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XPost: seattle.politics, alt.politics.democrats.senate

https://www.king5.com/article/news/politics/state-politics/wa-senate- democrats-raise-taxes-on-wealthy-budget-proposal/281-0abe761b-e3b8-4ae6- 9763-a2029a96bea4

OLYMPIA, Wash. — Washington Senate Democrats released its proposal
Thursday for the state's biennium budget, including new taxes on the
state's wealthiest residents to address a projected $13 billion budget
deficit over the next four years.

This is the first detailed look at lawmakers' plans, and more are certain
to follow. Each caucus in each chamber is expected to submit its budget proposal. The official deadline is Monday.

State Democrats said they prefer a budget that recoups revenue through new taxes instead of making deep cuts to state programs - putting them at odds
with Democratic Gov. Bob Ferguson, who said he saw any new taxes as a last resort.

"Rather than balance our budget entirely through devastating cuts or
doubling down on our regressive tax code on the backs of working families, we’re asking the wealthiest among us to finally do their part and pay what
they owe so that we can fund great public schools, health care, public
safety, and the services that our most vulnerable residents are counting
on," said state Sen. Noel Frame (D-Seattle), vice chair of the Senate Ways
& Means Committee.

According to a spokesperson for Sen. Frame, the state legislature has not adjusted the state's portion of the sales tax since 1983, when it was
increased from 5.4% to 6.5%.

Legislators lowered it to 5.4% in 1982 after raising it to 5.5% in 1981.

Proposals for new taxes, tax hikes
Four pillars of the Senate Democrats' five-pillar plan for addressing the budget deficit involve either levying new taxes or hiking existing ones to generate new revenue.

New tax on 'financial intangibles'
The first proposal is called a "Financial Intangibles Tax" which would
impose a cost of $10 on every $1,000 of assessed value on certain
financial assets for some individuals.

Stocks, bonds, exchange-traded funds and mutual funds held by individuals
with more than $50 million worth of these assets would be subject to the
tax. It would impact around 4,300 wealthy state residents.

The tax would generate $4 billion per year beginning in 2027, which would
fund public schools.

A tax on employer payroll expenses
A second new tax would charge large employers 5% on their payroll expenses above the Social Security threshold. Social Security taxes wages up to
$176,100 per year. The new payroll tax would kick in on wages or other compensation above the threshold.

This mimics the City of Seattle's Jumpstart tax, which implements
staggered taxes on Seattle companies that pay their employees more than $150,000 or $500,000 a year. Businesses already paying the Jumpstart tax
would not be required to pay the state tax.

The tax, in Seattle and the one proposed by Senate Democrats would only be levied against companies with $7 million or more in payroll expenses. This would impact about 5,289 companies in Washington state and would be
expected to generate $2.3 billion a year for schools, healthcare, public
safety and wellness programs, and assistance for seniors and those with developmental disabilities.

Retooling the property tax formula
The third pillar of the plan would repeal a limit on property tax
increases for local jurisdictions. In Washington state, taxing districts
are only allowed to raise property taxes by 1% per year. Instead, this
plan would link property tax increases to a combined rate factoring in population growth plus inflation.

At the same time, those enrolled in the state's property tax exemption for senior citizens and those with disabilities would not be required to pay
state property taxes at all. Local governments would be allowed to use a
lower growth rate when calculating property taxes if they so choose. Projections estimate this strategy would generate $779 million for the
state over four years.

These funds would go toward school funding, public safety, criminal
justice and community protection.

Repealing 'ineffective and obsolete' tax exemptions
Senate Democrats identified 20 different tax exemptions the Joint
Legislative & Audit Review Committee determined did not meet their public policy objective or the exemption had become legally obsolete. Repealing
these exemptions would generate $1 billion over a four-year budget cycle
that would go toward public schools, healthcare and social services.

"Wow, it was a lot," said Sen. Chris Gildon (R-Puyallup).

Gildon said he and fellow Republican Senators proposed without tax
increases or deep cuts to state services.

The proposal calls for redirecting funds from the state's Climate
Commitment Act and rejecting negotiated raises in a contract for state employees.

He said imposing taxes on the state's richest residents and business will
only send them to other states.

"They have a house somewhere else, they have choices," said Gildon. "I
think capital flight is a very real risk under this proposal."


Decreasing the state sales tax by 0.5%
At the same time Senate Democrats are seeking to hike taxes on the
wealthy, they appear to be seeking a break for the average consumer
through a 0.5% decrease in the state sales tax. This would eat from the
state's budget at a rate of $1.3 billion a year.

Under the proposal, sales tax would be reduced from 6.5% to 6%.

In their proposal, Senate Dems cited Washington's regressive tax
structure, which puts a disproportionate burden on lower-income families.

"This proposal reflects what we’ve heard from our communities: the
wealthiest few should share more of the responsibility of investing in
public schools and the services people need," said Senate Majority Leader
Jamie Pedersen. "People across the political spectrum... express their frustration with a tax system that is rigged against working and middle-
class families."

Gov. Ferguson on new taxes
The Senate Democrats' focus on new and hiked taxes puts them at odds with
the state's top elected official, Gov. Bob Ferguson. So far, his budget proposals have included asking all state agencies to cut their budgets by
6%, and a mandatory furlough day for all state employees once a month, including other cuts to state funding.

Ferguson said his budget would maintain all K-12 investments and adopt all
of former Gov. Jay Inslee's education investments, totaling more than $15 billion annually, which would increase the state's total education budget.
He also plans to maintain current funding for public safety.

In a previous sit-down interview with KING 5, Ferguson reiterated that he
sees new taxes to fill budget holes to be a last resort.


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