Tax relief, not new taxes, will help state recover from the pandemic

Feb 18, 2021
Written by Renée Sunde, President & CEO

Perhaps the pivotal debate during the 2021 Legislative Session is whether to raise revenue with new taxes or provide tax relief to stimulate the economy.

There are proposals to impose a capital gains tax and a wealth tax posed against a proposal to reduce property taxes.

This debate was highlighted during a recent TVW interview with two members of the House Finance Committee, Representative Noel Frame, who chairs that committee, and Representative Ed Orcutt, the ranking Republican on the committee. Further, a new Washington Research Council policy brief makes clear that the budget crisis the state faced last summer has been thwarted by surprisingly strong consumer spending supported in part by federal stimulus checks to state government and taxpayers.

Washington Retail firmly believes that adding new taxes, at a time when many retailers are trying to get back on their feet will pose new uncertainties and discourage economic recovery when recovery and tax relief is what’s needed most.

Representatives Frame and Orcutt both serve on a tax reform study committee whose work is not scheduled to end until next year. If for no other reason, this year is hardly the time to propose new taxes when the question of tax reform is not yet fully understood and vetted.

That aside, businesses and families have struggled mightily during the COVID-19 pandemic. Hundreds of businesses have closed, many because of forced closures, while family finances have been stretched to the breaking point as unemployment skyrocketed last year.

Representative Orcutt noted that state government spending is out of control, having increased 84% during Governor Inslee’s three terms in office.

Just as most businesses and families could never sustain such spending, how can state government? What businesses and families need are tax breaks, such as HB 1358 offers. He also suggested that the levels of sales taxes should be studied to provide relief for middle and low-income wage earners.

We’ve most recently seen the ills of state overspending during the last great recession more than a decade ago. The state had to respond by slashing spending across the board including the wiping out of many needed social services and funds to promote tourism to the state. Further, the current proposed taxes are far less reliable as income sources than the current base of state taxes composed of property, sales and business taxes. There are fears new investors interested in Washington would be discouraged from moving their interests here if the current tax proposals were adopted. Capital gains income would be difficult, at best, to predict as a reliable revenue stream. And, there are still serious questions as to whether it would even be legal.

Our membership is firm in urging tax relief, not new financial burdens, as the smartest way to overcome the pandemic, create jobs and recover the economy.