In response to the Republican budget proposal released yesterday that partially funds K-12 education by slashing services, Sen. Rosemary McAuliffe (D-Bothell) introduced a revenue referendum to be sent to the public for a vote.
“Last week Governor Jay Inslee’s budget proposal focused on closing tax loopholes and dedicating new revenue to education, lower class sizes, intensive remediation for struggling students and professional growth opportunities for teachers and principals,” said McAuliffe. “I applaud Governor Inslee’s budget proposal. Putting the education of our kids first is the right priority.
McAuliffe said that she believes the state needs a substantial overhaul of its tax system in order to fund education, including early learning for our most at risk children, lower classes in K-12 and access to college for our students through financial aid.
“I am introducing a revenue referendum and asking the Legislature to send this vote to the people,” said McAuliffe. “I believe the public deserves the chance to decide for themselves if they want to buy back detrimental cuts to the most vulnerable and fund education for our students to ensure all children have the support they need to be able to live their dreams.”
Senate Bill 5900 is a referendum to the people that increases taxes on high income earners and lowers the sales tax to 5.5 percent. This change in tax structure will raise revenue for Washington’s preschool for low income families, Early Childhood Education and Assistance Program, reduce class sizes for K-12; and help fund the College Bound Scholarships and financial aid according to McAuliffe.
Washington does not currently impose taxes on net income, but income taxes are levied by most states — 45 states impose a corporate net income tax and 43 states levy a personal income tax. Only Washington, Nevada, South Dakota, and Wyoming do not impose any form of personal or corporate income tax. Sales and use taxes are currently levied in Washington at a base rate of 6.5 percent.
Revenue collected by the new income tax will be deposited into the Education Legacy Trust Account (ELTA). Expenditures from ELTA may be used only for support of the common schools, and for expanding access to higher education through funding for new enrollments and financial aid, and other educational improvement efforts.
New income tax details
A new tax on income is referred to the voters at the next general election. If approved, a tax on income would be imposed on January 1, 2014. Individual income above certain thresholds that is earned from Washington sources is taxed at 4.5 percent. The tax is imposed on individuals, but not on estates or trusts. The tax does not apply to corporations. However, partners of partnerships and shareholders are subject to tax in their separate or individual capacities.
The tax is imposed on an individual’s income that is over $200,000. For a head of a household, income over $300,000 is taxed. For a married couple, the tax applies to income over $400,000. Both resident and non-resident individuals are subject to this tax. To avoid double taxation, the bill allows a credit for income taxes due on the same income in other jurisdictions and/or apportionment of income. A fiscal note on the bill projected that it would raise roughly $1.5 billion a year.
