Washington State is Grabbing from the Feds
By Federal law, U.S. Federal Government lands and property are exempt from state and local property taxes, just like sales to the U.S. Government are exempt from state sales taxes. This means that, for example, the feds don't have to pay property taxes to Wyoming for the buildings and improvements in Yellowstone National Park.
Most states may sulk about this but they live with it. However, a few of the most tax-avaricious states, including California and Washington, have found partial way around this.
I just got my "Leasehold Excise Tax Return for Federal Permit or Lease" from the state of Washington. What the heck is this? First, some background. My business runs campgrounds under concession contract with the US Forest Service in Washington State. These concession contracts are legally like leases, in that I lease the facilities for a percentage of sales payment in return for running them for-profit. Washington State can't charge property taxes on the campground itself, since its Federal property, so they charge a steep tax on the rent we pay to the Federal Government. In Washington, the tax this year is 12.84% of the rent payed.
Yes, that's right. The state only charges this special tax for rents payed to the US Government. No other rents get taxed. The tax exists for no reason other than to get around the limitations on taxing the US Government's property.
If asked, Washington would piously state that, oh, we aren't taking any money from the feds, we are taking it from private entities. Yes and no. Yes, I as a private entity, I am paying it. But, given how I bid for these leases, the state tax clearly comes right out of the Feds hands. When I bid this project, I figured out what rent I could pay the government, and then backed out how much I would have to pay Washington State and bid the lower sum to the Feds. In this case, Washington State is very clearly taking money right out of the US Government's pocket.
And for what? Washington State provides no services or utilities to the campground. The US Forest Service provides the fire protection, its own law enforcement officers, its own water and sewer systems, and its own roads. There are no residents on the property, so no one associated with the property is using schools or other services. And, because of sky-high sales and lodging taxes in Washington (from 10-12.5% of sales for camping), the properties are already contributing a ton to state coffers.
