Despite the fact that it hasn’t yet been introduced, I’ve already got a favorite bill in Washington’s still-young legislative session. Representative Reuven Carlyle is taking aim at the tax loopholes that riddle the state’s tax code. In the process, it could also put Eyman’s I-1053 in the judicial crosshairs.

As the news site PubliCola reported yesterday:

Thanks to I-1053, last year’s voter-approved Tim Eyman initiative that reestablished the requirement for a two-thirds vote of the legislature to raise taxes, it takes a supermajority to eliminate tax loopholes. (When you cut a tax loophole, you’re raising taxes.)

State Rep. Reuven Carlyle (D-36, Seattle) thinks it’s unfair that it only takes a simple majority to create a tax loophole, but a two-thirds vote to repeal one, and he plans to introduce a bill in the next week that will put sunset dates on all of the estimated 500 plus tax exemptions. Carlyle says he’s reviewed all the sales and b&o tax exemptions and there’s $2.7 billion worth out there.

Currently, once an exemption gets passed, it stays on the books, “locked in perpetuity,” Carlyle complains. “The one-time gig is over,” he says.

If Carlyle’s bill became law, it would mark a huge step toward fair-minded public policy. Tax giveaways—mainly the province of the business lobby and other special interests — would have to justify their carve-outs, which are effectively expenditures, in the same way that eduction, social services, law enforcement, state parks, and everyone else has to justify their levels of funding. Fair’s fair.

There’s also a tactical brilliance to the bill because it could set up a judicial showdown on Tim Eyman’s I-1053, which is very likely unconstitutional.

  • Under 1053’s distortion of democracy, the legislature needs a two-thirds majority in each house in order to close a tax loophole, no matter how egregious or irrelevant, which is an all but impossible threshold—not to mention one that appears to be at odds with a plain-language reading of the state constitution.

    Here’s where things get interesting. Attaching sunset dates to tax loopholes is something of a gray area: it’s a move that is probably not subject to 1053’s two-thirds requirement since a sunset date is not, by itself, raising taxes—and particularly not if the sunset date is set for some future legislative session. With sunset dates, loopholes would get closed (and taxes raised) not by an affirmative action of the legislature that would require a two-thirds majority, but simply by non-action. In other words, by taking no action and simply letting the loophole expire at its sell-by date, taxes would go up seemingly in violation of 1053. (Of course, a legislature could always choose to extend or re-open a loophole by simple majority vote.)

    All of this is uncertain, of course, which should provoke litigation, or otherwise require a state supreme court ruling on the measure’s constitutionality. And a judicial ruling could well be the death-knell for Eyman’s undemocratic minority rule.