Guide to tax preference reviews
This guide to the Joint Legislative Audit and Review Committee's (JLARC) tax preference reviews provides information about the purpose of tax preference reviews, the Citizen Commission for Performance Measurement of Tax Preferences, the review process, and what reviews address.
Tax preference reviews are studies that assess whether the state’s tax preferences are working as intended
- Reviews cover many policy areas such as agriculture, economic development, and aerospace.
- Reviews must address certain criteria and follow a standard process each year.
Citizen Commission for Performance Measurement of Tax Preferences
- Five citizen volunteers who are appointed by each caucus and the Governor.
- Established in 2006 (Chapter 43.136 RCW).
- Sets schedule for reviewing preferences, hears public testimony, and comments on the reviews.
What is a tax preference?
A tax preference is a reduction in the amount of state tax owed by an industry, business, or individual. These include tax exemptions, credits, deductions, exclusions, preferential rates, and deferrals.
Some tax preferences are intended to incentivize certain behavior, such as encouraging beneficiaries to hire new staff or remain in WA.
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Did you know?
Since 2007, JLARC has reviewed over half of the state's 700+ tax preferences.
Reviews follow a standard process
July
Present preliminary report to JLARC.
August - October
The Citizen Commission considers the report, hears public testimony, and adds comments.
December
Present the final report to JLARC.
January
Present the final report to the legislative fiscal committees.
By law, reviews must address:
Public policy objectives
What did the Legislature intend to accomplish? Has the preference achieved those goals?
Beneficiaries
Who is affected directly or indirectly by the preference? How much have they saved?
Revenue and economic impacts
What are the impacts to the taxpayers and the state?
Other states
Do other states have a similar tax preference?
Racial equity
What is the effect, if any, on racial equity?
Recommendations
Should the Legislature continue, modify, clarify, or terminate the tax preference?