Should 3 percent of Washington residents have their investment earnings taxed to pay for a public education system that serves everyone? Senate Democratic Leader Ed Murray of Seattle announced last week that he thinks they should.
Murray is proposing a 5 percent tax on capital gains to start in 2015, which he said would raise between roughly $600 and $700 million per year to help fund basic education and higher education. He would want to send the tax proposal to voters as a referendum so they could decide whether or not it should go into effect, he said.
The proposal is probably a non-starter, given that a Republican-dominated majority coalition in the Senate has denounced the idea of tax increases, and even Democratic Gov. Jay Inslee has pledged not to raise taxes to solve the state’s budget problems.
But Murray said the state can’t meet its obligation to fully fund education solely by making cuts and reforming the system. Last January, the state Supreme Court ruled in the McCleary vs. State case that Washington was not meeting its constitutional duty to fund basic education.
“They can’t cut deep enough to take care of the issue we have to take care of,” Murray said of the majority coalition of 23 Republicans and two Democrats. “There are not billions and billions of dollars to be cut in state government.”
According to Murray’s estimates, a 5 percent tax on capital gains would affect only 3 percent of Washingtonians who have investments in assets such as stocks, bonds and multiple real estate properties.
Murray is also advocating continuing the state’s beer tax and business and occupation tax surcharge through 2016 to help bring in revenue while the capital gains tax collection system gets off the ground. In the 2013-2015 biennium, Murray estimates that the combination of these taxes could allow the Legislature to funnel an additional $89 million into all-day kindergarten, $220 million into reducing class sizes for elementary school students, and another $175 into the higher education system. He plans to introduce a formal piece of legislation next week, he said.
Senate Republican Leader Mark Schoesler said that he doesn’t see his caucus or the public supporting a capital gains tax.
“There’s not much difference between a capital gains tax and an income tax,” the Republican from Ritzville said Friday. He said voters clearly showed in 2010 that they don’t support an income tax when they shot down Initiative 1098, which would have raised taxes on the top 1 percent of earners.
Schoesler added that only voters in Seattle, where Murray lives and is running for mayor this year, might approve of such a proposal.
“It might play well for his constituency there, but I think there are 44 other legislative districts where this might not play very well,” Schoesler said.Here are recent posts from The News Tribune’s Political Buzz blog. For the inside scoop on government and politics, go online to blog.thenewstribune.com/politics. firstname.lastname@example.org