H-1836.2                  _______________________________________________

                                                      HOUSE BILL 2087

                              _______________________________________________

State of Washington                              53rd Legislature                             1993 Regular Session

By Representatives Cothern, Karahalios, Wang, Romero, G. Fisher, Rust, Holm, G. Cole, Eide, Dorn, Sommers, Heavey, L. Johnson, Anderson, Locke, Kessler, J. Kohl and Brown

Read first time 03/03/93.  Referred to Committee on Revenue.

Directing the department of revenue to examine tax system revisions.

          AN ACT Relating to revision of the tax system; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  The legislature finds that our current state tax system is in need of restructuring.  The current system, which was designed over time in a piecemeal fashion, is due for an in-depth analysis that takes a hard look at a system that has worked remarkably well over the years, but that admittedly needs to be modernized.  The legislature intends to reform our current tax system to arrive at a high quality state revenue system that: Is composed of a variety of balanced sources and elements that complement each other; produces revenue in a reliable manner; treats individuals equitably; is easy to understand and administer; and is accountable to taxpayers.

          (1) The department of revenue shall conduct an analysis of the state tax system.  The analysis shall focus on revisions to the current system and alternative tax structures.  The objective of the analysis is to develop recommendations for comprehensive tax system reform.  The tax recommendations and suggested tax alternatives must meet the following criteria:

          (a) Adequately fund basic services for the state;

          (b) Provide for progressive tax rates, address the regressiveness of the current tax structure, with tax fairness as an outcome;

          (c) Provide a stable revenue source that is not affected by or is more resistant to business cycles than our current tax system;

          (d) Be designed with built-in flexibility so that future revenue needs are met;

          (e) Improve the economic vitality of the state in relation to the world economy;

          (f) Attract and retain a wide range of small and large businesses in the state; and

          (g) Be easy to comply with and simple to administer.

          (2)(a) The department of revenue shall submit an initial report to the fiscal committees of the legislature by September 1, 1994.

          (b) The house of representatives and senate shall form a ten-member joint committee, comprised of five members from each chamber, with three members from the largest caucus and two members from the next largest caucus, to be appointed by the speaker of the house of representatives and the president of the senate, respectively.  The joint committee shall review the initial report and recommend at least two alternative tax structures, which must comply with the criteria under subsection (1) of this section.

          (c) The joint committee, with the assistance of the fiscal committees of the house of representatives and the senate, shall, within a six-month period, hold open public meetings throughout the state on the alternative tax proposals.

          (3) The governor and the leadership of the house of representatives and the senate shall meet in December 1994 to choose one of the recommendations of the joint committee to be introduced as legislation during the 1995 session and referred to the people as a referendum in the general election in November 1995.

                                                           --- END ---