WASHINGTON STATE

Washington State House Democrats

HOUSE DEMOCRATS

House passes Carlyle reform to end secrecy for tax prefences

Speech on the House floor shortly before the passage of House Bill 2201:

Excerpt of the blog post (The moral hazard of tax preference secrecy) on this issue:

How much do Washington state taxpayers spend on tax preferences, how much financial value in tax preferences does a company receive, and how much do these companies actually pay in state taxes to put it all in context?

The uncomfortable reality is that we do not know how many tax dollars are being spent or not collected—because that information is, if assembled by the state Department of Revenue, almost completely inaccessible and hidden from legislators and the public.

The inside story gets worse: Under state law, for the vast majority of tax preferences, the basic information about what companies, organizations and industries receive how much money under most tax preferences is considered confidential and proprietary information and expressly hidden from legislators, media and the public.

As chair of the tax-writing Finance Committee, I am granted confidential access to the limited corporate tax information that is collected by the state.

This year, it has reached a point where the weight and moral hazard of this information burdens me, on a deep philosophical level, because I believe it is unethical for my colleagues to make fiduciary decisions about tax preferences–to draft bills, debate legislation and vote on behalf of the people–without knowing the true financial value or tax context of those preferences.

If I speak publicly about financial or technical details of who is claiming tax exemptions and how much they pay as a context to those dollars, I would face 90 days in jail, get ejected from the Washington State Legislature and be banned from holding public office for two years.

I’m not making this up. Telling the truth about this basic but vital tax data–even to other legislators–could cost me my elected position and land me in jail.

That’s because the strict interpretation of state law is that the chairs of the respective tax committees in the House and Senate are entitled to this important contextual tax data, but rank-and-file legislators are not. This means two of 147 legislators know the truth of how the money flows.

The old fashioned idea that the value of a tax preference must remain confidential is out of date and philosophically out of step with our state.