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February 6, 2012 in City
Wash. legislator: let’s vote on a capital gains tax
OLYMPIA, Wash. (AP) — The Senate’s chief budget writer on Monday proposed a plan that would have voters decide not only on a temporary sales tax increase this year, but also on a permanent capital gains tax that would be dedicated to paying for education for the long term.
Sen. Ed Murray, D-Seattle, told The Associated Press that he doesn’t want the bulk of education cuts or cuts to critical care hospitals to be decided by voters, as proposed by Gov. Chris Gregoire in November.
Instead, Murray said that he wants to see Republicans and Democrats work together to maintain those programs, by increasing some business and occupation preferential rates, increasing the cigarette tax, extending the beer tax and reducing the sales tax break for cars purchased from auto dealers, among other things. The sales tax proposal that would go to voters would help backfill other cuts lawmakers might make, and the capital gains tax would address education.
But the revenue votes that Murray wants to take up in the Legislature to prevent putting education cuts on the ballot require a two-thirds vote, which means majority Democrats would need Republican votes, something Murray says he is hopeful for.
Murray said putting education and critical health care on the ballot is a “win or lose scenario.”
“We shouldn’t take that risk,” he said. “We should take care of that problem here.”
Murray said he hadn’t yet talked to Republicans about his proposal, but he believes they will want to work to reduce cuts that directly affect their districts, like to rural hospitals, instead of leaving it to voters. Murray said that while he’s talked to the Democratic caucus, there wasn’t yet consensus.
Republican Sen. Joe Zarelli, the Senate GOP’s lead on budget issues, expressed skepticism toward Murray’s plan.
“I would say it’s highly unlikely they would muster two-thirds to do all of the above,” he said. “It’s solving a problem by raising a bunch of taxes.”
Zarelli said that while a legitimate discussion could be had on reviewing tax preferences, or eliminating a first mortgage tax deduction for large national banks as Murray suggests, Republicans want to focus on reforming government before talking about taxes.
But Murray stressed that those actions alone won’t solve the state’s nearly $1 billion budget crisis, so in addition to sending voters a temporary sales tax increase, as proposed by Gregoire, Murray also wants voters to decide on a capital gains tax. Murray says his proposal would ramp down the amount of that sales tax that would go down as a permanent capital gains tax of 5 percent would start in Jan. 1., 2013.
Capital gains taxes are applied when someone makes a profit off of the sale off of something, like stocks or real estate.
“Cutting alone won’t solve the problem long term,” Murray said of the need for sending a tax proposal to the voters.
Under Murray’s referendum proposal, a half-cent sales tax increase would take effect on July 1, bringing in nearly $500 million to help the current budget. In 2014, the sales tax would decrease to three-tenths of one cent. In 2015, it would decrease again to two-tenths of one cent, and in 2016, it would go away completely. The capital gains tax would be permanent, and dedicated to paying for basic education in the state.
Lawmakers returned to the Capitol on Jan. 9 for the 60-day legislative session, tasked with addressing the projected budget deficit through June 2013.
Gregoire wants a buffer of several hundred million dollars in case the economy underperforms, meaning legislators will have to make about $1.5 billion in cuts or find new revenue. The Democratic governor has also asked the Legislature to send a temporary sales tax to the November ballot to help offset those pending cuts.
Senate Democrats have said they would have a budget proposal ready shortly after the next revenue forecast, which is scheduled for Feb. 16.
© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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valleyman on February 06 at 12:39 p.m.
Times get rough - impose more taxes!!! The Democrat Party way…
This is the starkest example yet of why these buffoons need to be tossed from office. Let’s not make this state more attractive for investors and job creators, let’s make this a state those with means actively flee…
de3 on February 06 at 1:00 p.m.
We’ve got way fewer people working now than we did 4 years ago, so we need to extract more tax money from fewer people.
This is not going to end well.
JayNW on February 06 at 1:07 p.m.
its only going to make people invest less money, and get the oppostite end result than what they are looking for. not a good idea to tax more of investment funds.
fhstorey on February 06 at 1:07 p.m.
What should be on the agenda is education reform. Considering what we pay, we should have the much better results that should arrive if the system employed school choice strategies. Every voter ought to be offended by the more of the same offered by the congressional majority. Poorer education results, higher taxes.
polistra on February 06 at 1:30 p.m.
Capital gains tax simply wouldn’t work at the state level. The people who would be paying it can afford all sorts of tricks to get around it. They already do that with federal cap gains tax, but it would be vastly easier and less costly with a state tax.
johnclarke on February 06 at 1:58 p.m.
Gotta agree, this is not a good idea. I would prefer to take a hard look at the tax breaks for companies like Boeing etc. Considering the riches in the Puget Sound region, maybe it’s time for these corporations to pay what they are supposed to pay.
dougfresh on February 06 at 2:17 p.m.
yeah cap gain tax as a state is not a good idea, people with the real wealth will just establish residency in a different state to get around it (as they already do with the Estate tax), and the tax will mostly hit people with lower amounts of wealth / income.
Now bumping the tax rate back to 20% on the federal level isn’t a bad idea.
Nugget on February 06 at 2:17 p.m.
Money to go ONLY to education? Uh, I think I heard that line when they wanted to pass the lottery bill. “Just look how much money we will be able to give to the school system!” Yes, I remember that quote!! Now that money (lottery sales) goes to the general fund. No more “ONLY TO EDUCATION” because it won’t last.
No Olympia! You tried that before & it worked……..not this time!! Fool me once, shame on you; fool me twice, shame on me!!
dataxman on February 06 at 2:30 p.m.
Realize this would impact businesses in our State very little as most companies do not have capital gains. This is geared to the investors in a business - and non-business Washington residents that buy and sell stock. While the DOR can audit the cap gains of a business when they are there doing an Excise Tax Audit, a new mechanism will have to be established to capture cap gain data from those who are not currently required to file. Luckily, DOR spend a few million a couple of years ago putting a system in place to set up non-business residents for the ‘Working Families’ tax credit. So now we have the poor in the system - and pretty soon the rich (and the not-so rich but who happen to have cap gains after they sell the Starbucks stock they bought last year). When that works then a seamless transition to a State income tax…
Enjoy having a tax auditor sitting in your front room looking through your brokerage statements.
nslopeofw on February 06 at 3:06 p.m.
How about we get rid of the morons that think this is a good idea. I think a state sales tax at almost $0.09 with no cap, unreal property taxes, very high gas taxes, outrageous “sin” taxes, blah, blah, blah, are enough. Plus, never is a tax temporary to the government (example: the levy the schools want us to renew this year, that was temporary the last time they asked for it) We are not California. We cannot continue down this road of spend, spend, spend.
Time to get some fiscally responsible people in office. Make the hard cuts needed, balance the budget, and live withing our means.
Dazzeetrader11 on February 06 at 3:13 p.m.
This is just a variation on the income tax she tried in 2010. Tax the successful investors….it’s tiresome and WRONG.,
These Dems will continue to try for money…,rich, poor…really doesn’t matter.
Gregoire broke the budget with her union spending, her handouts, social programs and her inability to get the point…;: times are tougher than ever….cut the budget. YOu broke it, you fix it all on your own. NO MORE TAXES!
She, of course knows this is another “rich vs whomever” tax.
She wants the public (who is underwater in multiple areas) to turn on people with money or 401s ,etc to pay for her crazy spending.. Almost unethical…but it’s Obama’s way so why not Gregoire????
WHS on February 06 at 3:16 p.m.
I don’t see this going anywhere… As even I agree with the majority of responders on this one… Well other than dazee’s inane ramblings.
WHS
mtharves on February 06 at 4:27 p.m.
I agree with others and especially JohnClarke. We need some more revenues and getting rid of several of the larger tax preferences would be the place to start. Andy Billig has been trying this ( rep from the 3rd). Tax on capital gains does not sound viable at the state level.
oneanddone on February 06 at 5:23 p.m.
Murray said putting education and critical health care on the ballot is a “win or lose scenario.” “We shouldn’t take that risk,” he said. “We should take care of that problem here.”
It’s apparent that Murray has forgotten just whose money he’s talking about. Not his of course, but he’s obviously sure he knows better how to spend it.
8john on February 06 at 5:44 p.m.
If the legislature would take a good look at the education “budget” they would be able to find ways to cut the budget and no one would notice it at all. Education results might just improve.
I looked at one proposal for an “education” budget - it looks like a lot of special interests and pet projects got in and key programs are cut or reduced.
If we just stop passing local financial support of schools we could save a lot of money, in addition to what the legislature could cut.
Education is a place where a lot of “extras” could easily be cut. Lets see the cuts and then see if we have extra money in our bank accounts to give the state.
dataxman on February 06 at 6:25 p.m.
Enough money could be raised if the Legislature just fixed some recent Supreme Court decisions and tightened up some verbiage in tax laws that are slowly bleeding the general fund dry. Dot Foods, Homestreet Mortgage and AgriLink would be hundreds of millions. Add in a few other poorly written exemptions and the budget is balanced
Dazzeetrader11 on February 06 at 6:32 p.m.
WHS….what’s inane about the post? It’s exactly what I said.
Why don’t you come up with something instead of trying to insult? Answer please. I know , from your previous posts, that you’re against the wealthy and write like a socialist. Your opinions are fine…you’re entitled to free speech…but answer my questions….AND remember…YOU started it.
catfuzz on February 06 at 10:43 p.m.
Typical Democrat mindset. They forget that their actions have consequences. Raising taxes discourages people from doing whatever it is being taxed. Capital gains will only result in people investing less. Higher sales taxes will result in people buying less. And the most appalling, the taxpayers are just not smart enough to decide for themselves. We better just take the money without letting them decide if they want to give it to us. Worthless hacks.