Tax amnesty brings in cash – and equity

The state should look at going after more uncollected tax revenue

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The state's three-month amnesty for those who haven't paid their taxes was incredibly successful.

In fact, the state collected $321 million from tax scofflaws, far surpassing the original estimate of $24 million made when the idea was pitched by Gov. Chris Gregoire.

The Olympian newspaper reported last week that of the total collected, the state took in $264 million and local governments garnered $57 million. Nearly 11,000 businesses, most small operations doing less than $1 million in business a year, took part in the amnesty program.

Most of those businesses -- 8,888 (clearly a lucky number, at least for the state) of them -- were paying back taxes, thus avoiding penalties and fines. One in 20 participants were large businesses, The Olympian reported. This included one big business that agreed to pay tens of millions in back taxes that it was contesting in court, according to state Revenue Director Suzan DelBene and Gregoire.

DelBene also estimated there were about 1,000 businesses the state wasn't collecting taxes from because they weren't on the state registry. Now the state will be watching.

The extra cash is desperately needed given the state's current fiscal crisis. Since it's already in hand, it can be used to plug some holes in education and other immediate needs.

However, this windfall won't come close to bridging the $5.1 billion gap between the projected revenue and estimated spending over the next two years.

Nevertheless, getting these businesses to pay their taxes now should result in continued revenue in the future, assuming the owners want to remain in compliance with the law.

It's likely there are far more than 8,888 businesses that owe back taxes in Washington state.

Perhaps the state could find a way -- one that pays for itself -- to recover back taxes from others who owe.

Maybe, for example, the state could announce a second tax amnesty, making it clear there wouldn't be a third. Some of the money recovered could then be used to aggressively go after those who owe back taxes. This, too, should be made clear.

And beyond the additional revenue, getting businesses to pay the taxes they owe -- the same taxes paid by every other business -- helps bring equity to the tax system.

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