The public has a right to know the cost of tax breaks given by the Legislature, especially since there’s now a law calling for disclosure and accountability.
IMAGINE if your employer refused to say what’s being deducted from your paycheck, or your bank declined to reveal what’s automatically withdrawn from your account.
That’s the situation for Washingtonians trying to figure how much state revenue is given up through myriad tax breaks.
Some of these tax breaks are important for economic development. But the public and lawmakers must know their costs to decide if they’re worthwhile investments.
More transparency and accountability around such tax preferences was promised in 2013 when state Rep. Reuven Carlyle, D-Seattle, pushed through a disclosure law, requiring annual reporting on the value of large, new tax preferences.
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That applies to tax breaks worth more than $10,000, affecting companies ranging from beekeepers to Boeing and the $8.7 billion package of tax breaks that secured 777X manufacturing. Yes, it also applies to newspaper publishers.
Sadly, when details of the Boeing deal were finally released under this law, thanks to Seattle Times reporter Jim Brunner, only a sliver of the deal’s value — $19.5 million in 2014 — was disclosed.
The state Department of Revenue declined to collect or release information on the bulk of the Boeing tax break. Instead, it chose to interpret the law in a way that keeps the full yearly value of Boeing’s tax benefits hidden for the next decade.
The agency claims Boeing’s deal is mostly extensions of pre-existing tax breaks that don’t need to be reported. It pledged to disclose the value of new, tacked-on breaks after they take effect in 2025.
Yet the transparency law plainly states that it applies to tax preferences created or “expanded or extended” after Aug. 1, 2013. That includes Boeing’s November 2013 deal. “The shocking thing is they really are overriding legislative intent,” Carlyle said.
The Revenue Department also said that a broad interpretation of the law would create a burden on many companies and be difficult given its own aging computer systems.
Some relief may come in 2017 when new accounting standards will force state and local governments to clearly report tax breaks they provide.
But Washington shouldn’t have to wait. Transparency legislation should be interpreted in a way that favors maximum disclosure, not continued secrecy.
To make informed decisions, the public must know the actual cost of special tax deals made by lawmakers. This is especially important as the state struggles to fund education and other unmet needs.