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Originally published October 29, 2011 at 10:03 PM | Page modified October 30, 2011 at 2:25 PM

Danny Westneat

Companies enjoying tax breaks should 'give three' percent back

The state workers' union meant to be combative. But last week, in throwing down the political equivalent of a schoolyard taunt, I think they hit on an idea with legs. Specifically what the union said was: You're asking us for another 3 percent cut in health benefits. How about convening a meeting of corporations to ask them to give up 3 percent of their tax breaks?

Seattle Times staff columnist

quotes At the end of 2010 Microsoft was sitting on approximately $50 billion in cash reserves... Read more
quotes Point of clarification: the 567 tax exemptions and almost $15 billion was documented in... Read more
quotes "Last month I highlighted one huge tax break that goes to Microsoft. The company r... Read more

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The state workers' union meant to be combative. But last week, in throwing down the political equivalent of a schoolyard taunt, I think they hit on an idea with legs.

The backdrop was our grim-reaper governor, once again at the mike to say she must throw poor people off health insurance, jam the public-school classrooms with 30-plus kids in each and gut the universities.

I have no choice, she kept saying. My pocketbook is empty.

Both Democrats and Republicans nodded gravely and then dipped into their stock of times-are-tough clichés. We've looked under every rock. It's all on the table. Nobody is spared the pain.

Bull, said the union.

Specifically what the union said was: You're asking us for another 3 percent cut in health benefits. How about convening a meeting of corporations to ask them to give up 3 percent of their tax breaks?

As I said, I don't think the union meant this literally. But it strikes me as a fantastic idea. Give three. That's not much, right?

It turns out it could add up.

According to the state Department of Revenue, there are 567 tax exemptions, incentives and breaks in the state tax code that, if they were all repealed in full, would raise $15 billion in revenue for the government.

Obviously, doing that would be outrageous. But what if the corporate world was asked to give the same as the unions — three? Not a 3 percent increase in their base tax rates. Just forgo 3 percent of the value of their tax breaks (which by their nature are special carve-outs, anyway.)

That would be $450 million in new revenue. Amazingly enough, that's enough so we don't have to throw the poor off health insurance, don't have to cram school classes any more than they are and don't have to slash the university system.

Asking the business heads to pitch in during a crisis, even a tiny bit, seems never to have occurred to Gov. Chris Gregoire.

"I don't collectively bargain with business," she said, when asked about the union's idea.

Well, why not? You could appeal to their better natures, hold some sort of CEO summit in Olympia and say: "We all live and profit together. We're asking 3 percent from others. How about you?"

Last month I highlighted one huge tax break that goes to Microsoft. The company reported it is due sales-tax breaks totaling $104 million under a 17-year-old program designed, back in 1994, to spur on a fledgling high-tech industry.

The company pushed back at the notion that it doesn't need this break. A spokesman said other states don't have sales taxes on construction. So to be competitive, Washington can't, either. It was a nice way of saying: Take our break away and we might be outta here.

OK, Microsoft. We love you, so would you stay if you got to keep all but 3 percent of your special tax deal? Regular people who don't have lobbyists would have to go right on paying 100 percent of the sales tax when they do construction — say, for remodeling their kitchens. Would it kill you to give three?

I could see "give three" catching on. It's got that Herman Cain simplicity appeal. If everybody gave three — the public employees, the corporations, even the general taxpayers — there'd still be plenty of cutting left to do in Olympia. But they could spare what really matters, like education. Our public university system, especially, has been cut so much it's on the verge of being privatized. Good luck getting your kids admitted then!

Seriously, governor, put out the call. Most CEOs are aware they depend on the state's schools. (Ahem, Microsoft: Your founder was speechifying about this very thing the other day out at the UW.) Just posing the "give three" question might change the tone.

I know, I'm dreaming. But something's got to jar the state out of this "slash, burn, wait a few months, then slash, burn again" rut it's in.

The union was probably out just to make hay. Maybe it spun a little gold instead.

Danny Westneat's column appears Wednesday and Sunday. Reach him at 206-464-2086 or dwestneat@seattletimes.com.

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