Wednesday, November 25, 2009

Reporter's Notebook

Paul Leonard can be reached at

The case for taxes

Chances are you’ve scanned this headline and wondered, “What in the world is this editor drinking?” To actually suggest that a case can, or should be, made for a scourge afflicting humanity since the dawn of commerce seems completely against the values of most members of this business community.

However, one fact cannot be ignored – our tax system is broken, and if we are to emerge from this recession stronger than we were entering into it, we need a common-sense approach to funding government services essential to business growth and prosperity.

In order to do this, our business community should take the lead on the following measures: finally overturning the overly-burdensome Business & Occupation tax, as well as repealing the 1 percent cap on property tax increases throughout the state.

Here’s why it’s so important that one tax be eliminated and the shackles restricting another tax be removed:

Our government, at least at the county level, is going broke.

Last Friday, the Clark County Budget Office announced its recommendation of a $12.4 million cut of the 2010 General Fund operating budget, the third steep reduction in the past year.

Faced with the sudden loss of revenue from an unprecedented residential and commercial housing boom, the full effect of Tim Eyman’s misguided Initiative 747, passed in 2001 and capping an essential stream of government funding growth to a measly 1 percent per year, is now painfully clear.

On Dec. 31, the Clark County Sheriffs Department will let go of 16 deputies, more and more road maintenance projects will be deferred and our Health Department will continue to be increasingly dependent on nonprofit assistance to provide services essential to the wellbeing of all residents.

And that’s not all. For what the future beyond 2010 might hold if I-747 (upheld by the Washington Legislature in 2007 after the state Supreme Court ruled it unconstitutional) continues to strangle local government, we need only turn our gaze to the south.

California’s budget apocalypse, a business-killing cataclysm with no clear end in sight, can be traced back to 1978 with voter passage of Proposition 13, which caps property values at 1 percent of its assessed value at the time of sale.

Here in Washington, surely we can learn from another state’s mistake – for proof, one need look only to earlier this month, with a majority of state residents rejecting another Eyman initiative that failed so miserably in Colorado a decade ago.

However, before you term this New York native as another tax-loving liberal, the second part of my proposal involves killing off another long-hated levy – the B&O – for good.

The B&O, a tax on all gross receipts, has long been a burden on small businesses, stifling growth and innovation among revenue-generating and job-creating companies.

One common-sense alternative to the B&O is the replacement of the current gross receipts tax paid on each business activity with a gross receipts margins tax based on total receipts, an idea proposed by Center for Small Business director Carl Gipson and Center for Government Reform director Jason Mercier.

Along with the legislative overturn of the tenets of I-747, this alternative business tax might be just the proposal to put both local government and business on the road to a responsible and sustainable economic recovery.

Happy Thanksgiving

From all of us at the VBJ, happy holiday wishes to you and yours.

As a reminder: since the editor plans to be in the grip of a 48-hour tryptophan-induced coma, Just Business will not appear this Friday. Our column will resume Wednesday, Dec. 2.