State legislators should resist urge to raise taxes

LEGISLATORS in Olympia should resist all temptation to repeal the rule that requires them to have a two-thirds vote to raise taxes.

Many legislators are itching to go for it. They had better not. Taxpayers, whose wallets are the things being gone for, have their own problems to solve. Business is deep in a hole. Private employment is down by 165,000 jobs statewide in two years. Taxes for unemployment pay are going up. Taxes for workers' compensation are going up.

In 2007, voters passed a law, Initiative 960, requiring a two-thirds vote for the Legislature to raise taxes. After two years, a simple majority of the Legislature can change this rule — and Thursday they were busy at it, holding a hearing on Senate Bill 6842. The bill, sponsored by Sen. Margarita Prentice, D-Renton, would suspend the two-thirds rule until July 1, 2011, and repeal it permanently for closing loopholes or to fund voter-passed initiatives like cost-of-living raises for teachers.

Standing by is House Bill 3176, an 89-page compendium of loophole closers, all of which give the state more money. This page supports parts of HB 3176, much of which has been introduced in separate bills.

One part we support imposes business and occupation taxes on out-of-state companies doing business in Washington even though they have no office here. Some 88 percent of the expected revenue is from banks and credit-card companies, and some of the rest from out-of-state engineers and architects, and sellers of business franchises.

One part we do not support would impose sales tax on gold and silver bullion coins. These are investments; the IRS Code allows them in Individual Retirement Accounts, though it forbids collector coins. Out of fairness, the sales tax on bullion coins should continue to be the same as on a share of stock or a corporate bond: zero.

There is also the matter of practicality. If bullion coins are subject to sales tax, most of the business will leave Washington.

The parts of HB 3176 need to be voted on individually, with the two-thirds rule intact. The really good ones can get two-thirds.

And after considering the repeal of preferences, the Legislature should concentrate on spending cuts. This is not tax-party time. Legislators need to keep that in mind, particularly legislators up for re-election in November.