Advisory Votes, all 12 of them

Here we go again with the Advisory Votes. These are a time and money wasting exercise imposed by our friend Tim Eyman. The hostile language is dictated by that initiative. When it talks about “costing” what it means is that is how much revenue the state expects to take in.

What makes this really obnoxious is that the Advisory Vote has absolutely no impact. It is an exercise in futility.

With that in mind, lets go to the full dozen  ‘Advisory Votes.’

And for those of you who don’t want to go through the whole mess, the quick cheat is just to vote MAINTAIN on all but #21, which should be REPEALED. 

Advisory Vote No. 20

Second Substitute House Bill 1087 

Measure Text

The legislature imposed, without a vote of the people, an additional wage premium for long-term care services, costing an indeterminate amount in its first ten years, for government spending. This tax increase should be: 

• Repealed •Maintained 

Some of you may have noticed that there is an additional minuscule deduction from your paycheck. Employers are paying an additional 0.4% in withholding to fund longterm health care. It’s a great need and I wonder if that 0.4% is going to be enough. At least it’s a start.

I will be voting to MAINTAIN 

Advisory Vote No. 21

Engrossed Third Substitute House Bill 1324 

Measure Text

The legislature extended, without a vote of the people, the business and occupation tax for extracting, manufacturing, and selling timber and timber-related products, costing $21,000,000 in its first ten years, for government spending. 

This tax increase should be: 

             • Repealed             • Maintained 

The B&O tax has existed for years. This particular subset of it, dealing with timber products, was scheduled to sunset in 2024. The legislature removed that sunset date. The Eymanistas went nuts. I will be voting to MAINTAIN.
CORRECTION. I misread this. It is the reduction in tax rate that has been extended. I will be voting to REPEAL. Many thanks to the reader who caught this and brought it to my attention. 

Advisory Vote No. 22

Substitute House Bill 1652 

Measure Text

The legislature increased, without a vote of the people, retail sales tax on architectural paint by adding an assessment to the purchase price, costing $6,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed     • Maintained 

Yep, the legislature authorized a special assessment on house paint – in order to fund a program to manage waste paint. The producers are completely responsible for adding the assessment, and for managing the funds, which must be used for the waste paint management program. I did not find any specific dollar amount in the bill.

I like the idea of having a program to deal with leftover paint.  I will be voting to MAINTAIN

Advisory Vote No. 23

Engrossed Second Substitute House Bill 1873 

Measure Text

The legislature imposed, without a vote of the people, a tax on the sale, use, consumption, handling, possession, and distribution of vapor products costing $178,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed      •   Maintained 

This measure recognizes the fact that vape products are new and were not classified as tobacco and therefore were not taxed as tobacco is. It was the closing of a loophole created by a technological advance. It is a bit tangential to this issue, but very interesting that people are dying from contaminated vape products. And it turns out vape products are more addictive than straight tobacco. One has the distinct impression that there is going to be a need for funds to treat the many people becoming sick and/or addicted to vape products. 

I’m anti-tobacco to start with. I’m all the more against vaping. You bet I’ll be voting to MAINTAIN 

Advisory Vote No. 24

Engrossed Second Substitute House Bill 2158 

Measure Text

The legislature imposed, without a vote of the people, an additional service and other business and occupation tax for certain specified business activities, costing $2,253,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed      •     Maintained 

We’ve all been hearing and debating about how to reduce the cost of higher education. At the same time we have been discussing the unfairness of taxes in Washington. These two threads come together in this bill. The legislature passed a bill to increase B&O taxes to fund a program to provide “workforce education”. There’s a whole menu of grant programs for which people are eligible. The final bill report states that over 22,600 people were eligible for various grants but there was no money to actually give them. This B&O tax increase is intended to provide the funds to make higher education accessible.

I will be voting to MAINTAIN 

Advisory Vote No. 25

Substitute House Bill 2167 

Measure Text

The legislature imposed, without a vote of the people, an additional business and occupation tax for certain specified financial institutions, costing $1,036,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed       •     Maintained 

This one is fun. This is the legislature going after the big banks ( or “specified financial institutions, as the bill calls them), insisting that they pay at least a little bit back. It doesn’t go into effect until 1-1-20, and applies only to those whose annual net income is at least $1 billion. They’re being asked to pay 1.2% in B&O, which will generate a substantial addition to the state’s general fund.

Yep, I’ll be voting to MAINTAIN 

Advisory Vote No. 26

Substitute Senate Bill 5581

Measure Text

The legislature expanded, without a vote of the people, application of the state tax code to certain remote sellers, marketplace facilitators, and others, costing $1,051,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed      •     Maintained 

You may have noticed that you are now having to pay sales tax on on-line purchases. What a drag. The simple reality is that Washington has a terribly regressive state tax system. That means the state is often caught short on necessary expenses – like paying for schools and teachers. 

You may remember the McLeary decision, the one which directed the state to provide adequate funds for schools. The price tag was about $1 billion. The state failed for years to come up with that money, and the result was a $100k/day fine – which ended up costing the state $3,650,000/year. Add to that the fact that as on-line commerce grew and storefront retail shrank, the state was losing more and more in sales tax. So, over the screaming objections of Amazon and eBay, and following a successful Supreme Court case in South Dakota, Washington imposed a sales tax on on-line sales – which then provided the funds to meet the McLeary requirements to upgrade our schools.

Now, in an “advisory vote”, we are being asked if that was the right thing to do. Until and unless Washington adopts a state income tax (don’t hold your breath), it has to find the funds where it can. I’m not loving it, but our schools, especially our teachers, deserve our support, and it has to come from somewhere.

So I will be voting to MAINTAIN 

Advisory Vote No. 27

Engrossed Substitute Senate Bill 5993 

Measure Text

The legislature increased, without a vote of the people, taxes on petroleum products, costing $2,760,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed       •     Maintained 

Time for a deep dive into the Model Toxics Control Act. That’s a law we all passed in the 1980s to assess the fossil fuel industry in order to have a fund in place when the inevitable happened and the responsible party – just as inevitably – declared bankruptcy or otherwise avoided responsibility for the cost of cleanup. MTCA has served us well all these many years. 

Back then, the assessment was based on the value of the product. Given that value fluctuates, it was found not to be a good basis. SB 5993 changed the basis for assessment from value to volume. It’s a lot easier to measure a barrel than the value of that barrel’s contents. The change applies only to petroleum products.

Until we do away with fossil fuels, we need to have a means to clean up the mess created by accessing, transporting, processing, and burning fossil fuels. MTCA is there to make sure we have that means.

I will be voting to MAINTAIN   

Advisory Vote No. 28

Engrossed Substitute Senate Bill 5997 

Measure Text

The legislature increased, without a vote of the people, sales and use taxes on certain nonresidents by limiting the exemption applicable to them, costing $313,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed      •   Maintained 

For reasons not entirely clear to me, people come from other states and BC to buy big ticket items in Washington. They used to be able to claim an out-of-state exemption from sales tax. This bill closed that loophole, at least part of the way. Out-of-state shoppers now have to pay sales tax, but once a year they can file a claim with Washington to refund the tax paid, if it was more than $25.00. This applies mostly to motor vehicles and computer tech.

I’m fine with people from outside Washington paying the same tax as we residents. I will be voting to MAINTAIN  

Advisory Vote No. 29

Engrossed Substitute Senate Bill 5998 

Measure Text

The legislature increased, without a vote of the people, the real estate excise tax on certain sales of real property, costing $1,747,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed       •     Maintained 

Wow, I didn’t even know this had happened. I like it. 

When selling property, there is a Real Estate Excise Tax, which used to be a flat 1.28% of the sale price, paid by the seller, but of course calculated into the price so ultimately paid by the buyer.

This bill introduces a graduated Real Estate Excise Tax. Here’s the breakdown:

Up to $500k 1.1%

Amount between $500k and $1.5 million 1.28%

Amount between $1.5 million and $3 million 2.75%

Amount over $3 million 3%

So this actually reduces the REET rate for lower priced, ‘affordable’ homes, keeps the mid-range rate the same, and increases the top end rate. 

Frankly, I don’t see how this change is going to generate $1.7 billion in 10 years. The funds go to the Education Legacy Trust Account, created in 2005, so this is likely one small part of how to fund the McLeary mandate. 

I will be voting to MAINTAIN  

Advisory Vote No. 30

Engrossed Substitute Senate Bill 6004 

Measure Text

The legislature increased, without a vote of the people, the business and occupation tax on certain travel agents and tour operators, costing $28,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed       •     Maintained 

Yet another loophole being closed. This one applies to travel agents and tour operators. Seems these folks, for reasons not at all clear to me, were enjoying an exceedingly low B&O tax rate of 0.275% while everyone else was paying 1.5%. this bill raises the B&O on those travel agents and tour operators to 0.9%. They’re still below others, but getting closer. Oh, and it only applies to those who gross more than $250k/year, so does not affect the small operators.

As long as the state’s primary tax is B&O, I think its fair that everyone pay. I will be voting to MAINTAIN 

Advisory Vote No. 31

Engrossed Senate Bill 6016 

Measure Text

The legislature increased, without a vote of the people, the business and occupation tax on certain international investment management services, costing $367,000,000 in its first ten years, for government spending. 

This tax increase should be: 

• Repealed      •   Maintained 

It figures that the last item on the list is the most tangled and confusing, dealing with international financial markets. If I have this straight, and I’m not at all sure about that, “International Investment Management Services” receive a preferential B&O tax rate of 0.275% instead of the 1.5% that most of the rest of us pay. There are a whole lot of criteria about who qualifies as IIMS, but anyone with ‘average assets of more than $200 billion’, with offices in at least 8 countries and more than 500 employees gets that preferential rate. It looks as though the state is requiring these IIMSs to demonstrate that they still meet the criteria or pay back the difference between the 0.275% and the 1.5% for the years they didn’t qualify. 

On the other hand, the retail sales and use tax exemption is extended to 2031. 

I have very little sympathy for multi-billion dollar international corporations, and question why they should be receiving these tax breaks at all. I will be voting to MAINTAIN 

Whew, finally done with that exercise in futility. But now you know slightly more about Washington’s tax structure.