By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, March 2.—Lawmakers have heard just about everything over the course of the last 50 days, as they get set to raise taxes by nearly a billion dollars.

            For weeks now business owners and trade-association groups have been protesting the tax increases that everyone knows are coming. And by now most of the arguments have a familiar ring: A sales tax increase is regressive. A tax exemption can’t be cut without destroying business. And people will die.

            The whole thing makes lawmakers sigh. Said Rep. Mark Ericks, D-Bothell, “I’ve read my emails and taken phone calls, and I’ve talked to people, and it’s not easy to sort out what the right answer is this session. There’s been a long line of people who have said, please raise taxes to support services, just don’t raise mine. Or please make further cuts and don’t raise taxes, but don’t cut my program. So it’s not always easy to know what to do.”

            But every now and then, if you listen to the legislative testimony closely, you can find something that would astonish even the most jaded observer of the Olympia scene.

A new argument.

            Take Tuesday’s hearing before the House Finance Committee. There was nothing remarkable about it: The House finally released its tax plan Monday, after a week of internal disputes among House Democrats, and the House committee had to pass the tax bill, House Bill 3191, in order to place it on the House floor. Every proposal had been raised before, in previous hearings, and just about everything had been heard before, too.

            Social service advocates said a tax increase is the only way to preserve the state’s quality of life. And business interests said it’s a good way to nuke it.

            And yet – well, if you picked through the details, you might have heard a few new thoughts, or at least old thoughts expressed in a new way.

            ‘Liposuction Tax’ Discriminates Against Women

            The problem with imposing the sales tax on cosmetic surgery is that it isn’t P.C., explained William Portuese, president of the Washington Society of Facial Plastic Surgeons. That’s because most of the people who seek cosmetic surgery are female. “My three surgery patients yesterday were a flight attendant, a retail sales clerk and a nanny,” he said. “This is a discriminatory tax against working women.”

            People Will Get Bum Advice

Chris Hesse of the Lemaster and Daniels CPA firm told the committee it’s a terrible idea to boost the tax rate for accountants, because lawmakers are making the tax code so complex that it takes an accountant to understand it. Raise the tax rate and accountants will raise prices. That drives away customers. And that means they’ll go elsewhere and get bad advice. And then they won’t pay enough taxes. He asked:

            “Is it is in the best interest of government to lower the degree of expertise of those who will be providing advice and counsel for business to comply with an ever increasing regulatory and tax burden?”

            You Try to Do People a Favor…

Jack Field of the Washington Cattlemen’s Association said his group and the Washington Dairy Association wish they hadn’t been so public-spirited. They took a hard look at tax exemptions and found one they could give up in what he called “a spirit of goodwill” – a tax break for equipment and facilities used to handle cattle feed at dairies and livestock feeding operations. That’s worth $1.6 million a year. They offered to suspend the tax break for three years, he said, but the House and Senate are planning to eliminate it for good. “Now we are realizing that there is no good deed that goes unpunished,” he said.

            Raising Taxes is Good for Business

Marilyn Watkins of the Economic Opportunity Institute offered a novel message about taxes and jobs. The more people the state employs, she said, the better it will be for the economy. So the state ought to raise taxes to prevent public employees from being laid off. Better yet, it should raise taxes even more to rehire those who already have lost their jobs. And then maybe it ought to expand the state workforce.

For every dollar the state spends on a state worker, there is $1.41 in economic activity, she said. That’s despite the fact that the state takes that dollar from somebody else. An all-cuts budget, once the effect ripples through the economy, would reduce Washington employment by 35,000 jobs, she said. “The negative effect of raising taxes on jobs is rather less than the positive effect of state spending on sustaining jobs and sustaining economic activity, so by raising taxes even more you would prevent even more of these job losses,” she said.

Tax the Other Fellow, Please

            Scott Freeman said his janitorial business would be devastated by a proposal to force it to charge the state sales tax. Building owners have been hard hit by the downturn in the economy, and they won’t accept higher bills. Meaning that janitorial companies will have to eat the tax, and janitors will be laid off.

           “You can go and look at your sin taxes, and your gum and candy tax, but you know that if you raise taxes on janitorial firms, you are just going to lose good-paying jobs.”

Candy Tax Leaves Bad Taste

Candy manufacturers are seething about a plan to impose the sales tax on candy and gum. The two have been exempted ever since Washington voters removed the sales tax from food in 1978. The House plan would impose the tax on candy – but what exactly is it? The national sales-tax definitions, which the state is required to follow, exclude products with flour. That will give some products a killer competitive advantage on store shelves, while Mountain Bars and Almond Roca gather dust. Pierson Clair, chairman and CEO of the Brown and Haley company in Tacoma, said: “Kit Kat will not be taxed. Why tax Almond Roca?”