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The first online-only news site in state history to get media credentials to cover the state capitol and Seattle city hall, PubliCola has been called a “must-read” by the Seattle Post Intelligencer and a hot “New Media Mover and Shaker” by Seattle Magazine—which also cited our own Erica C. Barnett as the city's No. 1 news nerd.

Friday Jolt: Bank Loophole Revenue Not as Much as Believed

Jolt   November 4, 2011 at 2:47 pm Afternoon Jolt

Liberals who have been calling on the legislature to abandon an all-cuts solution to the budget by adding revenue into the mix—specifically by canceling corporate tax breaks—have been hyping one tax break in particular, a B&O exemption for banks on interest earned off first-time homebuyers’ mortgage loans.

And as we reported earlier this week, the citizen commission on tax preferences added some urgency to the lefty cause by concurring with a legislative report that recommended reviewing the $172.6 million break.

If you kept the preference in place for community banks and only repealed the break for big banks, it would only bring in $41 million.

But for today’s Jolt—not so much a winner or loser, but a shocker— here’s the cruel irony that could deflate the potency of the big bad bank example. Thanks to the recession, the mortgage business has been crummy—and that $172.6 million (a nice chunk of change to wave around) has been downgraded.

In a new analysis of tax preferences done by the state’s Department of Revenue in the wake of the devastating September revenue forecast, repealing the bank deduction would bring in $72 million less for the state ($100 million). And if you kept the preference in place for community banks and only repealed the break for big banks, it would only bring in $41 million.

Forty one million dollars is $41 million, but as a rallying cry in a $2 billion crisis, it’s not the cause celebre many think it is.


  • Ari Fineman

    That’s not what we want to hear!

  • http://twitter.com/glossolaliac Anne Martens

    Why are people surprised that there is no one magic bullet to solve the budget crises? We may have to do more than one thing here folks. When you have a $2 billion hole to close, raising $41 million is a damn good start and shouldn’t be dismissed just because it doesn’t solve everything all at once. 

    Should the legislature close the loophole for big banks? Yes. 

  • Josh Feit

    Didn’t dismiss. I said right out $41 million is $41 million. But it’s certainly not as potent a poster child anymore.

  • Jamesmi

    Good report – really !
    I wonder/assume the original purpose of the “break” was to lower the cost for the new homeowner. Doing a partial “tax reform” would give a tiny advantage to our local 1%ers over the national bank stockholders (probably including your State Employee Pension Funds, etc.).
    I generally get a kick out of how our State Parties like to comfort WA State 1%ers at the expense of Everyone else. They always get clever with verbiage and press titles, and our local news hounds lap ‘em up and sell them to the public. Check out the PDC and Federal Campaign reports for some entertaining reading. Yup, your politicians,  ”paid for by local families” ……. its a lot like the Corleones.
    Sorry I got off on the rant ….. glad you reported the new numbers and corrected a political falsehood.
    Later
    J-sa

  • http://manywordsforrain.blogspot.com/ Mr Baker

    I don’t care if it is $1, close it.

    Here is a nutty idea, how about a new B&O tax that actually increases their taxes. That’s right, I said it, raise their taxes.
    What are they going to do, leave?
    Ok, leave.

  • Anonymous

    Mortgage refinancing comes with many of the same costs as your initial mortgage. You want to be sure to recover the costs of refinancing your mortgage, particularly if you plan on selling your home within a short period of time. Use the “Official Refinance” free calculator

  • Fred

    $72m mill? Not enough to cover SEIU vacation expenses. Keep digging!

  • Fred

    How about $1 from the tribes?

  • http://manywordsforrain.blogspot.com/ Mr Baker

    How about we open the state to non-tribal gaming and tax it.

  • cause celebre hyper

    “hyping” and “cause celebre” are dismissive.

    Liberals simply have been suggesting closing loopholes generally with this one as an exmample, among other steps like raising taxes, putting on an income tax or making certain cuts like ending the war on drugs.

  • toadies of the 1%

    well said!

  • FrequentPoster

    Why an exemption for “community” banks? And $100 million is still worth pursuing.

  • Nemo

    There is still an exception for out of state banks worth persuing, They deal with mortagages. They are not community banks by that definition. There is also that tax break the rich benefit from (and would generate more than pocket change), when they buy a new car, that allows the value of a trade in to be deducted from the taxable purchase price.

    There are other no-brainer loopholes, but no guts to persue them. It’s easier to pick on those who cannot defend themselves well.