Statement from Rep. Norma Smith on Democrats’ $800 million tax increase

Despite bipartisan objection to the nearly $800 million tax increase on employers and families, a majority of the Democrats in the House moved to pass it on their own. Rep. Norma Smith, R-Clinton, issued the following statement:

“I, along with my House Republican colleagues, offered reasonable alternatives to raising taxes that should have been considered before Democrats’ rushed to unprecedented tax hikes. We simply cannot sustain a government that continues to grow at the peril of private-sector job-makers and hard working folks. More than 189,000 private sector jobs have been lost in Washington, while government jobs have grown by more than 1,300.

“The tax package passed by the House today would extract even more money from struggling private-sector employers, making it exceedingly difficult to retain and hire workers. It will also hurt the more than 10 percent of unemployed Washingtonians in our state because jobs will be even more scarce, and the goods they purchase more expensive. We simply cannot turn our economy around when the burden to taxpayers becomes too excessive and is unsustainable.

“I continue to believe the best way to generate tax revenue is to make sure our employers have tax relief and certainty so they feel confident enough to begin hiring again. Putting people back to work in our private-sector industries will not only create individual hope and prosperity, but also generate much-needed revenue for essential state and local services, such as education.

“Instead of constraining the growth of government, the tax package will have a chilling impact on our fragile economic recovery. Even an independent economist, who serves on the Governor’s Council of Economic Advisors, has concluded that tax increases will cost Washington more jobs than would an all-cuts budget.

“I am disappointed our ideas to prioritize spending, reform government and find critical efficiencies were not considered before increasing taxes. When we return for the 2011 budget, it may be too late to correct the massive budgeting mistakes made by overspending since 2005, along with using one-time federal bailout dollars and dedicated account transfers. These actions have propped up unsustainable spending practices and costly and inefficient entitlement programs. We can, and the public expects us to, govern more effectively.”

Tax package facts:

New and increased taxes approved by House Democrats amount to $794 million in just the first year alone – the largest one-year tax increase in state history.  They include:

  • A 0.30% increase in the B&O tax on all services except hospitals and scientific R&D = $242 million;
  • DOT foods = $155 million;
  • Cigarette($1 per pack)  and other tobacco products =  $101 million;
  • B&O tax on economic income (Nexus) = $84.7 million;
  • 50-cent per gallon (28-cents per six pack) beer tax = $59 million;
  • Sales tax on bottled water = $32.6 million;
  • Sales tax on candy/gum = $30.5 million;
  • 2-cent per 12-ounce soda tax = $33.5 million;
  • Taxes on business structure transactions = $8.5 million;
  • B&O tax increase on property management salaries = $6.9 million;
  • B&O increase on certain canned meat products = $4.1 million;
  • B&O tax increase on mortgages = $3.6 million;
  • B&O tax increase on corporate officer salaries = $2.1 million;
  • Tax increase on bad debts = $1.7 million;
  • Tax increase on livestock nutrient management = $1.3 million;
  • Tax increase on PUD electric bills = $1.2 million; and
  • Personal liability for tax debts = $1.1 million.

The 2010 regular legislative session ended March 11. Gov. Gregoire called the Legislature into a special legislative session so majority Democrats could finalize their operating budget and tax increase proposals. The 30-day special legislative session is scheduled to end on Tuesday, April 13.

Senate Bill 6143, the third iteration of the tax package legislation, will now be forwarded to the Senate for consideration, possibly as soon as tomorrow.


Washington State House Republican Communications