Washington State: highest for per capita sales tax collections

The Tax Foundation has recently published a fantastic "State and Local General Sales Tax Collections Per Capita" map (see below).

Washington came in #1 as highest per capita state and local sales tax collections. Washington's per capita collection in FYI 2010 was $1,770.00.

Also according to the Tax Foundation, Washington's combined State & Local tax rate is 8.80% (4^th highest in the nation), previous blog coverage here.

Washington State Sick & Family Leave Laws

The House Labor & Workforce Development Committee passed two bills yesterday mandating paid sick leave and paid family and medical leave. HB 1457 would entitle a worker to up to 6 months of paid leave in any one year. If these laws are passed, they will have a significant negative impact on all business owners, and especially small business owners, and thereby significantly reduce Washington State job creation.

From the Washington Policy Center:

HB 1313 would extend the paid sick leave ordinance passed by Seattle last year to employers across the state. The bill would require employers with 5 or more employees to pay employees for 5, 7 or 9 days of sick or safe leave per year, depending on the size of the company. Only one other state (Connecticut) mandates paid sick leave.

HB 1457 would significantly expand the current paid family leave law that was passed in 2007 but never implemented because a funding source was never agreed upon. The new bill would provide up to $1,000 per week for 12 weeks for a child's birth or adoption or for a family member's "serious health condition," and another 12 weeks of paid leave for the individual's "serious health condition." Workers could apply for both benefits in the same year, meaning they could receive 24 weeks of paid leave in one year. Employees would be eligible for the paid leave upon working 6 months or 650 hours.

[…]

Unlike its weaker predecessor, SHB 1457 does identify a funding source—a new payroll tax. The tax would be paid by employers with the option to charge employees half of the tax, and the program would be administered by the Employment Securities Department. Only two states (California and New Jersey) have laws mandating paid family leave.

The fiscal note for HB 1457 is staggering. According to OFM it will cost employers and workers $97 million in new taxes in 2013-15, $342 million in 2015-17 and $387 million in 2017-19.

Washington Policy Center Proposes “Single Business Tax” to replace the B&O Tax

The Everett Herald recently published an op-ed by Jason Mercier and Erin Shannon of the Washington Policy Center (WPC) in which they proposed that Washington's B&O tax be replaced by a "Single Business Tax." This single business tax would be based on total receipts but would eliminate the complexity of the current B&O Tax's multiple rates and tax breaks.

The proposal would be revenue neutral but use "one fair, flat rate" that applies to all businesses equally. They described the proposed tax thus:

"Here is how the Single Business Tax would work. Each year business owners would choose one of three ways to calculate their taxable receipts, selecting the one that results in the lowest tax burden. Calculating the taxable margins would be based on the business':

•Total gross receipts minus labor costs, or;

Total gross receipts minus all production costs except labor, or;

60 percent of total gross receipts.

The business owner would then multiply the taxable receipts by the Single Business Tax rate. Cities could levy their own business tax, but the same uniformity standard would apply -- any local business tax would have to be based on a single rate applied equally to all business owners, with no political favoritism. The final amount owed for each taxing jurisdiction would be sent to the state in one payment. State officials would then distribute the funds to different local governments."

They state that this proposal would eliminate the multiple rates on business and repeal the special interest credits and exemptions that currently riddle the B&O tax.

More information on this proposal can be found at the WPC website here.

Washington’s sales, excise and gross receipts taxes

The Tax Foundation reports that Washington State has the highest proportion of its state and local tax revenues generated from sales, excise and gross receipts tax. Washington State generates 60.5% of its state and local tax revenues from sales, excise and gross receipts tax. The Tax Foundation's tax map with all other states is included below and can also be found here.

The balance of Washington State's state and local tax revenue comes from property taxes (31.5%) and other taxes (8.0%). Washington State has no individual income tax or corporate income tax per the Tax Foundation's report on The Sources of State and Local Tax Revenues.

Washington Superior Court (King County) holds 2/3 vote requirement for tax increases unconstitutional

Today, in his memorandum opinion, Judge Heller of the King County Superior Court ruled that Washington State's supermajority requirement for tax increases is unconstitutional. This ruling will no doubt be appealed.

The Court reasoned that since Article II, § 22 of Washington's Constitution only requires a bare "majority" of the House and Senate to pass a measure, a voter initiative that requires a greater than majority (i.e. supermajority) for tax measures violates the State Constitution. Essentially, the Court ruled that the Constitution's requirement of a "majority" to pass a law constitutes both a floor (measures cannot be passed with less than a majority) and a ceiling (the people cannot require more than a simple majority to pass a measure).

As the Washington Policy Center points out, this 2/3 vote requirement has been approved by the voters 5 times since it was originally enacted 18 years ago, and this will ultimately end up before the Washington Supreme Court.