The Tax Structure Work Group, established by the 2019-21 biennial operating budget, recently released their preliminary report and economic analysis for legislative review.
The work group was tasked with updating previous research materials and changes to state’s tax structure, facilitating a series of public meetings to collect feedback from taxpayers and interest groups, and making recommendations to the Legislature for changes to the state
tax structure. AWC appreciates Vancouver Mayor Anne Mcenerny-Ogle for serving as the city representative on the work group.
The report, completed by Department of Revenue (DOR) staff, includes tax analysis of a value-added tax (VAT), margins tax, corporate income-net receipts tax, personal income tax, and alternative property tax growth limitations. DOR expands their analysis
to include changes in household tax burden, business tax burden, and economic competitiveness.
DOR uses seven core principles of tax policy analysis when conducting their research:
- Adequacy: tax revenue should grow at a rate similar to that of the overall economy.
- Stability: tax system should be able to withstand short-term fluctuations in the economy.
- Economic vitality and harmony with other states: the tax system should not create reasons for businesses to selectively move taxable activities outside the state.
- Vertical equity: taxpayers with a greater ability to pay should pay more taxes than taxpayers with a limited ability to pay.
- Transparency and administrative simplicity: knowing how much tax to pay, when to pay, and when tax has already been paid should be clear and evident to the taxpayers.
- Horizontal equity: taxpayers, including businesses, with similar abilities to pay should pay similar amounts of tax.
- Economic neutrality and efficiency: the tax system should minimize opportunities and incentives to take advantage of differential tax treatment of economic activities.
The Tax Structure Work Group will review the preliminary report with appropriate committees of the legislature and stakeholders and propose recommended changes during the 2023 legislative session.