Today's P-I story on the status of state budget woes continues to point to a Legislature in which precious few people actually have a grasp of what will be needed to solve the problem:
So, [House Finance Committee Chairman Ross] Hunter said, the Legislature could look at reducing prison costs by releasing nonviolent offenders and keeping tabs on them electronically. But the majority Democrats have not reached a consensus on cuts, he said: "I really don't have a handle on exactly what we're going to do." [emphasis added][Senate Ways & Means Committee Chairwoman Margarita] Prentice thinks the cuts relative to current services may be in the range of $7 billion to $8 billion.
"Everybody is still in denial about the depth and seriousness of what this is going to mean," she said. "It's, 'Don't cut us because we're special'; well, everybody's special."
All this points to the increasing chance that majority Democrats will throw up their hands after the February 19th revenue forecast and begin turning a tax increase to fund K-12 education (thus sparing other favored programs) into reality. The only question is the details of the proposal and when exactly voters will be asked to cast ballots on it.
Exit thought: in fairness, Ross & Prentice are probably among the legislators who are clear-headed about the issues at hand. It is the bulk of their peers who are still excessively doe-eyed about solving the most pressing problem on their plate. Meanwhile, Governor Gregoire "gets it" too when it comes to the budget, and appears to be holding firm - for now - to her campaign-induced aversion to new taxes. That said, her duplicitous "we don't have a deficit" rhetoric from last fall merits continued and vigorous raspberries given reality today.
Posted by Eric Earling at February 16, 2009 10:00 AM | Email ThisWe have filed an initiative that we believe will help the economy and the residents of Washington.
We need your support in order to:
Obtaining 325,000 signatures.
Financing these initiatives. Please assist us by Forwarding this e-mail or send the information to the members of your organization.
At a minimum would we ask that you consider endorsing either or both of these initiatives?
This initiative replaces the B&O Tax with a flat rate corporate tax not to exceed 5% (national average is 6.6%). My B&O Tax for last quarter was .015% and at a flat rate was 6.9%
Website is http://home.comcast.net/~businessandoccupationtax/site/?/home/
Key points for implementing this initiative are as follows:
B&O TAX PROBLEMS - WHAT YOU MAY OR MAY NOT KNOW
State officials also have to be cognizant of the fact that they are not only competing against each other for investment and jobs, but against the rest of the world. The emerging low-tax countries in Europe and Asia benefit from the United States remaining a high-tax country. In the past two months, at least six countries have announced plans to cut their corporate tax rates: Canada, Hong Kong, Korea, South Africa, Spain, and Taiwan. In an interview in the Korea Times, Choi Kyung-hwan, a member of the new administration's presidential transition committee, said: "The corporate income tax reduction is not a matter of choice, but a matter of life and death for Korea in an increasingly globalized business environment."
http://www.awb.org/articles/fastfacts2005/governor_looking_for_ideas_to_reform_b_o_tax_you_can_help.htm
Governor Looking for Ideas to Reform B&O Tax - You Can Help Written on Monday, July 25, 2005
During a meeting with the Clark County High-Tech Council last Thursday, Gov. Gregoire said she is looking for ways to reform the B&O tax to make it less onerous on business. AWB President Don Brunell attended that meeting, and she asked him to develop ideas on the tax. She indicated that she is not looking to replace it with an income tax. AWB's Tom McBride and the Tax and Fiscal Policy Council (TFPC) will work on the issue. Send your ideas to Tom at TomM@awb.org.
Gregoire: Combine small schools, overhaul biz tax- Feb 11, 2009
Gov. Chris Gregoire pushed for more overhauls of state government today, asking business leaders for a plan to reform Washington's main business tax and calling for consolidation of small public schools. It was Gregoire's second public push this week for considerable government reform as the state grapples with a budget deficit that will likely top $6 billion through 2011.
FOUR YEARS LATER and she wants another study. By doing this the citizens, she knows the citizens are divided on how to be taxed and nothing happens. What I see is all talk and no action.
We cannot wait any longer. The Washington State Research Counsel states, that: "No sensible case can be made for imposing gross receipts taxes in the modern economic environment. The old turnover taxes, typically adopted as desperate measures in fiscal crisis, were replaced with taxes that created fewer economic problems. Gross receipts taxes should never be seen as an element of positive tax reform. They were abandoned for good reason. One reason for the high tax burden placed on business in Washington is the business and occupation tax. This is a truly unique aspect of the Washington tax system and is the most significant gross receipts tax remaining in the nation."
The major concerns regarding the business and occupation tax, otherwise known as a gross receipts tax, are that the business and occupation tax is:
A tax on all gross revenues incurred by a business, not just the profits;
A stealth tax which is hidden from the consumer; and
A tax on a business whether they make a profit or not.
RCW 19.275.030 states that no person may establish, promote, operate, or participate in any pyramid scheme and yet our business and occupation tax is a pyramid tax. The business and occupation tax is imposed on each stage of the service or product and creates a pyramid effect which is in turn passed on to the consumer.
There are only four states that have a gross receipts tax. Below is a comparison of the states that have a gross receipts tax:
(a) Delaware: Retail can deduct eighty thousand dollars per month. Manufacturers can deduct one million dollars per month.
(b) Kentucky: Business can choose between gross receipts and gross profits. Business under three million dollars is exempt.
(c) Ohio: Business under one hundred fifty thousand dollars is exempt and those businesses with receipts between one hundred fifty thousand dollars and one million dollars pay one hundred fifty dollars.
(d) Washington: The worst tax of all four gross receipts tax states. Business under twenty-eight thousand dollars is exempt.
The United States is among eight countries with extra corporate tax rates imposed by state or local levels of government. While the burden of these state level taxes is somewhat lessened because they can be deducted from federal taxes, they do add a second layer of tax and also add considerable complexity for multistate and multinational businesses. Unfortunately, in the state of Washington the business and occupation tax on gross receipts does not allow for a deduction for moneys paid for federal or local taxes.
In order for the state of Washington to economically compete in the global market, we need to revive manufacturing and business. In order to do this we must eliminate the business and occupation tax, which discourages capital investment by our businesses and discourages purchases of capital equipment that are directly related to growth. This is not a good strategy for economic growth and development.
Join Citizens for Economic Stimulus in WA: for contributions, please make checks payable to:
Citizens for Economic Stimulus in WA
14416 168th Street, Orting, WA 98360
If you have any questions, please feel free to call us at 253.241.9634
Jim Vaughn
As our new Secretary of State said not too long ago, you have to suspend disbelief to conclude that Gregoire and the legislature are serious or capable of fixing the current economic mess.
Gregoire can show that she is serious by laying off the 8,000 employees she added during her first term. Rather, expect the usual response to deficits, state parks will be closed, thousands of convicts will be released from prisons, etc. Discretionary social programs will continue, taxes will be increased, budgeted expenditures (i.e. pension plan payments) will be delayed or shifted to subsequent accounting periods, state borrowing will increase, and the size of government will remain constant.
California, the model that WA dems will use, is a preview of what to expect here. States like Nevada and Idaho become more attractive. With real estate prices in a slump, now seems like a good time to move.
Posted by: Paddy on February 16, 2009 10:40 AMDuring the 81 recession we raised sales tax by almost 20% so the notion of a tax increase is not unprecedented.
Posted by: Giffy on February 16, 2009 03:32 PMWhere does Washington find itself?
Well with Gregories wonderful spending spree each one of us would have to pay $950 more to make up for it.
With Unemployment at 7.1% and rising fast in this state, and going out of business signs going up every day, I guess Ole Gregoire and her gang of thieves will be looking to pick your pockets clean by mid year.
Posted by: GS on February 16, 2009 04:59 PMState governments need to immediately suspend ALL benefits (medical, housing, food stamps, education, etc.) to illegal aliens and begin efforts to round them up for deportation, effective immediately.
If taxpayers cannot afford to help our own citizens, we certainly can't be expected to feed, clothe and house a good portion of Mexico's also.
Posted by: Saltherring on February 16, 2009 05:01 PMalso, let's switch to a loser-pays legal attitude; you want lawsuits and the slip & fall settlement game? well, YOU pay if you lose; then only meritous cases will proceed; businesses will do the right things without the ever-present threat of suing; enough with the robbery and sue-settlement game; it drives up costs for us all, esp good medical practioners and the whole med system;
Posted by: jimmie-howya-doin on February 16, 2009 06:21 PMGregoire signs measure boosting benefits
Gov. Chris Gregoire on Monday signed into law a measure boosting benefits for the unemployed, saying that some Washington families are struggling and need immediate help.
"Our goal today is to put in their pockets some much-needed money," the governor said before signing her first bill this legislative session.
The measure boosts the minimum weekly benefit amount, and adds $45 a week for all jobless workers. That makes the minimum payment $200 per week, and the maximum $586. (there's a bit more)