Today’s suggested exemptions to ax and sins to tax:
Washington relies heavily on sales tax revenue. Services, which are largely untaxed, make up a growing percentage of the state economy in comparison to goods. The net effect is that the percentage of transactions covered by sales tax has been shrinking. Expanding the sales tax base to reflect our modern economy will both improve long-term budget stability, and provide a more level economic playing field for all business sectors.
$45.6 million | End the sales tax exemption for securities brokers. Note that as structured, this sales tax on security brokers will have minimal impact on those who invest for the long haul; it will most impact those who trade frequently in speculative transactions.
$28 million | Apply sales tax to candy and gum. Allowed – and clearly defined – under the Streamlined Sales Tax Agreement in use by many states across the country.
$15.9 million | Apply sales tax to bakery products sold on-site.
$6.6 million | Apply sales tax to elective cosmetic surgery.
Total value of this Ax It or Tax It package: $89.5 million.
Total value of all Ax It or Tax It packages to date: $805 million.
Economically speaking, Washington has been hit by a “perfect storm”: Plummeting tax receipts brought on by the national recession are now slamming our state’s rickety and outdated tax system. Last year, lawmakers cut $3.4 billion from the state budget. This year, we face a projected $2.6 billion shortfall.
“Ax It or Tax It” offers budget solutions that will both balance the state budget this year and provide long-term budget stability in the years ahead. By closing tax exemptions that no longer serve a compelling public purpose and carefully choosing new sources of revenue, lawmakers can stabilize funding for quality schools, affordable health care, a safety net for the most vulnerable, affordable housing, public safety, and a clean environment.
You can read previous editions of “Ax It or Tax It” here.