Sign up for our
Email Newsletter

The Greater Marysville Tulalip Chamber of Commerce

2006 Legislative Priorities

 

 

 

The Greater Marysville Tulalip Chamber of Commerce believes the following items are the highest priority issues facing business in the 2006 Washington State Legislature.  These priorities will shape our policies and guide our 2006 legislative lobbying efforts directed at advancing and/or defending the needs of the business communities we serve.

 

Priority Index

Education

Electric Energy

Global Climate Change

Healthcare

Land Use GMA

Local Infrastructure

Municipal B & O

Natural Gas Taxation

Oil & Gas Energy

Priorities of Government (POG)

Property Tax Reform

Regulatory Reform

Research and Development Tax Incentives

Spending Limit

Staffing Industry B & O

State Death Tax

State Tax Appeals Reform

Streamlined Sales Tax

Tax Classification for Environmental Remediation

Transportation

Unemployment Insurance

Water Resources

Workers’ Compensation

Workforce Training

 

EDUCATION

Washington State’s competitiveness rests on the cornerstone of a well-educated and technically competent workforce.  Thus, it is imperative that Washington’s children be ensured a quality education. 

 

K-12 EDUCATION

 

Initial WASL (Washington Assessment of Student Learning) scores for the class of 2008, the first that must demonstrate proficiency in reading, writing, and mathematics as one requirement for graduation, show great progress in reading and writing achievement, but slower progress in math.  These results demand a coordinated, statewide focus on math, including a critical examination of everything from math curriculum and instruction to the recruitment, support, and training of math teachers. 

 

Additionally, the WASL standards only represent the minimum skills students will need to be successful, regardless of their vocational or educational plans after high school, and the commitment made to standards-based education must be maintained.  Washington’s schools must strive to give our students the knowledge and skills they need for whichever path they choose – entry into the job market, starting their own business, or postsecondary education.  

 

Back to Top 

ELECTRIC ENERGY

 

BACKGROUND  Washington’s economy has been built on abundant, reliable and inexpensive electric energy. Based primarily on hydropower, the “energy advantage” enjoyed by the Pacific Northwest  has allowed traditional manufacturing facilities to provide family-wage jobs, meet strict environmental regulations, offset high transportation costs and still compete successfully in the global marketplace.

 

In recent years, aluminum, oil, pulp & paper, steel, food processors and other traditional
manufacturers have been joined by high-tech firms in requiring large, reliable amounts of electricity. In some cases, power costs account for over half the operational expenses at a facility. Unfortunately, Washington has lost its energy advantage, and these businesses are now struggling to compete.

 

Energy prices skyrocketed during the West Coast energy crisis in 2000-01 and retail electric rates for many business customers remain higher than other regions in North America and around the world. The crisis was described as the “perfect storm” by Bonneville Power Administration (BPA) officials — a combination of failed  electric industry restructuring in California, market manipulation, reduced hydropower, and a failure to construct adequate new generation and transmission capacity. Utilities and their ratepayers are still carrying that burden, and there appears to be only very limited price relief in sight.

 

Available BPA hydropower can no longer meet growing regional demands, and hydro production is being further restricted by litigation and efforts to protect Endangered Species Act-listed salmon runs on the Columbia-Snake River system.  Additionally, most of the region’s non-federal dams are facing a costly federal re-licensing process. To ensure the protection of low-cost hydro power for this region, the state should work concurrently with and support F.E.R.C. in balancing economic and environmental interests during the hydroelectric re-licensing process, and any mitigation requirements must be directly related to re-licensing.   Generation costs for other existing and new resources also remain relatively high.

 

Finally, volatile natural gas prices have contributed to the cancellation or delay of several new combined-cycle combustion gas turbine plants planned for the region.

 

Recognizing the disastrous impacts additional energy price hikes would have on Washington’s economy, our congressional delegation, state lawmakers and Governor Gregoire all strongly opposed recent federal efforts to push BPA rates higher by requiring market rates or dedicating excess revenues to early debt reduction. Against this backdrop, it is vital that Washington public policy encourages development of a reliable supply of affordable energy and ensures that its laws and regulations enhance, rather than impede, the development of affordable energy supplies and necessary infrastructure.

 

GMTCC’s POSITION

 

Back to Top

HEALTH CARE

BACKGROUND   Health care costs continue to rise at paces far in excess of inflation, causing many employers to either reduce the benefits they provide to their employees, drop existing coverage, or refrain from purchasing new coverage.  The high costs of health care coverage have a direct impact on the number of uninsured in the state, and an expensive health care market makes Washington unattractive to new and existing businesses who want to provide good benefits for their employees. Exorbitant health care costs also erode the ability of the state to provide other vital services without raising taxes.

 

Private and public entities should continue efforts to address the major problems associated with rising health care costs.  Citizens should adopt healthier lifestyles.  And, they should be more aware of the costs and efficacy of their treatments.   Government policies should be revised to reduce unnecessary regulations, most particularly mandated benefits.  Insurers should be permitted to offer affordable basic health care plans, free of many of these mandates, along with those that may contain more options.   In addition, the availability of consumer driven health plans, such as Health Savings Accounts, should be expanded, allowing employees greater control of and accountability for their health care decisions.

 

GMTCC’s POSITION

GMTCC supports health care policy that:

Back to Top

LAND USE GMA

 

BACKGROUND   The goals and requirements of the Growth Management Act (GMA) form the basis of local land use planning and regulation in Washington State.  After 15 years of experience under the GMA, however, many critical questions remain as open now as they did upon the law’s landmark enactment.  Such questions involve:

 

 

Specifically, problems continue to exist with the application of Best Available Science in protecting critical areas, which have been highlighted with recent decisions of the Growth Management Hearings Boards.

 

As a result, Initiative Measure 933 was introduced that would have shaped future land use decision making in Washington state. I-933 is an example of the level of frustration with parts of our land use regulatory system. 

 

GMTCC will monitor the development and progress of legislation introduced during the 2007 legislative session and offer support and its own proposals when consistent with GMTCC principles and positions.

GMTCC’s POSITION

 

• Streamline the permit review process through means such as integrating processes at both the local government and state agency levels to provide coordination between the various agencies to provide speed, certainty, and predictability in project review and approval.
• Require local governments to allow sufficient land within urban growth areas to allocate a variety of needs and choices, including single family and multifamily housing, as well as sufficient buildable land for commercial and industrial use, while meeting density requirements.
• Establish a system of performance measures to gauge how jurisdictions are achieving housing and economic development goals and require accountability for the timely processing of permits.

• Protect against net loss of economically productive land by expanding urban growth boundaries through the addition of new land to replace land that has been restricted by the best available science (BAS) GMA or the SMA.
• Reduce permitting or planning requirements that limit economic development and employment opportunities.
• Ensure that Best Available Science does not override or undermine the other goals of the GMA.

Back to Top

LOCAL INFRASTRUCTURE

 

BACKGROUND   Rural and urban communities in Washington need private-sector investment to create economic opportunity. All across Washington, opportunities for development and redevelopment could invigorate stagnating economies by creating jobs, stimulating the redevelopment of blighted areas in the inner city, reducing the cost of housing and promoting more efficient land use.  But to generate these economic benefits, public-sector investment is necessary.  Publicly owned infrastructure is a critical part of many economic vitality projects.  Without it, private investment sometimes cannot move forward.  The state must provide basic infrastructure such as water and sewer systems, sidewalks and streetlights, street and road improvements, parking and other basic services.  

 

The local infrastructure financing tool supports communities to secure future tax revenues that will pay for these improvements.  Newly developed and redeveloped property will increase property tax revenues and thereby pay for the needed public improvements.  Similarly, the new businesses created with these partnerships will increase collections of excise taxes that will contribute to paying these costs.  Local governments will propose and sponsor these projects alone or in coalition with other local governments.  In order to participate, the sponsoring jurisdiction must: (1) adopt an ordinance that describes the proposed project and a financing plan for the proposed public improvements, (2) show that the project is likely to increase private investment and employment and generate state and local revenue in excess of the public’s expected contributions, and (3) provide a dollar-for-dollar match of state funds.  They may develop partnerships with other local governments to attain the match. 

The funding mechanism works as follows.

• A local government must pass an ordinance to establish the project and notify the Department of Revenue (Department) of the development area.  The Department will establish a baseline of sales and property revenue in that area for the purpose of calculating the revenue generated by the project.
• The local government will also pass a sales tax that will be a credit against the state sales tax.  Consumers will see no increase in sales tax.
• At the end of the year, the Department will calculate the additional revenue generated by the project and distribute it to the local government via the credit against the state sales tax.

 

GMTCC’s POSITION

 

 

MUNICIPAL B&O

 

BACKGROUND   Many of the state’s cities impose business and occupation (B&O) taxes and/or a public utility tax.  Over the years, each city enacted its own definitions and tax classifications through various ordinances.  This led to a complicated and confusing situation in which taxpayers are confronted with differing interpretations of the tax laws from the state to the local level and among the cities.  As a result, the legislature in 2003 required adoption of a model B&O ordinance by the state’s cities that impose a B&O tax (EHB 2030).

 

Forty cities impose B&O taxes on the gross receipts of activities conducted by businesses without any deduction for the costs of doing business.  A city with a B&O tax imposes the tax on a business if the city determines that there is nexus.  Currently, if nexus is established, some cities assert a B&O tax on the entire value of the transaction or particular activity involved without regard to the place where the transaction or business activity occurs.  GMTCC supports taxation of gross receipts only in the city where the transaction or business activity occurs.  Under the adopted model ordinance,
taxpayers may be treated as having nexus even where the taxpayers’ only activity is delivering into a city using its own trucks or acting on its behalf.  GMTCC supports a requirement of a significant physical presence in the jurisdiction as a prerequisite to taxation by that city.

 

The cities adoption of a model code as required by EHB 2030 allows for unacceptable deviations that eliminate B&O tax consistency among the cities.  Short of a true model code, the requirement that taxes be apportioned among jurisdictions and collected by the Department of Revenue (Department) is the best way to eliminate multiple taxation and ensure consistent B&O tax administration.  Therefore, GMTCC supports the immediate imposition of mandatory municipal B&O tax apportionment and collection to be administered by the Department. 

 

GMTCC’s POSITION

 

 

Back to Top

NATURAL GAS TAXATION

 

BACKGROUND   Historically, natural gas was a regulated industry and subject to the Public Utility Tax.  In the early 1980’s, the sale and resale of gas was deregulated on a federal level.  The result has been that gas is now bought and sold as a commodity.  Large consumers of gas have found it beneficial to buy natural gas from parties other than their local utility.

 

To compensate the state and localities for potential loss of tax revenues, in the 1980’s the Legislature passed a state natural gas use tax and authorized cities to impose similar taxes.  The system was designed so that consumers would pay a use tax equal to, but no more than, the public utility tax that was formerly paid on their purchase of gas.

 

The sale of natural gas has long been thought to be exempt from business and occupation tax.  Recently, the Department of Revenue has informed the business community that it believes current legislation requires it to collect business and occupation tax on sales of natural gas by parties other than public utilities.  If the Department is correct, the imposition of both the business and occupation and use tax on natural gas would result in more total tax being paid when a consumer chooses to purchase gas from someone other than their local utility than when the gas is purchased from the lcal utility.

 

The Greater Marysville Tulalip Chamber of Commerce (GMTCC) believes that taxes should not steer a consumer to purchase from either their local public utility or a gas marketer.

 

GMTCC’s POSITION

 

Back to Top

OIL & GAS ENERGY

 

BACKGROUND   A variety of factors impact the price of gasoline, diesel, natural gas, liquefied natural gas, propane, heating oil and jet fuel in Washington, but none more than market forces.  Oil and gas trade on an international market; they are commodities, the price of which is driven by the price of crude oil in the longer term and determined by the laws of supply, demand and competition in the shorter term. When supply falls short or demand increases, the market will reflect those changes. Recently, increased global demand spawned by tremendous growth in such countries as China and India, coupled with economic expansion and heightened use of petroleum products in North America, have led to an increase in international oil prices. In the Western states and in Washington in particular, there are additional market factors to consider. Washington has no oil production capacity of its own, limited pipeline capability, and refineries are operating at near maximum capacity. In addition, due to our unique geographic, economic and social factors, Washington generally exceeds the national average for oil and gas consumption per capita.

 

While it may be politically popular to blame producers, wholesalers and retail companies for rapidly rising costs or price gouging, this does not offer a solution.  Some policy makers have responded by instituting price caps and price controls. These approaches are misguided. Artificially holding down the price of petroleum products will constrain supply, which makes a bad situation worse. Given the high demand for petroleum products and a constricted supply, price controls heighten the risk of a return to long gas lines and/or “sold out” signs at service stations. 

 

Additionally, despite exponentially growing demand, there hasn’t been an oil refinery built in the region in over 35 years, although many west coast oil and gas reserves remain untapped. Most of the Western states do not benefit from pipeline or other access to oil and gas supplies from Texas or the Gulf States. It is, therefore, more difficult to import gasoline and fuel components during supply shortages.

 

Several alternatives exist for addressing the problems of increasing costs and protecting consumers. One alternative is to increase supply.  Washington needs more oil, natural gas and liquefied natural gas infrastructure such as refineries, marine terminals and pipelines to meet consumers growing demand for oil and gas products. Another alternative is to decrease demand by educating the consumer on the benefits of voluntary conservation. Additionally, government should remove state and local regulatory barriers, encourage companies to expand capacity, and provide incentives to companies to continue research and development of alternative and renewable fuels.

 

GMTCC’s POSITION

Back to Top

PRIORITIES OF GOVERNMENT (POG)

 

BACKGROUND   How can Washington state best spend taxpayer dollars to achieve the results that are most important to its citizens?  In August of 2002, Washington State initiated a "Priorities of Government" (POG) budget process that established results as the basis for budget decision-making.  Also known as the “price of government”, this government-wide assessment and evaluation of state services had several objectives. 

 

First, it established a clear set of results that citizens expect from state government.  Second, it reprioritized state spending to focus on the services that achieve those results.  Third, it provided lawmakers with a prioritization of government services to guide budget negotiations and to communicate that budget to the public.

 

The POG process is unique in that it departs from the traditional incremental budget approach that focuses on adjustments to existing spending levels. POG makes it easier to consider the way state services are delivered, and to make budget decisions that eliminate programs less essential to achieving critical results.  To be effective, the POG process must be used to develop the state budget so that government buys only the services it can afford.

 

The POG process starts by identifying the priorities of government.  Results teams first identify key indicators of success to determine how citizens would know if the state makes progress towards the high-level priorities.  Next, the teams identify proven or promising strategies for achieving results by using the agency activity inventory- a catalog of particular activities within state government.  The teams then receive a dollar allocation, the price of government, to provide a limit to their purchase of selected activities.  Finally, the teams develop a results-based prioritization of activities to accomplish the desired results based on available resources.

 

In contrast, Governor Gregoire has implemented GMAP (Government Management Accountability and Performance) process for reviewing agency programs and goals.  GMAP reviews are one element in a performance management system based and should be used in concert with the POG process. The Greater Marysville Tulalip Chamber of Commerce supports the POG process as a budget-development tool to ensure that the state’s spending is targeted towards appropriate objectives, is limited to available resources and can be measured against its results.

 

GMTCC’s POSITION

 

Back to Top

PROPERTY TAX REFORM

 

BACKGROUND In recent years, property taxes in Washington have increased dramatically. The causes are varied: isolated surges in some real estate markets, infrequent property reevaluations, voter-approved levies and expanding local government budgets.

 

In 1997, the Legislature approved property tax legislation that was ultimately placed on the November ballot as Referendum 47. Washington voters overwhelmingly approved the measure, which made sweeping changes to the property tax collection system. 

 

Referendum 47 limits increases in property tax collections to inflation.  To exceed inflation, a jurisdiction’s legislative body must, by supermajority vote, determine a “substantial need.”  No jurisdiction can exceed 6% growth in collections without a public vote.  Districts with populations less than 10,000 are exempted from these limits.

 

In 2001, voters passed Initiative 747 requiring state and local governments to limit property tax levy increases to 1% per year, unless an increase greater than this limit is approved by the voters at an election.  The initiative was challenged in King County Superior Court and the judge declared the initiative was unconstitutional.  Attorney General Rob McKenna, whose office defended the initiative, announced he would file a direct appeal with the Washington State Supreme Court.  Unless the Supreme Court grants a stay of the lower court’s ruling, I-747 may be replaced by Referendum 47 allowing for annual increases in regular property tax levies of up to six percent.  The ruling is retroactive under the courts ruling I-747 has been invalid since passed.  A decision to accept the direct appeal is now pending by the Supreme Court.

 

GMTCC’s POSITION

 

• Preserve and affirm the principle of assessing and valuing all property uniformly and equitably at 100 percent of its true and fair market value.
• Strengthen statutory limitations to prevent taxing districts from increasing their property tax collections beyond the rate of inflation without a vote of the people.
• Ensure that the property tax burden is not shifted from one class of taxpayer to another.
• Use surplus, non-emergency fund revenues to gradually reduce the state property tax levy.
• Provide full tax disclosure by requiring that property tax notices and levy ballot measures include comprehensive information for taxpayers.
• Require that real estate be revalued every year to more accurately reflect market value, equitably distribute the property tax burden, increase predictability for taxpayers and local governments and improve overall administrative efficiency.
• Expand deferral programs for all property taxpayers in danger of being taxed out of their property and homes that do not qualify for exemptions or deferrals under current law.
• Ease the unreasonably high “burden of proof” placed on taxpayers that challenge property valuations.
• Implement options, such as alternative dispute resolution, for taxpayers that appeal their property tax valuations.

Back to Top

REGULATORY REFORM

 

BACKGROUND Since the mid-1990’s, there has been significant changes to the rulemaking process in Washington state. Unfortunately, these changes have not been enough to reduce the regulatory burden facing employers.

 

In 1995 landmark regulatory reform legislation, HB 1010, was passed to:

 

Despite these reforms, Washington State continues to be a heavily regulated state, putting us at a competitive disadvantage. In the 2001 report from Governor Locke’s Competitiveness Council, regulatory reform was highlighted as why our state is non-competitive. Recommendations to increase legislative authority, appoint a secretary of regulatory reform, establish timely permit decision making, create a pilot program for permit streamlining, require DOE to formally promulgate its 401 certification rules, expand the Master business license program to cities, ensure the state’s energy policy maintains Washington’s competitive advantage in supplying low-cost reliable electricity to the region, and changing the venue in which agency rule challenges are brought are some of the recommendations the Council made.      

The legislature passed several of these recommendations in the 2003 session that were vetoed by Governor Locke. Other bills that were signed into law, such as the requirement for notice of new rules, did not fully implement the Competitiveness Council recommendations since it only applied to a limited number of agencies. 

 

The benefits of HB 1010 have not been fully realized by the business community. In addition many Administrative Procedures Act (APA) questions were raised in the WE CARE v. Department of Labor and Industries case before the state Supreme Court however these questions were not answered as a result of I-841 passing the ballot and the case being declared “moot”.  Ongoing efforts for meaningful regulatory reform through legislative and administrative changes are still needed.

 

GMTCC’s POSITION

 

 

Back to Top

RESEARCH & DEVELOPMENT TAX INCENTIVE BACKGROUND

   Legislation passed in 2004 (ESHB 2546) extended the sunset date of the R&D tax incentive laws to January 1, 2015.  Unfortunately, ESHB 2546 also reduced R&D tax incentives for many Washington employers in amounts up to and in some cases exceeding 70 percent.  In 2005, the legislature passed legislation (ESHB 2314) that over a period of four years returns the R&D B&O tax incentive rate to 1.5 percent.  This change was a good start.  However, the R&D tax incentives are still calculated on the amount of R&D expenditures after subtracting 0.92 percent from the calculation of the taxable amount.

 

These R&D tax incentives were created by the legislature in 1994 to increase R&D investments and to attract and preserve high-paying Washington jobs.  The 0.92 percent deduction significantly reduces the R&D tax incentive available to Washington employers.  Moreover, the 0.92 percent deduction made to the R&D tax incentives by the 2004 legislature disproportionately impacts smaller companies with lower R&D investments and manufacturing activities. 

 

Without the full incentives in place, many companies cannot or will not continue to invest in R&D activities in Washington State.  This is not the time to place more Washington jobs at risk.  GMTCC supports elimination of the 0.92 percent deduction from the taxable amount in order to return the R&D tax incentive laws to the form that worked successfully for 10 years prior to passage of ESHB 2546.

 

GMTCC’s POSITION

 

 

Back to Top

SPENDING LIMIT

 

BACKGROUND In 1993, Washington’s voters instituted state expenditure limits by enacting Initiative 601.  Initiative 601 put the brakes on state spending by tying growth in expenditures to the annual rate of inflation and population.  Amounts above the spending lid were to be socked away in a rainy-day fund.  Initiative 601 also mandated that any new taxes would first need a two-thirds vote of the legislature and then a vote of the people if the tax increase caused spending to exceed the limit.  In the years immediately following the passage of Initiative 601, the state had budgets that were more fiscally responsible and contained sound rainy-day funds.  More emphasis was placed on significant reforms and efficiencies in state government.  As a result, renewed attention was focused on policies that would grow the economy such as the Manufacturing Machinery and Equipment Sales and Use Tax Exemption.

 

Voters in 1993 asked the legislature to spend within the state’s means.  In 2000, the legislature modified Initiative 601 to reduce the Emergency Reserve Fund cap and to allow for certain transfers of funds.  As a result, the state’s 2001-2003 budget disregarded the state’s spending limit.  It devised ways to circumvent the state’s spending limits to the tune of nearly $280 million.  More dangerously, the 2001-2003 state budget spent nearly $600 million more than the state took in over that term.  Likewise, the 2003-2005 budget increased spending by 3.1% even when the state experienced an approximately $2.4 billion revenue shortfall. 

 

In 2005, the legislature made additional changes to Initiative 601 that effectively rendered the spending limit laws moot.  SSB 6078 suspended until June 30, 2007 the two-thirds legislature vote approval requirement for tax increases, redefined the state expenditure limit base for 2007 and revised the fiscal growth factor calculation to grow faster.  The inability to sustain increased spending levels may lead to the same result that drove Initiative 601’s adoption in 1993- significantly higher taxes on the business community.  GMTCC believes that it must act affirmatively to restore and strengthen the spirit and intent of our state’s spending limit. 

 

GMTCC’s POSITION

 

Back to Top

STAFFING INDUSTRY B&O

BACKGROUND   The temporary staffing industry employs over 40,000 people in Washington State and pays an annual payroll of over $1 billion.  The industry has created over one million new jobs in Washington State in the past 7 years.

Prior to December of 2002, most companies in the industry paid business and occupation (B&O) tax at the rate of 1.5 percent on the gross income derived from fees paid by clients for personnel services net of wages, payroll taxes and benefits paid to contracted workers.  That method of taxation was supported through audit by the state Department of Revenue (Department).

 

In December of 2002 the state Supreme Court issued a decision that disallowed the deductions for pass-through wages previously authorized by the state.  As a result, the B&O tax must now be paid on revenues that include the amounts for wages and payroll taxes.  The staffing industry, faced with a B&O tax increase that, for some companies, exceeds 500 percent, drafted legislation in each of the past three years that would have created a definition of “staffing company” and assessed a lower tax rate on gross revenue that is comparable to the taxes paid prior to the court decision.  Efforts to pass the proposed legislation failed. 

 

In addition, the Department has issued a new directive requiring the collection of sales tax by staffing companies when a worker performs a task that is considered a retail service.  There remains tremendous confusion in the differences in statutes, policies and industry practices in the collection and remission of sales tax.  In one instance, the Department has said that the industry will pay B&O tax at the services rate of 1.5%.  In another instance, it has said that if the event preformed by the employee is retail by definition the company can pay at the retail B&O rate and must collect sales tax.

 

The current situation has created confusion and has resulted in misapplication of the law and large penalties for the industry.  While the staffing industry has agreed that in those instances where the customer is actually performing retailing activities it should collect the retail sales tax, or a resale certificate as appropriate.  The current policy of the DOR continues to create confusion, costs, and must be clarified.

 

GMTCC’s POSITION

 

Back to Top

STATE DEATH TAX

 

BACKGROUND   In early 2005, our state Supreme Court tossed out the state estate tax in Hemphill et all v. Department of Revenue and Congress is in the process of phasing out the federal version as well by 2010. Despite that, the governor and legislators have created a new stand-alone death tax in the 2005 legislative session. 

 

No matter how you look at it, to tax death is wrong. A death in the family is traumatic enough and causes disruptions down on the farm, at the factory, or in the family store because often the founder and leader is gone. Whole communities can be devastated when small business sell to larger business or when small business close shop to avoid the death tax. Family members often have to come to grips with who will carry on the operation, but it is very difficult with the tax collector standing in the shadows with a crippling tax bill.   By the time the owner of a family business dies, he or she has already paid federal, state and local taxes on their income several times – B&O taxes, excise taxes, license fees, social security taxes, federal income taxes, sales taxes, and state and local property taxes, etc. Most of what’s left goes to pay wages and benefits to employees, who, in turn, pay some of the taxes all over again. When small businesses prepare for the death tax often the result is under-investing in the company, hurting future economic growth and the ability to create jobs and the resulting taxes that are paid.    

The stand-alone state death tax raises about $127 million for the 2007-2009 state budget. Even though the legislation, ESB 6096 from the 2005 session, purports to exempt family-owned farms and would not include estates of less than $2 million, some experts looking at the law say it may not. It still forces children to literally “sell the farm” or go deeply in debt to pay the state when mom or dad dies.  Often the family assets are tied up in machinery, equipment, buildings, inventory and property. In today’s world, it doesn’t take too much to hit the $2 million threshold when many average family homes in Seattle go for more than $500,000 or a combine on the Palouse goes for a couple hundred thousand.  More often than not, it isn’t as though a family member can go to the bank and withdraw a large sum or sell stock or bonds to pay the tax.  Instead they are forced to sell equipment, property, or worse – close shop!

 

The death tax needs a permanent burial. While it is tempting to use death taxes to balance the budget, our state would get much more tax revenue in the long run if it helped preserve the small businesses that produce the jobs and wages that support the entire economy. Family businesses are the backbone of America, and we shouldn’t tax them to death – and beyond.

 

GMTCC’s POSITION

 

 

Back to Top

STATE TAX APPEALS REFORM

 

BACKGROUND   Washington state businesses have become increasingly concerned and frustrated with the existing avenues available for appeals of tax decisions made by the Department of Revenue (Department).  Taxpayers that desire to contest the Department’s determination of a refund claim or tax liability face obstacles that undermine the public’s perception of the fairness of tax decisions.

 

First, a taxpayer must present its challenge to an administrative law judge employed by the same taxing authority that issued the assessment or denied the refund in the first instance.  Regardless of the administrative law judge’s fairness, the judge’s status as an employee and agent of the tax collector creates an unavoidable perception of bias.

 

Second, as a precondition to challenging the state’s determination of a tax liability before an independent decision-maker, a taxpayer must pay 100% of an asserted liability for tax, interest and penalty or post a bond, which can be an expensive and onerous requirement.  The imposition of these substantial costs upon the taxpayer’s right to contest state determinations before an independent decision-maker places a significant burden on taxpayers and can discourage legitimate challenges to state tax determinations.  Furthermore, it has a chilling effect upon a taxpayer’s right to judicial review, especially upon small and mid-sized businesses that often find it impossible to
produce the substantial funds necessary to pay the tax to get to court.

 

The Greater Marysville Tulalip Chamber of Commerce (GMTCC) believes that taxpayers deserve to have tax disputes heard by an independent and qualified body in a fair and inexpensive process, without being required to pre-pay the tax or post a bond.  GMTCC proposes that the Model State Administrative Tax Court Act be reviewed and considered as a possible framework for state tax dispute resolution change.

 

GMTCC’s POSITION