Legislators Still Split on Tax Hikes; Should Focus on Reining in Spending

The Seattle Times has another story today on the apparent stalemate in Olympia on tax increases. Andrew Garber writes,

...it increasingly appears the Legislature is high centered when it comes to increasing taxes.

...House Democrats have repeatedly delayed announcing the taxes they support increasing, saying they haven't yet reached a consensus. Their caucus has considered several options and was counting votes Friday to see which ones had the most support.

There's still a divide in the House between lawmakers who support a sales-tax increase and those who prefer closing tax exemptions as a way to raise money.

That's a choice Washington Roundtable president Steve Mullin described this way in yesterday's Times:

"Our view is, it's sort of like asking: 'Do you want death by lethal injection or death by hanging,' " Roundtable President Steve Mullin, said of sales taxes versus exemptions. "We'd prefer to stay alive."

In Washington State Wire, Erik Smith touches on a theme also found in Garber's story, suggesting business groups lean toward a sales tax.

The trouble is that the House and Senate proposals hit individual businesses in dozens of ways, some of which are not fully understood at this point, [Association of Washington Business lobbyists Amber] Carter said. And lawmakers might want to rethink the whole thing.

AWB isn’t endorsing a tax increase, mind you, she said, but there is some talk in Democratic circles of a one-cent sales tax increase that could raise $1 billion a year and avoid most of the troubles. “Lawmakers seem bent on raising taxes,” she said. “We’re not in favor of that. We feel the state should live within its means. But if taxes are raised, we feel that they should be broader-based and should not just place the burden on a few industries.”

The key message is clear: rein in spending. Business is not endorsing tax increases, or choosing between lethal injection or the noose. Lobbyists for specific industries will work to make sure their clients are not adversely affected by the tax changes being considered now. And, Smith writes here, one group - auto dealers - appear to have saved the sales tax credit for trade-ins.

It's premature to talk about tax hikes without having pushed hard to reopen public employee union contracts, considering reasonable privatization options, or  having done what's necessary to win federal Race to the Top funding. And, premature or not, tax hikes of the magnitude being discussed will increase unemployment and delay recovery.