Gov. Inslee wants capital gains tax, big boost in education spending
Gov. Jay Inslee has unveiled a $39 billion, two-year budget that boosts spending by $5 billion over the current biennium, saying it is time to “reinvest in Washington” particularly in education and with the state’s largest-ever early learning investment.
The governor, who disclaimed the need for new taxes in 2012, called for a 7 percent tax on capital gains earnings above $25,000 for individuals and $50,000 for couples, saying that less than 1 percent of state taxpayers have an income above these thresholds.
Profits from home sales and retirement accounts would be exempt from the tax.
Inslee blamed the Legislature for failing to “muster the gusto” to close tax loopholes, saying he has “tried to avoid” tax hikes.
The key increases in spending are contained in a $2.3 billion education plan, which would cut kindergarten-through-third-grade class sizes to 17, and implement full-day kindergarten statewide.
The spending for public schools, less than 39 percent of the state’s General Fund in 2007, would rise to 47 percent under the governor’s plan.
Inslee is also proposing a boost in state social services. The state would hire 100 child protective and child welfare service workers to speed up investigations of abuse and neglect, and make sure that kids in foster care receive safe care.
The state would increase mental health treatment capacity by adding 145 beds to prevent boarding of psychiatric patients, plus another 35 beds designed to shrink wait times for those in jail waiting for evaluation and restoration services.
Inslee is also proposing to restore money for a popular but long-starved state program — the Washington State Parks system, much of which is forced to close for part of the year.
The Inslee budget would The Governor’s proposal received an immediate, skeptical Republican response. Rep. Bruce Chandler, R-Granger, the GOP’s ranking Appropriations Committee member, noted that state revenues are predicted to rise $3 billion in the coming biennium.
“If we can’t balance the books with an 8 percent increase in revenues, folks back home should be very concerned,” Chandler said in a statement.
House Majority Leader Pat Sullivan, D-Covington, took a different perspective, noting pains inflicted by the Great Recession.
“It is clear that after seven years of program reductions and now a large budget shortfall that some, new targeted revenue will be needed, ” said Sullivan. “It’s also clear that this shortfall we will be facing cannot be filled with cuts alone.”
The state’ depends on sales tax revenues. Its voters have repeatedly rejected an income tax, even on millionaires. Income from sales taxes goes down during recessions, at the very time more people need social services and retraining programs provided by community and vocational colleges.
“Washington’s tax structure is a Ford Pinto in a Tesla world,” said State Rep. Reuven Carlyle, D-Seattle, House Finance chair. The tax system is “economically inefficient” for business as well as “patently unfair” to the middle class, said Carlyle.
The Legislature during the last biennium’s budget debate, staying in session almost until the beginning of summer before reaching bipartisan agreement on a plan.
Inslee has said he anticipates “storm and fury.” The governor is hoping that lawmakers will turn to his proposal to charge major polluters “allowances” for what they discharge into the atmosphere. The allowance levels would be gradually lowered.
Inslee has said the “Carbon Pollution Reduction and Accountability Act” would put $1 billion a year into state coffers, while providing Washington’s 6 million residents with cleaner air.
Of his capital gains tax proposal, Inslee said: “This is a fair way to raise needed revenue. It avoids an additional burden on the vast majority of Washington taxpayers. This is not intended to show a lack of respect for those who would pay. We honor success in Washington, but we also always strive for fairness.”
In briefing reporters, the governor said he had identified $400 million in possible cuts, but that some potential reductions would be “devastating.”
Inslee said those in the Legislature, the corridors of power and the ivory tower often cannot see and feel what cuts in social services do to ordinary people.
State Sen. Andy Hill, R-Redmond, chairman of the Senate Ways and Means Committee, charged that Inslee is proposing “massive tax increases.”
“Instead of prioritizing spending and living within our means, the governor would rather rewrite the rules in order to increase state spending by more than $5 billion,” Hill said.
Hill is a possible Republican gubernatorial candidate in 2016. Inslee campaigned for his opponent in last fall’s election.To continue reading: http://blog.seattlepi.com/seattlepolitics/2014/12/18/inslee-budget-capital-gains-tax-big-boost-in-education-spending/