Most states have an income tax that makes their tax system more equitable across all incomes and better ensures public revenues keep up with population and economic growth. That means other states have been able to invest in their people and public structures, while Washington has fallen behind. Washington’s rank in K-12 spending fell from 34th to 45th compared to state personal income from 1998 to 2009, according to the U.S. Census Bureau.
If Washington’s budget had grown at the same rate as personal income in the state over the past decade, the 2011-13 budget would be $13 billion higher – that would pay for a lot more teachers, lower college tuition, and better protection of the most vulnerable.
The popular political solution to the budget debacle is a temporary half-cent increase on sales tax. This, of course, spreads the burden equally among the poor, middle-class, and wealthy. Two experts say there are more progressive ways for the state to make ends meet.
Both Marilyn Watkins, policy director for the Economic Opportunity Institute, and Eric de Place, a senior researcher at the Sightline Institute, recommend closing as many of the 567 tax loopholes currently afforded by the state to various corporations and industries.
Watkins is particularly opposed to tax breaks for the farm industry. While farmers are hardly the stereotypical Wall Street fat cats, Watkins says the largest beneficiary is industrial agribusiness, not mom-and-pop homesteads.
“We almost completely exempt farms from taxation in our state,” Watkins says. “That made sense back in ’30s when it was family farmers slammed by the depression and in financial crisis, but there’s not a good reason in this day and age to exempt big agribusiness from taxation.”
According to de Place, several farm tax loopholes border on absurd. They include caveats for the propane used to heat vast chicken coops, and fine print that favors bull semen traders, he says.
“You name it there’s an exemption,” de Place says. “They live in this weird tax-free environment, Maybe that makes sense from public policy standpoint, I don’t know, but do we really need tax-free bull semen? Is that hugely important?”
