NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Monday, March 27th, 2017

House Democrats unveil “Families First” budget proposal, embrace capital gains tax

Law­mak­ers rep­re­sent­ing Wash­ing­ton State’s House Demo­c­ra­t­ic major­i­ty took the wraps off of their bud­get this after­noon, offer­ing a stark­ly dif­fer­ent plan for the next bien­ni­um than the Sen­ate Repub­li­cans did last week.

“Our approach to the bud­get is ‘what’s best for kids?’ This bud­get and our [edu­ca­tion fund­ing] plan is what’s best for kids,” the cau­cus tweet­ed dur­ing a press con­fer­ence high­light­ing key ele­ments of the pro­pos­al.

The draft House Demo­c­ra­t­ic bud­get calls for $44.7 bil­lion to be invest­ed in Wash­ing­ton’s pub­lic ser­vices over the next two years. $3 bil­lion in new rev­enue would be raised to sup­port these invest­ments.

Key aspects of the bud­get that dif­fer from the Sen­ate Repub­li­cans’ pro­pos­al:

  • Freezes col­lege tuition at Wash­ing­ton’s pub­lic col­leges and uni­ver­si­ties: “Unlike our col­leagues in the Sen­ate who have cho­sen to raise tuition, our bud­get freezes tuition,” says Rep­re­sen­ta­tive Drew Hansen.
  • Does­n’t reject fed­er­al mon­ey for health­care: “Unlike the Sen­ate Repub­li­cans we are accept­ing the Med­ic­aid Trans­for­ma­tion waiv­er, over $1 bil­lion in fed­er­al fund­ing,” says Rep­re­sen­ta­tive Eileen Cody.
  • $350 mil­lion invest­ment in men­tal health includes mon­ey for salaries: “Our biggest invest­ment [in men­tal health] is actu­al­ly in pay­ing those folks who are pro­vid­ing men­tal health­care both out in the com­mu­ni­ty and in our hos­pi­tal set­tings — to make sure that folks can actu­al­ly get the care that they need. And that’s prob­a­bly the most fun­da­men­tal dif­fer­ence between the Sen­ate Repub­li­can bud­get and ours,” said Rep­re­sen­ta­tive Lau­rie Jink­ins.
  • Does­n’t raise prop­er­ty tax­es on fam­i­lies in sub­ur­ban or urban school dis­tricts through a “levy swipe” scheme.

The cen­ter­piece of the rev­enue com­po­nent of the plan is a cap­i­tal gains tax on the wealthy, which House Democ­rats esti­mate would raise approx­i­mate­ly $715 mil­lion dur­ing the next bien­ni­um. The tax would only be levied on Wash­ing­ton’s 48,000 rich­est tax­pay­ers. The oth­er 98.5% would be unaf­fect­ed. Sales of sin­gle fam­i­ly homes as well as retire­ment accounts would be exempt.

Wash­ing­to­ni­ans are over­whelm­ing­ly in favor of levy­ing a cap­i­tal gains tax on the wealthy to meet our state’s para­mount duty. Last year, NPI found that sup­port among Wash­ing­to­ni­ans for a cap­i­tal gains tax had increased to six­ty-five per­cent.

The spe­cif­ic lan­guage of our cap­i­tal gains tax ques­tion was as fol­lows:

Do you strong­ly sup­port, some­what sup­port, some­what oppose or strong­ly oppose tax­ing the cap­i­tal gains of wealthy indi­vid­u­als to help pay for pub­lic schools, col­leges and uni­ver­si­ties?”

These were the answers:

  • Sup­port: 65%
    • 46% “strong­ly sup­port” a cap­i­tal gains tax
    • 19% “some­what sup­port” a cap­i­tal gains tax
  • Oppose: 33%
    • 9% “some­what oppose” a cap­i­tal gains tax
    • 24% “strong­ly oppose” a cap­i­tal gains tax
  • 2% answered “not sure” 

More than three-fifths of our respon­dents also agreed that schools are under­fund­ed and that the State of Wash­ing­ton should increase rev­enue to invest in them.

Our ques­tion:

Do you strong­ly agree, some­what agree, some­what dis­agree or strong­ly dis­agree with the fol­low­ing state­ment: Washington’s pub­lic schools are under­fund­ed, and we need to raise state rev­enue to ful­ly fund them?

These were the answers:

  • Agree: 63%
    • 45% “strong­ly agree” that we need more rev­enue for schools
    • 18% “some­what agree” that we need more rev­enue for schools
  • Dis­agree: 32%
    • 18% “some­what dis­agree” that we need more rev­enue for schools
    • 14% “strong­ly dis­agree” that we need more rev­enue for schools
  • 6% answered “not sure” 

Our sur­vey of 679 like­ly Wash­ing­ton State vot­ers was in the field from June 14th-15th, 2016; all respon­dents par­tic­i­pat­ed via land­line. The poll, con­duct­ed by Pub­lic Pol­i­cy Polling, has a mar­gin of error of +/- 3.8% at the 95% con­fi­dence lev­el.

Wash­ing­ton has the most upside down, regres­sive tax code in the nation, as the chart below shows. The low­est income fam­i­lies cur­rent­ly pay the most in tax­es, while the wealth­i­est fam­i­lies pay the least. That’s inequitable and unac­cept­able.

State & Local Taxes in 2015 by income

The House Demo­c­ra­t­ic bud­get brings us a step clos­er towards end­ing this inequity.

Gov­er­nor Jay Inslee praised the pro­pos­al in a state­ment issued through his office.

“When I rolled out my bud­get pro­pos­al in Decem­ber, I was very clear that any final bud­get must meet two cri­te­ria: 1) Ful­ly fund edu­ca­tion; and 2) Pro­tect vital state ser­vices for our most vul­ner­a­ble,” the Gov­er­nor said.

“The House bud­get does both those things. Their pro­pos­al ful­ly and amply funds edu­ca­tion while pro­tect­ing crit­i­cal ser­vices for our fam­i­lies and com­mu­ni­ties. The bud­get the Sen­ate approved last week fails on both counts. That bud­get calls for large prop­er­ty tax increas­es and makes min­i­mal new invest­ments in edu­ca­tion while cut­ting ser­vices to our stu­dents, their fam­i­lies and vul­ner­a­ble peo­ple.”

“I am pleased we have two leg­isla­tive bud­gets on the table and I look for­ward to work­ing with the Sen­ate and House over the com­ing weeks so we can reach agree­ment on a bud­get that ful­ly and amply funds edu­ca­tion and works for all Wash­ing­to­ni­ans,” the Gov­er­nor added.

NPI com­mends the House Demo­c­ra­t­ic cau­cus for craft­ing a bud­get that would put Wash­ing­ton State on the road to pro­gres­sive tax reform.

The next step is to go from words on paper and pix­els on screen to action: the House should demon­strate to Wash­ing­to­ni­ans that it is ready to enact these ideas into law so that vot­ers appre­ci­ate who’s real­ly stand­ing in the way of rev­enue fair­ness: the Sen­ate Repub­li­cans.

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