Don’t give away the (server) farm

February 16, 2008 | Aaron Keating

The Seattle Post-Intelligencer’s common sense POV on Washington’s tax structure notes that:

Microsoft, Yahoo or any technology enterprise could build server farms anywhere (including Oregon, where there is no sales tax). That’s a fair point, but one that argues for a comprehensive review of Washington’s tax policy rather than databit by databit exemptions.

Washington State’s has an outmoded tax system based on the early 20th century economy – one that relies upon the sales tax, the business tax and the property tax.

The sales tax disproportionately hits middle class and low-income families, while allowing wealthy people to contribute a much smaller percentage of their income to taxes. This is compounded by the exclusion of some services which cater to higher income people, like lawyers and accountants, from the sales tax.

The property tax is more related to ability to pay, but that equity is time-delayed between annual taxation and the ultimate sale of real property.

The business tax is on gross income, regardless of whether the business makes a profit or not, making it especially hard on new and expanding companies.

In contrast to most states, we excuse all income from an income tax. Over the years special interests have also lobbied for exemptions that now total in the billions of dollars.

So we are left with a tax system that can’t keep up with the demand for public services and looks a little like Swiss cheese with the multitude of tax expenditures for the few. This leaves those who don’t benefit from a special interest tax break assuming an even larger responsibility for public revenue.

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Posted in Tax and Budget

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