2009 Session Notes – Tax Policy

(I orginally posted this on a different blog in April 2009. I am consolidating into a single presence and am re-posting here. )

A number of key tax policy bills were passed this year. These are interesting to me because I chair the Finance committee and am responsible for making sure the system works.

I sponsored HB 2075, a complete re-write of how sales taxes are figured out on digital products. This was an interesting situation – the tax rules hadn’t been revisited for 30 years, long before Al Gore invented the Internet. My goal was to make sure that the tax system taxes the same thing in the same way – downloaded music should have the same tax treatment as stuff you buy on disks. I worked out a deal with the business community that we all agree on. It protects state revenue from deteriorating as usage shifts to downloaded products and fixes related problems for business, making sure that Washington is hospitable for Internet businesses into the future.

At the very end of the session we had a little fire drill to deal with. One the last weekend the Senate passed a bill (SB 6173) with little public scrutiny that was intended to eliminate some of the fraud associated with misuse of sales tax resale certificates. Businesses are entitled to not pay sales tax on items that they will eventually resell, on the theory that they’ll pay the tax then.

The Senate version of this bill solved the problem by denying anyone in the construction industry the ability to avoid paying the tax up front and giving them a credit they could use when they eventually sold the product. This makes builders and remodelers carry the float on everything they buy for resale. I arrived on Monday to read through the bill and we had an army of angry guys with nail guns outside my door.

I was able to re-write the bill in cooperation with all the business groups to be much smarter about how we went about fixing the problem. We got a solution at the last minute that both the Republicans and I agreed with and that the business community was OK with. It passed overwhelmingly and should help homebuilders by eliminating a lot of the fly-by-night contractors who never pay sales tax, unemployment insurance, or workers compensation premiums.

The Master Builders of King and Snohomish County made me their legislator of the session for my work here.

Author: Ross

I am the Director of the Department of Early Learning for Washington State. I formerly represented the 48th Legislative District in the State House of Representatives, chairing the Appropriations committee and spent many a year at Microsoft.