Tax exemption hurts state’s schools, services

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Closing bells next month will toll for another school year. With legions of youngsters set to crash the exits, now is the perfect time for grown-ups to reflect on the state of our schools through some statistics. Let’s take a look at a few numbers we’d be seeing if only we’d chart a new course toward stronger public education funding and a fairer tax system.

Specifically, consider a tax-loophole program that enables a select group of shoppers to dodge the sales tax. The sales tax is our primary means here in Washington to finance public safety, education and other public programs and services. It only stands to reason and plain common sense that Washington sales taxes should apply to anyone who participates in Washington sales. But no, that isn’t the way it works today.

Oregonians, and anyone else who gets their mitts on an Oregon ID, don’t pay it. But guess what? Clark County is one of the top seven counties — of all 75 counties in Oregon (36) and Washington (39) — for the amount of money residents here send to Oregon for that state’s income taxes. The sales tax exemption is my No. 1 complaint from constituents. Every day 60,000 Washingtonians cross the Columbia River to work in Oregon. They receive “no consideration” from Oregon when it comes to Oregon’s income tax, which helps pay for their schools, parks and health care. My constituents demand the same thing: When Oregon folks shop in Washington, they should help pay for our schools, parks and health care, as promised above. Last year, it was estimated that doing away with this sales tax exemption would have generated almost $83 million in 2011-2013. The total value of the exemption is estimated at approximately $67 million for 2012-2013.

But Southwest Washington Republicans, unfortunately, are leading the GOP mission to keep tax breaks for Oregon shoppers ahead of funds that could be going toward our public safety and students. It’s simply unjust to let these tax breaks stay on the books when we’re closing fire stations or firing teachers. And yes, Vancouver Fire Station 6 has been closed and many hundreds of Washington teachers have already received RIF notices.

Definition of insanity

Eliminating the tax exemption would also cut down on fraud. All too many people who live in Vancouver or elsewhere on our side of the river use an Oregon ID when they shop here in our Washington stores. Obviously, the current system is open to serious fraud by customers who actually live in Washington but keep their Oregon ID or obtain one illegally. It’s important to note that of the other 45 states with a sales tax, not a single one of them shares our exemption for out-of-state shoppers.

Keep in mind another thing. The most serious downturn since the Great Depression continues running roughshod over our Southwest Washington economy. Our unemployment numbers in Clark County are as bad or worse as anywhere in the state.

Not all businesses are the same. One business that clearly competes across the river for costumers is car dealerships. Repealing the out-of-state sales tax exemption would make no difference for them here in Vancouver. That’s because their exemption is in another portion of tax law, which means that these dealerships would be free to continue offering the sales tax exemption to Oregon residents.

Tax exemptions are intended to spur economic growth of new industries, and sure, sometimes they’re justified. But so many other times, so many of these exemptions have either outlived their usefulness or they simply don’t work the way people long ago thought they would. These exemptions deserve the same level of scrutiny as any other state spending program. We cannot afford to take money that should be paying for fire stations or the education of our kids and give it away to people who don’t live here — who can then turn around and tax Washington people who don’t live there! That, folks, is a sad new definition of insanity.

State Rep. Jim Moeller of the 49th Legislative District is the Speaker Pro Tempore of the Washington State House of Representatives and a member of the House Health Care & Wellness Committee, the House Labor & Workforce Development Committee, the House Rules Committee, and the House Transportation Committee.