Gordon signs on to tax loophole reform bill
Published 12:18 pm Wednesday, February 24, 2010
Sen. Randy Gordon, D-Bellevue, is co-sponsoring legislation to crack down on what he calls unfair tax loopholes and preferences that he says cost taxpayers hundreds of millions of dollars each year.
“This legislation will close over half a billion dollars worth of tax loopholes that have been buried in the tax code for years,” Gordon said. “That money can be used to save critical state programs and services such as health care for low-income families, services for the developmentally disabled and our schools.”
Gordon says closing loopholes should be addressed before any new taxes are considered.
“It’s only fair that the privileged few who can afford lobbyists contribute to our state before we ask working men and women to carry increased burdens,” he said.
SB 6853 shifts the burden of proof by requiring tax preference recipients to justify their status to the public in an open and transparent way. It also requires legislators to analyze tax codes with the same level of scrutiny they would apply to any new program. Going forward, any new or continued tax preference would include the following:
* An intent statement that clearly provides rationale for the preference against which its effectiveness can be measured;
* A condition that renewal is conditioned upon the full compliance of reporting requirements;
* Transparency that requires all tax preferences to provide the dollar amount of tax savings obtained; and
* A sunset date that is no later than 10 years after the date it’s enacted.
Gordon is a member of the Joint Legislative Audit and Review Committee (JLARC), a bi-partisan group working to make state government operations more effective, efficient and accountable. Over the years JLARC and the Citizen Commission for Performance Measurement of Tax Preferences have recommended ways to improve the tax preference process, but past Legislatures have not always acted on those suggestions.
Another piece of legislation introduced Tuesday, SB 6873, repeals and/or narrows certain exemptions, including:
* First mortgage deduction is limited to $100 million per year for each financial business. Savings: over $51 million.
* Direct seller B & O exemption is eliminated. Savings:nearly $155 million.
* Modifying the Sales Tax Exemption for Fertilizers, Sprays, and other Washes. Savings: over $25 million.
* Tax Debts – Corporate Officer Liability. The Department of Revenue would be allowed to pursue uncollected taxes of a terminated or insolvent limited liability business from the chief executive or chief financial officer, or other persons responsible for paying the taxes.Savings: $4.5 million.
* Allows the Department of Revenue to ignore transactions that lack economic substance beyond the tax benefits. Closes methods used to avoid use tax and real estate excise tax. Does not affect transactions initiated before July 1, 2010 that are based on a determination or other documents from the Department of Revenue or to completed field audits for the period before July 1, 2010. Savings: nearly $12 million.
Both SB 6853 and SB 6873 are pending in the Senate.
