Based on emails I've received from leading house and senate members in the Washington State Legislature today in response to this morning's letter, it appears that the democratically controlled body is getting ready to not only redefine the royalty tax giving Microsoft a $100 million tax cut going forward but also to include clauses which would grant it amnesty going backwards for its past Nevada tax dodge. I expect we'll see these elements passed into law in the next week or two.
What the Legislature still must do is fill the $2.8 billion budget gap and explain to citizens why they're being taxed more as the state's richest corporation is given a huge pass.
From Representative Bob Hasegawa, a sponsor of HB 3191:Mr. Reifman, Thank you for your thoughtful message. Unfortunately I'm only just now seeing it and the train has pretty much left the station as far as being able to analyze your issues and drafting amendments to the revenue bills the legislature is considering. We'll likely be passing something off the House floor either today or tomorrow. I will however talk with staff to consider your arguments. Thank you again for taking the time to write. Fair tax enforcement as well as fair tax policy is a goal for all of us. -Bob Hasegawa
Apparently, Rep. Hasegawa did not receive a copy of the letter I wrote to every Legislator on January 8th about this issue. Nor, apparently did he see any of the local Seattle blogosphere coverage of the tax cut and tax amnesty issue on February 14th.
From Senator Adam Kline (with permission):
Jeff,
It occurs to me that I may not have communicated with you after reviewing the legal situation with staff about a month ago. I went over the current language of the statute, and read your analysis of how MS skirts the law. My questions were perhaps uninformed at first--I'm a personal injury lawyer, with no experience in taxation--but I think I understood eventually the basic risk-benefit analysis that every lawyer has to make in undertaking a lawsuit.
My judgment, after this review, was that for past taxes due under the existing statute, the risks outweigh the benefits. We can change the law prospectively to plug this hole, but we have little realistic chance of success, and much expense in lawyer time and litigation expense, in chasing MS down for the amount of tax they have saved. In coming to that conclusion, I later found, I was agreeing with a similar analysis that DOR had undertaken, but which the staff here in the Senate had not asked about.
I'm tempted to agree with you because in my heart I want to. But as you know, that's not how lawyers are supposed to make these decisions. In any case, thanks for bird-dogging this.Adam Kline
I appreciate Sen. Kline's sentiments but I guess I've felt that when the state's given up $1.25 billion in tax dodges and facing a $2.8 billion deficit, perhaps it could risk a bit more on the enforcement side.
So, looks like Microsoft's getting what's best for it in Washington. Taxpayers will be left carrying the burden ... we just don't know exactly how much yet.
In either case, we'll be wrapping up coverage on the blog soon.
