State Treasurer James McIntire is proposing a constitutional amendment that would create a 5 percent state income tax to fund education in Washington.
That's the headline part of his plan.
McIntire's proposal also calls for eliminating the state property tax; setting an increased limit on local property taxes; limiting all business-and-occupation taxes to the Boeing Co.'s rate of 0.29 percent of gross receipts; and dropping the state sales tax from 6.5 percent to 5.5 percent.
The proposal also calls for a constitutional amendment to require 60 percent majorities in both the Washington House and the Senate to change the new income, sales and B&O tax rates. "We have to assure voters that we are not going to gouge them," McIntire said.
The bottom line is that this proposal would raise an extra $4 billion each budget biennium for schools and colleges, McIntire said at a Monday press conference. McIntire's idea is for legislators and others to discuss this proposal between the 2015 and 2016 legislative sessions to come up with a plan to send to voters in November 2016.
"It's not perfect," he said of his proposal. "It's a starting point for a conversation."
He added, "The result would be a tax system that actually raises more money."
As of now, Washington's tax system is universally considered as the most regressive tax system in the nation -- meaning the poor pay significantly larger percentages of their incomes on taxes than the rich. McIntire said the imbalance has resulted in a dilemma where, while Washington's economy grows, the state's tax revenue has not kept pace with that growth. Consequently, meeting all of the state's educational needs over the long term is impossible, with the available money never catching up with the requirements, he said.
The Washington Supreme Court ruled in 2012 that the state's teacher-to-student ratios in Grades K-3 need to be dramatically reduced and a long-term plan must be put in place to adequately fund the state's basic education needs. And Washington's voters passed an initiative in 2014 to require similar teacher-student ratio reductions in Grades 4-12. The Washington Legislature is deadlocked with huge philosophical, taxing and budgetary differences on how to comply with these obligations.
Last week saw a rash of bills and proposals from Democrats and Republicans, plus Washington Superintendent of Public Instruction Randy Dorn, to tackle school financing, levy reform and other educational fix-it measures. And those proposals came even as the Senate Republicans and House Democrats were starting budget negotiations that include paying for education. But those talks immediately stalled.
Sen. David Frockt, D-Seattle, and Rep. Chris Reykdal, D- Olympia, said that while they have concerns about some parts of McIntire's plan, they believe it should be explored -- including setting up a task force between legislative sessions to work out a plan for 2016.
"It has something for both sides," Reykdal said. "There are a lot of tax cuts," Frockt added. They said that long-term reform in the tax structure is what the Supreme Court is looking for in a legislative fix to basic education.
Senate Majority Leader Mark Schoesler, R-Ritzville, said McIntire's plan is very complicated. And he said his caucus is focused on finishing the current budget talks rather than on a possible tax system restructuring in the future.
Rep. Bruce Chandler, R-Granger and the House GOP's lead budget writer, said his caucus would be interested in participating in between-sessions discussions. But he also has qualms about changing the status quo in the state's tax structure.
"We have, for all its faults, a stable tax system," Chandler said, pointing to the regular growth in revenues year to year. He said he is concerned about an income tax providing a less predictable source of revenue than Washington's current sources.
McIntire said he has talked privately with a few Republican lawmakers about his proposal, but declined to publicly discuss their feedback in detail. The treasurer, who is a Democrat, said, "I think some Republicans are willing to go with the concept."