Tax Breaks Versus Budget Cuts as Special Session Approaches
SEATTLE - Just as most Washington families are finishing off the Thanksgiving leftovers, state lawmakers will be headed into a special session to trim as much as $2 billion from the state budget.
The special session starts a week from today.
Most of the budget gap, says Marilyn Watkins, policy director at the Economic Opportunity Institute, could be paid for by repealing tax breaks such as the one the state provides to banks for profits they make on home mortgages.
"There's absolutely no evidence that, that tax break has done any good for consumers in Washington or homeowners in Washington state. The only benefit is to banks who have gotten their big bailout and are doing quite well now."
Gov. Chris Gregoire has expressed concerns that ending tax breaks could cost the state jobs. However, Watkins says there is no evidence the breaks produce jobs, adding that $167 million in new revenue could come from the banking sector alone each year. By ending similar tax breaks and applying modest tax increases to oil refineries, high-tech and agribusiness, she estimates that $1 billion a year in progressive revenue could be generated.
While some lawmakers say the economy is still too fragile to be talking about taxes, Watkins says it's a matter of priorities. Tax breaks for business, she says, should not come before education for the state's youngest students and home care for the elderly.
"By cutting so much, we're not only hurting people's opportunity and life chances and even their ability to live at all in some cases, but it's hurting our economies too."
Watkins blames that last round of budget cuts for slowing the pace of the recovery, which she says cost the state as many as 45,000 jobs. More job losses are in store, she says, if lawmakers focus solely on budget cuts during the special session.
"If we cut another $2 billion, that's about 15,000 jobs that we are going to lose in the private and public sector across the state."
A related Economic Opportunity Institute report is online at eoionline.org.