The Tax Structure Work Group extended in the last legislative session met yesterday to consider its work plan. (TVW coverage here.) When the work group was given another year to study the state’s tax system, we wrote,
Interest in changing the tax structure remains a legislative perennial. It’s worth noting, however, that research finds that Washington’s tax structure is unusual,but it yields revenues that are similar to other states by multiple metrics. And, there’s strong evidence that Washington state’s tax system has contributed to the state’s run of economic growth.
Research and analysis are important, surely. We’d simply advise caution when contemplating changes to a system that has demonstrated that it works well, for most people and businesses, most of the time.
We’re still cautious. But perhaps the notion of another year’s review will have the salutary benefit of avoiding major tax policy changes in the short 2020 session.
Reporting on yesterday’s meeting for The Lens, TJ Martinell writes,
Work group member and Pierce County Councilmember Derek Young suggested at the Dec. 4 meeting to host public meetings during the 2020 legislative session.
“(It’s) best to engage as many people as possible,” he said. “If you’re looking for early outreach to members of the public, that would be the ideal way.”
Also, DOR plans to explore the possibility of replacing the B&O tax with a corporate income tax or margins tax. The agency’s study will also include modeling a la “Back to the Future,” projecting what the state’s revenue would have looked like in the 2017-19 biennium had alternative revenue sources been adopted from a 2002 Washington State Tax Structure Study Committee starting in 2003, and what rates would be required to match actual revenue for the biennium…
Among the 2002 work group’s alternatives to be included in DOR’s modeling is a graduated personal income tax, and a capital gains tax.
There’s clearly a lot to be ironed out, as the revenue department acknowledges.
DOR Research and Fiscal Analysis Assistant Director Kathy Oline said that while they’ve started preliminary modeling on the alternative taxes, “we have not yet begun a lot of that work. We will be working with a big, long list of technical advisors who hopefully will help us take into consideration all of those factors.”
We agree, the tax structure is complicated. The work group is expected to make its report by Dec. 1, 2020, i.e., after the general election and before the legislative session.