Evolution of tax increase proposals for 2013-15 budget

July 30, 2013

Despite projected revenue growth of $2 billion for the 2013-15 biennium, proposals for significant tax increases dominated the budget debate and contributed to the Legislature going into two special sessions to finish its work on the budget. The final tax increase package included in the 2013-15 budget was a fraction of what state Democrats initially proposed. Below is a breakdown of how the tax increase proposals evolved.

Democrat proposals

Out-going Governor Gregoire (12/12): Total tax increases - $1.2 billion

  • Extend “temporary” B&O surcharge: $534 million
  • Impose excise tax on wholesale fuel: $368 million
  • Extend “temporary” beer tax increase: $101 million*
  • Repeal sales tax exemption for candy/gum: $69 million
  • Repeal fuel tax exemption: $63 million
  • Impose soda tax: $57 million

Governor Inslee (3/13): Total tax increases - $1.2 billion

  • Extend “temporary” B&O surcharge: $534 million
  • Extend “temporary” beer tax increase: $128 million*
  • Limit trade-in exemption for cars: $95 million
  • Repeal sales tax exemption for residential phones: $83 million
  • Extend sales tax to custom computer software: $79 million
  • Across the board reduction in preferential B&O rates by 25%: $66 million
  • Repeal sales tax exemption for non-residents: $64 million
  • Repeal sales tax exemption for bottled water: $52 million
  • Repeal use tax exemption for extracted fuel: $41 million
  • Eliminate preferential rate for resellers of prescription drugs: $29 million
  • Repeal B&O exemption for long-term commercial rental property: $28 million
  • Narrow tax emption for import commerce: $24 million
  • Repeal sales tax exemption for farm auctions: $6 million

House (4/13): Total tax increases - $1.3 billion

  • Extend “temporary” B&O surcharge: $534 million
  • Retroactive death tax increase (Bracken ruling): $160 million
  • Repeal sales tax exemption for residential landline telephone service, other tax parity changes: $110 million
  • Repeal sales tax exemption for non-residents: $64 million
  • Repeal public utility tax exemption on interstate transport, in-state portion: $63 million
  • Extend & lower “temporary” beer tax increase: $59 million*
  • Repeal high-tech R&D sales & use tax exemption: $56 million
  • Repeal sales tax exemption on bottled water: $52 million
  • Repeal preferential B&O rate for insurance agents: $46 million
  • Repeal extracted fuel exemption: $41 million
  • Repeal sales tax exemption on janitorial services: $36 million
  • Repeal preferential B&O rate for resellers of prescription drugs: $29 million
  • Repeal preferential B&O rate for stevedoring: $28 million
  • Narrow B&O and sales tax exemptions for import commerce: $24 million
  • Narrow high-tech R&D B&O credit: $23 million
  • Repeal preferential B&O rate for travel agents & tour operators: $15 million
  • Repeal handling losses fuel-tax deduction: $5 million

Majority Coalition Caucus

Senate (6/13): Total tax increases - $64 thousand

  • Taxation of commuter air carriers: $64 thousand

Final budget

Enacted budget (6/13): Total tax increases - $269.4 million  

  • Retroactive death tax increase (Bracken ruling): $159 million
  • Repeal sales tax exemption for residential landline telephone service, other tax parity changes: $110 million
  • Leasehold excise tax credit repeal: $312 thousand
  • Taxation of commuter air carriers: $64 thousand

Though other tax increases were proposed, the details above reflect the ones that received serious consideration or approval for the 2013-15 budget.

*Different amounts due to various exemptions granted

Additional Information
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