholes.” When a business owner takes the incentive to re-invest his hard-earned money, grow his company and create jobs, liberals call it a “loophole.”
Here’s just a sample:
- Democrats eliminated the Business and Occupation Tax (B&O) exemption for direct sellers – retroactively. That means, not only do they no longer receive the tax exemptions, they must refund the tax exemptions already paid to them.
- They eliminated the trade-in allowances on vehicles and farm implements. For instance, if a person buys a $20,000 car with a $5,000 trade-in, the sales tax is calculated on the remaining $15,000. When this is eliminated, it will be calculated on the entire $20,000. At a time when auto dealers are desperate for customers…this will actually discourage buyers. Struggling farmer families will have to save even longer to replace old tractors and farm implements.
- They limited a 40-year old tax deduction designed to “reduce the cost of buying a home and stimulate residential construction in Washington.” Benefitting financial institutions, real estate sales and construction and home buyers, the B&O tax deduction was allowed for interest earned on first mortgage loans. This change effectively cuts the benefit in half. Local and regional banks are hard hit by this recession and real estate has taken a nosedive. This shoves their face in the mud and walks on their backs.
- Since 1943, the state has had a sales tax exemption for fertilizer, spray materials (including pesticides) and chemical sprays used in commercial agriculture. The majority Democrats have now limited the exemption to only organic products, which will reduce the existing exemption by more than half. It will likely drive food production out of this country, to be grown by those countries having little or no restrictions.
- Since 1965, Washington has exempted Oregon, Alaska, Montana and Alberta residents from our sales tax. All they need is one piece of identification. Now majority Democrats are eliminating the exemption and instead permit non-residents to apply to the Department of Revenue for a refund of sales tax paid. How’s that for convenience? This will slam businesses along our borders, especially the Oregon border, because they won’t be able to compete with merchants in other states that do not have a sales tax.
How does risking jobs help our recovery?
During the debate on overturning I-960 on the Senate floor, Majority Leader Lisa Brown, D-Spokane, justified increasing state taxes because it would allow the government to create programs to benefit children, among others.
That sounds swell, but government cannot give to one person without first taking from another. If we are taking money from the business that employs fathers and mothers, causing parents to be unemployed, how does that benefit the children?
A strong economy benefits families and does not cause homelessness and joblessness. There is a light at the end of the tunnel, but I’m afraid it’s a train coming down the track.
It’s a losing proposition to tax businesses during a recession. I am worried about what this legislation will do to our local Snohomish, Skagit and Whatcom County economies, which have already seen so much unemployment and suffering.
Sincerely,
Val Stevens
P.S. – It could be much worse. Here’s what the governor advocates:
