Proposals that Prioritize and Protect Fair Tax Policy
A coalition of computer Data Centers and the City of Quincy named itself Washingtonneedsjobs and asked legislators to extend retail sales tax break on their capital equipment purchases for three years. They said give us the break and we’ll build millions of dollars of data centers and create new jobs. Don’t give it to us and we won’t build. You lose nothing but you gain jobs and taxes.
The state had suspended sales taxes for 15 months and data centers were built. Nevertheless, the Speaker of the House refused to allow a vote on the bill.
The request made sense to Quincy residents, local economic development authorities and legislators. Tax breaks made sense to the industry. Tax breaks make sense to every industry.
Tax breaks make sense to every individual. Karen and I retired in Washington from Oregon, but I never thought to request tax breaks. We could have promised to invest our money here if the state wouldn’t charge us retail sales taxes for computers, cell phones, and routers for the first three years. The state wouldn’t lose any money because without the tax break, we wouldn’t come. Currently new retirees could say, “We’ll buy all these houses you have for sale.”
The problem is new companies and people cost the state. Every industry and its employees who move here require services paid for by the state, in part with retail sales taxes when the firms build. Sales taxes pay for public education, insurance regulation, court systems, health and human services, fraud protection, prisons, higher education, government operations and on and on. The companies never propose foregoing or offsetting those services.
So here’s a counter proposal: the company itself could promise not to use courts to file suits for a couple of years. Or they would agree to buy insurance only from unregulated Washington insurance companies and agree to accept any losses from fraud. That way the companies could fairly evaluate the risks to them of no services.
Or companies could commit to temporarily supplement the costs of state services needed by their employees. For students of employees, companies could pay a K-12 education surcharge or donate need based grant awards for higher education students who qualify. They could supplement health and human service costs for their families requiring handicapped services.
The company saves money and proudly promotes their willingness to pay their fair share, while the state limits the cost of the tax breaks and promotes their ability to create jobs. Everybody would be happy.
Our legislators would be happy because they’re bombarded with individual tax break requests. Each request is difficult for legislators’ to resist so they propose them to other legislators. Other legislators say, “Guess what? I have a request too.” They’re all pressured into back-scratch tax policy. “You scratch my district’s back and I’ll scratch your district’s back.”
We could strengthen our legislators’ bargaining power by passing an initiative that tax breaks be revenue-neutral from offsetting budget cuts from governmental operations budgets, such as legislators’ pay and benefits. If legislators cut their compensation by an amount equal to special tax incentives, industry will bring the jobs.
Legislators would forego benefits for a limited time and win re-election for their sacrifices. In the next election they could vote themselves increased compensation and have more incentives to offer new industries. Or retirees.
All these approaches would help us avoid too many special tax breaks that create an unfair tax policy and too little revenue while citizens suffer.
Fair tax policy should be first priority.
Categories: Politics for People, Justice
Tags: washingtonneedsjob data centers tax break
Tax breaks and other financial incentives to get companies to locate their business in WA simply shift more of the tax burden to the public and allow business to be irresponsible in paying their fair share of their costs to area in which they locate. This financial strategy over burdens the middle class, contributes to its decline, and allows much more well endowed entities to get away without paying their fair share of providing necessities for their area generated by their very presence, their immediate business needs, and the needs of the people whom they add to the area's population. Nobody deserves a free lunch at the cost of the ordinary taxpayer.
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Thanks Jim for sharing….as always very thought provoking….especially when you filter it through the $50B in current Corporate, Business and individual “tax preferences” we already subsidize each year in our State with little or no review/analysis or other as to their value, continued value or effectiveness.
I found it interesting public policy political theatre this session as we struggled to fill a $5B deficit with little or no discussion of the $50B in preferences already being subsidized. A simple 10% reduction/suspension or postponement for two years would have left us with no deficit….go figure. We are an interesting society to be sure…we will reduce our investment in our children and our infrastructure, putting our future at risk while maintaining a tax preference to benefit me today…hmm.
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From my view, this Clear Skies is a little cloudy.
Our architectural firm, currently employing 13, has been doing the design work for data centers for the last 9 years. We are just one of several local consultants employed for these projects. The construction of these centers employs 50 to 75 construction workers for a period of 1.5 years each. The data center staff that operates these centers is smaller (maybe 10 to start but increases with the addition of racks of switches, routers and the like.) Without exception, the data centers seek to purchase low cost land in areas of higher unemployment and low electric utility rates. We were in the middle of a Quincy data center project when the legislature last withdrew this tax incentive. Within 60 seconds of this action in Olympia our project was terminated. A couple of our personnel that had been added to handle the work load were let go and went on unemployment. One moved from WA to another place for employment. The impact on the other consultants and the construction industry was much more significant but never-the-less similar.
This particular data center client later moved the project to New York State where they found these incentives. They then doubled the size of the data center in NY. The next data center went to Nebraska and they did a two phase development there as well for the same incentives. These, obviously did nothing for the tax paying citizens of WA.
Immediately, upon the reinstatement of these incentives in WA, our project plus a few others in Quincy were restarted. This has been a boost to the city of Quincy and this entire North Central WA geographic area. This data center development has helped our economy and because of it, the city of Quincy has built a new and much needed library, a new planning and building department facility, a fire station and now a badly needed law enforcement facility. Each of these projects have improved the quality of life in Quincy, provided permanent employment, created new housing and attracted new teachers to their schools to handle the increase of students. All or most of this because of a tax incentive given to the development of data centers.
Who else benefits from these projects? We all do! You may recall the financial support given to the Pac in Wenatchee from one of these data center owners.
From my view, this tax incentive is appropriately applied. I would agree that there are a ton of incentives that don’t return a cent to the State. It would be a real eye opener for everyone to see this list and the negative or zero economic impact. I think that Data centers are the wrong venue to pick on and not just because they hire me!
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You know I am just so sick and tired of the "You scratch my back and I'll scratch yours" policies in this country. You are speaking about a local situation, but unfortunately it goes beyond state and is practiced at the national level by lobbyists, politicians, and corporations and the only people that can't afford fancy back scratchers are the middle to lower class, So ultimately they are left out of the decision making process. Hope you don't let that happen there.
We are losing our country to a group that represents 16% of the population, but ----- they own the backscratchers.
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