*Companion to HB 2117*
This act intends to modernize and rebalance the state tax structure in order to ensure that it is equitable, adequate, stable, and transparent for the people of Washington state.
The legislature recognizes that the business and occupation tax has penalized new, small, and low-margin businesses with capital costs. Furthermore, excise taxes have resulted in a state tax code that is overly regressive. There are 700 tax preferences which are targeted to benefit a very small number of taxpayers, therefore leaving them to assume a disproportionate share of the responsibility to fund critical local and state investments.
The legislature also recognizes the work of the WA state House Tax Structure Work Group in 2017, which recommended finding solutions to address:
- the regressive nature of the tax code;
- the negative impact of the business and occupation tax;
- the need to modernize the tax structure; and
- the excessive number of tax preferences and exemptions.
Therefore, the legislature will:
- directly engage in robust conversations with taxpayers, stakeholders, and experts about reaching the intent of this act;
- expand upon the successes of the 2017 work group;
- reevaluate the state tax structure by taking into account the modernizing economy;
- develop alternatives to our current tax structure; and
- recommend policies that consider the principles named in (d) of this subsection by reducing the tax burden on low-income & middle-class households, as well as small, new, and low-margin businesses.
Section 2 of this adds a new section to RCW 82.32, which reauthorizes and expands the Tax Structure Work Group to include 9 specific voting members. The duties of the work group are:
- update the information collected in the final report of the findings and alternatives submitted by the committee to the legislature; and
- make recommendations to the legislature for changes to the state tax structure. Additionally, any recommendation made may not result in a loss of revenue to the state.
All recommendations made under this subsection must be guided by the following principles: equity, adequacy, stability, and transparency.
This act also includes a detailed timeline for implementation, as follows:
July 1st, 2020: the Work Group and Technical Advisory Group must prepare a report summarizing their findings and alternatives, which includes:
- updates to the findings and alternatives in the final reports submitted in 2017; and
- economic modeling or other comparable analysis addressing key challenges of the WA state tax code.
Between July 1st, 2020 – December 31st, 2020: The work group must:
- hold at least 2 meetings in Olympia to review the preliminary report described in subsection (a), and must include stakeholder groups;
- present the report to the appropriate committees of the legislature; and
- begin to plan strategies to engage taxpayers and stakeholder groups to encourage participation in public meetings.
During 2021 legislative session: the work group must:
- deliver a presentation to the appropriate committees of the legislature; and
- finalize the logistics of the engagement strategies.
Between the end of 2021 legislative session and December 31st, 2021: the work group must:
- hold at least 5 public meetings in geographically dispersed area;
- present the report and findings described in subsection (a);
- provide an opportunity for discussion to engage in conversations about the state tax structure;
- utilize methods to collect taxpayer feedback;
- encourage legislators to inform constituents about public meetings;
- inform local elected officials about the meetings; and
- summarize the feedback that taxpayers and other stakeholders provided and submit a final summary report.
The act then continues to detail timelines up to the 2024 legislative session, in which a final report shall be submitted by December 31st, 2024 which compiles all other reports.
Subsection (10) specifies that staff support for the Work Group must be provided by the Department of Revenue.