Deputy House Republican Leader: Democrats’ $800 million ‘tax deal’ a bad deal for taxpayers, job seekers

With the state's unemployment figures hovering around 10 percent, which does not include those who have given up looking for work, majority Democrats in the House voted to slap a nearly $800 million tax hike on employers and families to patch a $2.7 billion spending gap. Rep. Joel Kretz, R-Wauconda, issued the following statement on the House passage of Senate Bill 6143, the third iteration of the tax package legislation, on April 10:

“When you boil down the tax package, it's a serious blow to job creators and those looking for work. After nearly a half-billion dollar increase in payroll taxes on employers this year, hitting them up again for millions more in taxes is simply irresponsible. How are our small businesses supposed to hire and retain employees when they know the financial hit coming at them, and that there is no end in sight for the government's tax appetite? This could be the final blow to our battered employers and those looking for work.

“I am also concerned the majority party is relying on taxes on canned meats and other food staples that many of our families purchase to make meals stretch a little farther at a minimal cost. These taxes will hurt those struggling the most. One example of the elitist taxation of the working class is that Seattle microbrew drinkers won't be taxed under this package, but the blue-collar worker who buys the less expensive American beers, like Coors, will be taxed. How is that fair?

“Folks in my district are facing double-digit unemployment so making anything more expensive or making it more difficult to find a job is irresponsible. Not to mention, the majority is relying on unpredictable revenue from cigarettes, bottled water and candy. This is not the kind of budgeting practice that leads to sustainable funding for necessary programs.

“We cannot tax ourselves to prosperity. I do not believe new and higher taxes are the solution to our budget issues. House Republicans offered ideas to reform government and find efficiencies, but the direction toward taxes was made clear after Democrats repealed the Taxpayer Protection Act in February. We need to put people back to work and give employers certainty in our tax and regulatory structure – these are the steps that will lead to a healthy economic recovery. These new and increased taxes will only serve to erode the slight recovery parts of our state were beginning to experience.”

Tax package facts:

New and increased taxes approved by House Democrats amount to $794 million in just the first year alone – the largest one-year tax increase in state history. They include:

  • A  0.30% increase in the B&O tax on all services except hospitals and scientific R&D = $242 million;
  • DOT foods = $155 million;
  • Cigarette($1 per pack)  and other tobacco products =  $101 million;
  • B&O tax on economic income (Nexus) = $84.7 million;
  • 50-cent per gallon (28-cents per six pack) beer tax = $59 million;
  • Sales tax on bottled water = $32.6 million;
  • Sales tax on candy/gum = $30.5 million;
  • 2-cent per 12-ounce soda tax = $33.5 million;
  • Taxes on business structure transactions = $8.5 million;
  • B&O tax increase on property management salaries = $6.9 million;
  • B&O increase on certain canned meat products = $4.1 million;
  • B&O tax increase on mortgages = $3.6 million;
  • B&O tax increase on corporate officer salaries = $2.1 million;
  • Tax increase on bad debts = $1.7 million;
  • Tax increase on livestock nutrient management = $1.3 million;
  • Tax increase on PUD electric bills = $1.2 million; and
  • Personal liability for tax debts = $1.1 million.

The 2010 regular legislative session ended March 11. Gov. Christine Gregoire called the Legislature into a special legislative session so majority Democrats could finalize their operating budget and tax increase proposals. The 30-day special legislative session is scheduled to end on Tuesday, April 13.

Senate Bill 6143 will now be forwarded to the Senate for consideration, possibly as soon as tomorrow.

For more information, contact Bobbi Cussins, Public Information Officer: (360) 786-7252

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Washington State House Republican Communications
houserepublicans.wa.gov