Review and analysis of tax exemptions in Washington State

This paper traces the growing interest in tax exemptions in Washington State over the past three decades. Presently, state law requires publication of a comprehensive listing and analysis of exemptions every two years by the Department of Revenue. The latest study covers 336 separate exemptions, deductions, credits and other tax preference devices for eighteen state or local tax sources. In the aggregate these exemptions provide savings to taxpayers estimated at $25.3 billion for the 1991-93 biennium. For two of the tax sources-the property tax and the public utility tax-the amount exempted is significantly greater than the forecasted state revenue collections. Together, the impact on state revenues of these exemptions slightly exceeds the collections for the same sources. In addition to summarizing the results of the 1992 tax exemption report, the paper discusses the usefulness of the data to state policy-makers. Better information on the impact of exemptions is now available to legislators, officials of the executive branch, special interest groups, and the general public. Tax exemption proposals now receive greater scrutiny during the legislative process than was the case only a few years ago. Not only are policy-makers concerned over foregone revenues, but there appears to be a growing awareness of the inherent inequities which many exemptions produce.