New bill would provide transparency for state and local taxation
Senators Fain and Palumbo have introduced a bill based on our recommendation to create a tax transparency website modeled after the state's budget website (fiscal.wa.gov). SB 6590 (Concerning transparency in state and local taxation) would require the new tax transparency website to be up and running by January 1, 2019. A tax calculator would also be provided to allow taxpayers to compare their tax burden based on the location of their residence or business.
Why is this type of tax transparency resource needed?
There are approximately 1,800 taxing districts in the state whose officials impose various taxes on Washingtonians. There is no single resource, however, to help individuals and businesses learn which taxing districts and rates they are subject to, and how much officials in each taxing district add to their total tax burden. A typical home, for example, can be located in as many as ten different taxing districts. SB 6590 would help improve the transparency of state and local taxation by creating an online searchable database of all tax districts and tax rates in the state.
According to the intent section of the bill:
"The intent of the legislature is to make state and local tax revenue as open, transparent, and publicly accessible as is feasible. Increasing the ease of public access to state and local tax information significantly contributes to governmental accountability, public participation, and open government; this is particularly true when the information is currently available from disparate government sources, but is difficult for the public to collect and efficiently aggregate."
If enacted by lawmakers, SB 6590 would set up an online database where citizens could find their state and local tax rates (such as property and sales taxes) by entering a zip code, street address, or by clicking on a map showing individual taxing district boundaries. An online calculator would be provided for educational purposes, to allow individuals and business owners to estimate their total tax burden and which officials are responsible for imposing it on them. To facilitate the creation and maintenance of a searchable database, taxing districts would report their tax rates to the state annually, and would report any changes within 30 days of imposing the rate changes.
A similar bill was introduced in 2009 but the legislature took no further action on it. Hopefully lawmakers will act this time on SB 6590.
Increasing the ease of public access to state and local tax rates would enhance trust in government and increase the public’s understanding of the cost of government services. Improved transparency would also facilitate meaningful tax competition among taxing districts, because taxpayers could compare different tax burdens based on where they decide to live or locate their businesses.