State budget pain is spreading – but not to Microsoft

October 4, 2011 | Alex Stone

Photo: Microsoft

Maybe you caught Danny Westneat’s column in the Seattle Times titled “Microsoft doesn’t need our tax break“. It was in response to Washington’s downwardly-adjusted revenue forecast, which lops an additional $1.3 billion off our already beleaguered state budget.

In case you didn’t, Westneat’s column offered a solution to the shortfall: “Prioritize.” He writes:

When you go through the state budget with that question in mind — who really needs it? — you find most of the money already goes to people who plainly do. School children, for instance. The poor. The disabled. Prisoners (in the sense that we all need to keep them locked up). But there are glaring exceptions to this “needs” test. Take, for example, Microsoft.

Over the past decade, Microsoft’s tax exemptions have eaten millions out of the state budget even as company profits have soared. Now, as Westneat reports, Microsoft is claiming a “high technology” exemption of $105 million for 2010 – more than the entire “incentive” program cost in 2009.

But Microsoft isn’t the only one – Washington’s 500+ tax giveaways have grown into a veritable Cerberus, consuming more public dollars every year. Tax exemptions for Wall Street banks, cosmetic plastic surgery, hog fuel, country clubs, chicken bedding, non-organic fertilizer, private jet owners and more are draining funds from public infrastructure and services.

The effects are being felt across the state (except, perhaps, at Microsoft headquarters).  Public schools are struggling to meet the needs of students, onerous tuition increases at state colleges and universities discourage enrollment, low-income workers are losing health insurance, mental health facilities are “in serious trouble” – and that’s just the beginning.

Back to Westneat:

Microsoft is hardly a fledgling company that needs a hand up. It announced last week it has stockpiled $52.8 billion in cash and short-term investments…

Second, the state has never found any evidence these high-tech tax breaks produce many jobs, at least not jobs that wouldn’t have been created anyway. One study by the Department of Revenue found it took $588,000 worth of tax credits for each local job created.

Tax exemptions, incentives and loopholes are siphoning public funds away from critical investments at an alarming and unjustifiable rate. Yet Microsoft, JP Morgan Chase, and private jet owners haven’t suffered. Their checks – which come at the expense of public education and infrastructure – are arriving in full and on time while public schools struggle to buy books and fund full day kindergarten.

It’s time Washington’s governor and legislature spread the pain beyond the poor, and ask everyone to pay their fair share.

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Posted in State Economy, Tax and Budget

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