Bill would undo wheat farmers’ tax breaks

Washington wheat farmers are upset about legislation that would undo tax breaks they have enjoyed since the Great Depression. The bill, sponsored by three West Side senators, would apply business and occupation taxes to farmers with gross revenues of $200,000 – a modest sum, say farmers, at a time when costs for machinery, fuel and chemicals are soaring. Language in the bill, rooted in the findings of a special study commissioned by the Legislature three years ago, would also apply state sales taxes to farm auctions. State Sen. Mark Schoesler, R-Ritzville, assailed the legislation as “two of the cruelest proposals imaginable.” The study recommended that the Legislature establish income thresholds to apply business taxes to large farms while still exempting small farmers. One sponsor of the bill, Sen. Phil Rockefeller, D-Bainbridge Island, said he signed on to the legislation after an exhaustive Legislature-commissioned study of tax preferences and fairness. He said embedded tax exemptions written in Washington law – some since statehood – need to be revisited to ensure that the costs of government are not skewed in favor of one segment of people or business. The bill, he said, was not an attack on agriculture, but merely a systematic approach of encouraging the Legislature to review the state’s history of tax exemptions. “The key here is to ensure there’s fairness within the state’s tax system,” Rockefeller said. Farmers have been exempted from the “gross proceeds tax,” now called the business and occupational tax, since its inception in 1933. At the time state government, like now, faced a funding crisis. So the 1933 Legislature adopted the business taxes. The governor, Clarence D. Martin, vetoed that portion of the new tax as it applied to farmers. Acknowledging the burden to already struggling farmers during the Great Depression, the Legislature exempted farmers from the tax in a 1934 special session. Future tax changes kept the exemption in place. Washington’s wheat farms have been dwindling in number yet growing in size. A new report from the federal government shows Washington has lost 1,800 wheat farms in the past 10 years. Rockefeller doesn’t expect the bill to pass. It hasn’t even been scheduled for hearing since its Feb. 6 introduction. But he wants the Legislature to consider the findings of its own report that recommends ways to achieve better tax fairness. Other sponsors include state Sens. Craig Pridemore, D-Vancouver, and Adam Kline, D-Seattle. Brett Blankenship, a Washtucna farmer and vice president of the Washington Association of Wheat Growers, said farmers operate differently from many businesses who pay the B&O taxes. “Wheat growers have no ability to pass this expense on,” he said.