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The old-fashioned idea that the value of a tax preference must remain confidential is out of date and philosophically out of step with our state.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