Our Sponsors:

Read more »

Our Members

Many thanks to David Epstein and Elizabeth Pizac some of our many supporters.

ALL MEMBERS »

Secrecy in tax breaks is harming state

Guest Opinion: The public should have the data to judge whether it's worthwhile to give a company a tax break.

With political pressure from industries to “match” Boeing’s state tax preference package rippling through the 2014 Legislature, many on the left and right are asking larger structural and systemic questions: How much do Washington state taxpayers spend on tax preferences, how much financial value in tax preferences does a company receive and how much do these companies actually pay in state taxes?

The uncomfortable reality is that we do not know how many tax dollars are being spent or not collected — because that information is, even if assembled by the state Department of Revenue, almost completely inaccessible and hidden from legislators and the public.

The inside story gets worse: Under state law, for the vast majority of tax preferences, the basic information about what companies, organizations and industries receive under most tax preferences — how much money — is considered confidential and proprietary information. And, despite how much information was provided for the Boeing discussion, the financial details are usually expressly hidden from legislators, media and the public. 

As chair of the House's tax-writing Finance Committee, I am granted confidential access to the limited corporate tax information that is collected by the state.

This year, it has reached a point where the weight and moral hazard of this information burdens me, on a deep philosophical level, because I believe it is unethical for my colleagues to make fiduciary decisions about tax preferences — to draft bills, debate legislation and vote on behalf of the people — without knowing the true financial value or tax context of those preferences.

If I speak publicly about financial or technical details of who is claiming tax exemptions and how much they pay as a context to those dollars, I would face 90 days in jail, get ejected from the Washington State Legislature and be banned from holding public office for two years.

I’m not making this up. Telling the truth about this basic but vital tax data, even to other legislators, could cost me my elected position and land me in jail.

That’s because the strict interpretation of state law is that the chairs of the respective tax committees in the House and Senate are entitled to this important contextual tax data, but rank-and-file legislators are not. This means two of 147 legislators know the truth of how the money flows.

The old-fashioned idea that the value of a tax preference must remain confidential is out of date and philosophically out of step with our state.

Since 1972 our state has been a national leader in public disclosure about who funds campaigns, how state budgets are written and how tax dollars are spent. Disclosuure applies to the spending of tax dollars, whether it’s the salary of a local elementary school teacher or how much a vendor is being paid to build a tunnel along the Seattle waterfront. A 2012 investigation by the widely respected Center for Public Integrity ranked Washington No. 3 of 50 states in its “Integrity Index” based on the strength of the disclosure laws when it comes to campaign financing, lobbying reporting, state budget process and public access to information.

However, in contrast to campaign data and budget expenditures, which can be searched online down to the individual check on www.fiscal.wa.gov, the actual beneficiaries of tax preferences are public for just 32 of the state’s 650+ tax preferences, less than 5 percent of the recipients. And the financial value of the value of the tax preferences claimed is public for only 19 categories — less than 3 percent of the total.

Last year, I partnered with Senate Majority Leader Sen. Rodney Tom, D-Medina, to shine a light on tax preference transparency through a new law so the public can more effectively understand the scale and scope of the value of a tax preference created by the Legislature.


Like what you just read? Support high quality local journalism. Become a member of Crosscut today!

Comments:

Posted Sun, Feb 2, 6:18 a.m. Inappropriate

Let's see Rueven, We have had a Democrat Governor for almost 30 years and Democrats in control of at least one body of the legislature for the same amount of time. Who could voters logically look at being responsible for the number and performance of these tax exemptions and breaks? Now you need legislation to make you do the right thing and cull out the deadwood your party has created?

Where was Suzan Delbene at the Dept. of Revenue when she was appointed to head the agency by Gregoire? She is now doing for the Country what she did for the Department of Revenue. Nothing. Regime change in Olympia.

Cameron

Posted Sun, Feb 2, 8 a.m. Inappropriate

I'm glad to hear that you are considering ways to legally open up what should be fully public information about taxable income in corporations. You are correct that it is morally and financially wrong to keep this information from the decision makers who represent us all. I look forward to seeing this situation corrected.

nwsrdr

Posted Mon, Feb 3, 6:55 a.m. Inappropriate

Reuven Carlyle is what's known in the politics game as “a big talker”. He puts out columns like this posing big questions that suggest he's interested in taking on issues that special interests lobby for. Then a few hearings are held, and nothing changes.

This is a pattern with Carlyle. He wrote this same kind of column in 2011:

http://crosscut.com/2011/11/22/politics-government/21562/Instead-cutting-cities-revenue-share-should-we-tri/

In it he vowed to analyze the tax costs local taxing districts impose and analyze their utility using objective criteria:

How much local taxing authority do current and future service needs require? Which level of government — state, county, city, or special district — is best suited to perform each service in question? Are the special purpose districts we have collectively created taking the right share of resources away from the direct city and county authority?

Where did that initiative go? Nowhere. Think you can go to the state's website now and find out whether or not some PTBD, port district, or the RTA is taxing appropriately and providing appropriate value for people and their communities? For sure not.

Absolutely nothing changed after Carlyle launched that “words without deeds” initiative, and nothing will change now that he says he'll start working on tax preferences the special interests obtain as a matter of course from him and his colleagues.

crossrip

Posted Tue, Apr 22, 4:32 p.m. Inappropriate

Totally agree about Carlyle being a "big talker". Not only is Carlyle a "big talker", but he has a tendency to speak-out of both sides of his mouth. On one hand, Carlyle pushes the biggest tax-break in history. Then, he complains about the terrible burden of carrying inside information.

If Carlyle was SO upset with the amount of taxbreaks given to Boeing..Why didn't he hold back?

Watching

Posted Mon, Feb 3, 8:10 a.m. Inappropriate

This is something a lot of people have been concerned about. Boeing is not the only large employer in Washington state. Amazon and Microsoft are the two that come to mind immediately, but you know there are others. The Legislature has shown they'll cut deals with one private business, and the others are only showing their human nature by lining up and asking "What about us?"

The problem with giving tax breaks to some people without cutting spending is that more money now has to come from other people. Guess who those "other people" are? Us.

I suppose it's a reactionary position, but I'm personally in favor of closing all tax loopholes for everyone, especially at the federal level where "we" have a 17 trillion dollar (and growing) debt. People who own and operate private businesses in this state and country should be expected to accept the risks involved, including the fact that you'll earn less money by paying ALL your taxes.

It's apparently Pollyanna-ish to expect the President and/or Congress to adopt the Simpson-Bowles recommendations and actually start paying what "we" owe, but it would be nice if everyone who's making money in America paid what they're already supposed to be paying. I guess that's unrealistic, too.

Posted Mon, Feb 3, 3:14 p.m. Inappropriate

A word of warning to those of you whose positions differ from the fine Rep. Carlyle. This, from a recent FB comment on his page. As a fellow Jew, I hope his rabbi knows about his temper, and lack of grace:

Reuven Carlyle: "...Elizabeth, I quietely accept your unrelentingly negative rants as the price of public service. Today, however...I would like to say in response to your mean-spirited post on my page that I'd appreciate if you would be so kind, gracious and considerate as to go to Hell.
January 31 at 9:43am

SteveShay

Posted Mon, Feb 3, 4:55 p.m. Inappropriate

This tragic iniquity has become the “new normal” in the United States and represents one of the country’s biggest problems. An investigative column dedicated to these topics should become a permanent element on Crosscut’s home page.

This should be red meat for anyone with a journalistic bone in their body.

jmrolls

Posted Wed, Feb 5, 7:11 a.m. Inappropriate

Anyone want to try arguing these tax break were worthwhile for the vast majority of people in this state?

There is research showing big state tax breaks are not the reasons companies stay in a particular state:

http://tinyurl.com/qfpksmc

Anyone think the state legislators did any research to prove giving these tax breaks to Boeing would be worthwhile for 95% of the people in this state? Carlyle doesn't point to such objective analyses in this piece because nothing like that exists. The lobbyists said "Boeing wants tax preferences" and Carlyle and his colleagues asked "How big?"

crossrip

Posted Thu, Apr 10, 7:43 a.m. Inappropriate

Here's an idea: replace all of the tax breaks with tax rebates. That way they will all appear as the spending they are when the rebate checks go out rather than being invisible reductions in revenue that have no line item entry in the accounts.

coolpapa

Login or register to add your voice to the conversation.

Join Crosscut now!
Subscribe to our Newsletter

Follow Us »