Budget Report, Part 3: "The People Whose Business Practices Got Us into this Mess in the First Place."

By Josh Feit, Friday, December 11, 2009 at 2:50 PM
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At a press conference organized by a coalition of social service providers on Wednesday, Jerry Reilly, spokesman for the Elder Care Alliance, said the $700 million that Governor Chris Gregoire vowed to seek in new taxes to restore cut programs wasn’t enough.

“Seven-hundred million dollars is nowhere near where we need to be,” Reilly said.

Seven hundred million, for example, will not buy back the adult day care that 600 seniors will lose—a senior health program for which Reilly advocates.

Even if the state generates $700 million in new taxes, there’s still likely to be around $1 billion in cuts: There’s a $2.6 billion shortfall and Gregoire is planning to raise $700 million in new taxes and make $900 million in transfers—leaving $1 billion to cover.

Reilly had a suggestion of where to find the $1 billion: Tax loopholes and exemptions for “professional services.”

He’s right. The exemptions for white-collar services include sales “tax preferences,” e.g., exemptions from the sales tax for white-collar business services, totaling $833.9 million and sales “tax preferences” for a subset of the “professional services” category, financial services, totaling $322.3 million (full list of exemptions below the jump).

Nick Federici, the outspoken low-income advocate for the Washington Low Income Housing Alliance (a member of the coalition with Reilly), sums up: “The securities broker exemption, $77.8 million per year sales tax break, should be closed. Why should they continue to get a free pass from sales taxes? … The securities industry are the people whose business practices got us all into this economic mess in the first place.”

Consultants and miscellaneous business services worth $25.2 million

Legal services worth $199.8 million

Engineering & architectural services worth $84.4 million

Accounting and auditing services worth $84.2 million

Detective and security services worth $66 million

Computer and data processing services worth $66.2 million

Management services worth $131.7 million

Trade-ins of used products worth $176.3 million

Credit agencies worth $76.9 million

Security brokers worth $77.8 million

Insurance companies worth $5 million

Insurance agents worth $101.6 million

Real estate brokers & agents worth $5.3 million

Holding companies worth $7.6 million

Precious metals and bullion worth $6.4 million

Other financial services worth $41.6 million

Total: $1.1 billion.

  • Roxana
    THe people who ... are all the people how decided to go a cheap, fast=easier money making, moving the jobs outside, promoting the agressive -- not necessary morale people in all industries not just finances,-- and beleiving that being tricky means being smart -- no jobs, means : less customers in the stores, less taxes to the state, and so on...
  • sarah68
    #1: Numbers communicate to me, and I have a high-school education, much of which was spent avoiding math as much as possible. If they don't communicate to you, you're not paying attention. It's a shame that someone needs a "morality tale" (i.e., the equivalent of a graphic novel) to be able to grasp facts. This isn't about writing style; this is about people hurting. What about "69,00 people kicked off the Basic Health Plan" don't you understand?
  • Sarajane46th
    While gaining $1 billion (per year?) from the list above would be excellent, I'm in favor of extending the sales tax to all services, not just professional services. It's a more just tax than the hated B&O. As far as I can see, the only service taxes the lowest 20% of poor people would pay would be on haircuts and nails. That would make an all-services sales tax pretty progressive (applying far more to the top 20%) and would likely cover all the deficit.

    Don't forget to repeal the $3.2 billion Boeing tax exemption, on the basis of failure to deliver 1,200 new jobs. It will send a warning to other corporations not to make promises they don't intend to keep.
  • Fat-tailed
    @1 Not sure that continuing to suggest that taxes are a way to punish wrongdoing ("tax those who did us harm") is a good way to change the tax debate. Tax policy should be a way to collect revenue, not a way to influence behavior. (If the wrongdoing is so wrong, make it illegal.) Talking about tax policy as a way to correct moral failings is a way to get a lot of people to resent taxes even more.
  • Essdee Zee
    Don't know when voices first started getting raised over the need to deal with various exemptions, loophole and breaks to the Overlords of Commerce in this state. I've been aware of the outcry for twelve years, but it was never loud enough to move many lawmakers in Oly.

    I do know that the "business incentives" passed by the legislature over the last fifteen years drained $2.5 billion from the '09-'11 state budget.

    A good primer on the subject is here:
    http://www.eoionline.org/tax_reform/reports/WAS...
  • commenter
    now that's what I am talking about.

    Make it a story, not a list of budget numbers!

    "The people who make money trading in paper got us into this mess. For too long, they've enjoyed a tax exemption while hard working Washingtonians don't! In fact, in the last bumpety bazillion years their exmpetion meant they saved 28928202902820 in taxes. So I am going to fix that by making them subject to the same taxes as any small business accountant or flower sales person or computer repair businesswoman. We have to tax those who did us harm, to help those who need help. And so they play by the same rules as everyone else!"

    If it is not a little morality tale, it's not communicating.
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