Not a good day for tax lawyers

How do you raise over $200 million without raising taxes? By making common sense fixes to the tax code.

Like closing a loophole that allows certain businesses to form an LLC for the purposes of avoiding paying taxes. Savvy tax lawyers like this loophole, but the $54 million their clients avoid paying in 2011-2013 could pay for a lot of student need grants.

Or closing the loophole that lets banks off the hook for paying the real estate excise tax regular homeowners have to pay on foreclosure sales. Big banks might not be fond of closing this loophole, but the $13.4 million in restored revenue next biennium would go a long way to preserving all-day kindergarten in schools around the state.

Or updating the $125 licensing fee set in 1949 for people who buy an airplane - even if that airplane is a million-dollar luxury plane. Boat owners pay .5% of the value of their boat meaning a boat owner would pay $50,000 on a million-dollar boat. We should treat planes like boats. And use the $12 million we'll see next biennium to preserve health care for 60,000 Washingtonians.

Or the recent Supreme Court ruling that expands a B&O exemption intended for folks who sell stuff like Amway or Mary Kay from home to any out-of-state business with a direct seller in Washington. So an out-of-state business can hire one door-to-door salesperson and get out of paying $95 million in B&O taxes? That's what the courts say, but that's not what legislators intended.

It just so happens that the changes proposed in the House plan require changes to I-960, Eyman's initiative requiring a 2/3 vote of the Legislature for any bill that would increase state revenue. The Senate introduced its bill to do just that today.

And you can read more about the House proposal, rolled out today by Rep. Ross Hunter who chairs the House Finance Committee. In total, it raises and protects $363 million in revenue.