Villeneuve | Stop corporate exploitation of our tax code

At nearly every town hall, legislative action meeting, or budget question-and-answer session that I've been to in the last few months, someone has inevitably brought up the subject of tax loopholes, wanting to know why Gov. Chris Gregoire and legislative leaders aren't talking about raising revenue by repealing outdated, unnecessary exemptions that no longer serve the public interest (or never did).

At nearly every town hall, legislative action meeting, or budget question-and-answer session that I’ve been to in the last few months, someone has inevitably brought up the subject of tax loopholes, wanting to know why Gov. Chris Gregoire and legislative leaders aren’t talking about raising revenue by repealing outdated, unnecessary exemptions that no longer serve the public interest (or never did).

The reason that they’re not is because they are interpreting Tim Eyman’s ill-conceived Initiative 1053 to mean that repealing any tax exemption counts as a tax increase. And under I-1053, any action or “combination of actions” that raises revenue undemocratically requires a two-thirds vote of the Legislature to raise taxes. This blatantly violates Article II, Section 22 of the Washington State Constitution, but that doesn’t bother Eyman, who only has respect for the provisions of our highest law that he likes.

Given Initiative 1053’s margin of victory, the governor and lawmakers appear loathe to dispute how the initiative should be interpreted, and the likelihood of a legal challenge is remote, given the Supreme Court’s past refusals to rule on the constitutionality of I-1053’s predecessor, I-960.

This leaves us, as a state, in a very precarious position. If lawmakers can’t democratically raise funds to keep vital services operating, those services will cease to exist. They’ll simply be eliminated – and we will all collectively pay the price. There’s no better way to kill off an economic recovery than to eviscerate essential public services. But unthinkingly, that’s exactly what we’re doing. If we don’t make a course correction and stop I-1053 from choking our commonwealth to death, we’ll end up trapped in a permanent recession.

Only we the people of Washington can fix the mistake we made last November in approving it.

That’s why, on the first day of the 2011 legislative session in Olympia, I filed the Commonwealth Protection Act as an initiative to the people. The Commonwealth Protection Act doesn’t repeal I-1053, but it would stop corporate lobbyists from using it to block well-intentioned efforts to undo their exploitation of our tax code. It consists of two provisions.

The first amends the “raises taxes” definition of I-1053 to clarify that repealing exemptions is not a tax increase, but rather a restoration of lost revenue. Since I-1053’s language could no longer be interpreted to require that a bill to repeal an exemption needs a two-thirds vote, the Legislature could opt to offset future budget cuts by cleaning up our tax code.

The Commonwealth Protection Act also extends the “logic” of I-1053 by requiring a two-thirds vote to create any new tax breaks. This provision is of course unconstitutional, but it’s needed because it would provide balance. Our tax code is riddled with loopholes; under I-1053, even more can be added with just a majority vote, but none can be taken away. This doesn’t make any sense. The Commonwealth Protection Act would address this situation, allowing majority rule to prevail on decisions to get rid of tax breaks, and requiring wider agreement among legislators to approve lobbyists’ requests for new ones.

At a time when families are losing jobs, health care, and access to education, it’s just not acceptable that the Legislature doesn’t have the ability to stop greedy, selfish corporations from passing on costs to the rest of us. For that is what a tax preference amounts to. It may come in the form of a credit, or a deduction, or a deferral, or a preferential rate.

Whatever form it takes, it’s a loophole in the tax code which allows somebody to forgo paying their full membership dues to our state. All too often, the “somebody” who is getting a free ride is a big corporation which has the means and the ability to pay their full dues, but simply doesn’t want to, because it would detract ever so slightly from their profits.

Not all tax preferences are bad, but many, if not most, are simply not benefiting the public interest, and need to be repealed, or scheduled to sunset.

In these tough times, giving wealthy corporations like I-1053 donors BP, ConocoPhillips, Shell, Tesoro, JPMorgan Chase, Bank of America, Wells Fargo, US Bank, Liberty Mutual Group, and Philip Morris USA a free ride is simply immoral. We need an initiative like the Commonwealth Protection Act to empower our lawmakers to put our quality of life first for a change, so our communities aren’t at the mercy of a broken, unfair tax code.

Andrew Villeneuve, a 2005 Redmond High graduate, is the founder and executive director of the Northwest Progressive Institute, a Redmond-based grassroots organization. Villeneuve can be reached at andrew@nwprogressive.org.