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Thursday, May 3, 2012

Gregoire Calls for New Tax to Fund Education

Posted by on Thu, May 3, 2012 at 2:14 PM

At yesterday's bill signing ceremony in which the contentiously negotiated supplemental budget became law, Governor Chris Gregoire boldly came out in favor of raising taxes to fund education:

We cannot meet our constitutional mandate on K through 12 and the McCleary case, our moral mandate for early learning and our economic mandate for higher education if we are not going to look at new revenue...”

Okay, I guess that's not so bold coming from a governor retiring from elective office the end of this year. But she did have some bold advice for her successor:

"To the candidates that are running, we can say 'no new revenue,'" she said. "The reality is we cannot live up to our responsibilities without new revenue. That is my opinion. It is sound. I am not playing games. It's the truth."

Yes it is. And another truth is that there's no way to raise the billions of additional dollars a year needed to fully fund education under the terms of the McCleary decision without taxing income and/or financial assets. Which brings me back to an immodest proposal I've written about a number of times before: The Education Income Tax.

The proposal is simple. An income tax would be levied, dedicated solely to funding basic K-12 education, and that income tax would be the sole source of basic K-12 funding.

The Education Income Tax essentially takes K-12 spending out of the general fund and into its own budget with it’s own dedicated revenue stream, balancing a popular public service against a generally unpopular tax. And by walling off both K-12 spending and the income tax that supports it from the rest of the budget, it eliminates the possibility of budgetary tricks through the usual fungibility of funds.

How much would it raise, and what would it look like? Well, the state currently spends about $13 billion per biennium on K-12 education, a total the court suggests may be $2 billion to $8 billion short of what's needed. Split the difference and figure about $18 billion, a little more than half the projected revenue in the next biennium. This is no high earner's income tax, but rather a more broad based alternative that would reach well into the middle class.

But in return we could eliminate the state portion of the property tax (currently dedicated to education), slash the state sales tax from 6.5 percent to 3.0, and still have billions of dollars to target at further tax cuts or program enhancements, on top of the extra $5 billion for K-12. Plus, by replacing much of our highly regressive sales tax with a progressive income tax, the majority of Washington households would pay less in total state taxes, not more, as our most-regressive-in-the-nation tax structure (and by far) is substantially flattened in the direction of fairness.

Finally, no state relies more heavily on the sales tax than Washington, a tax that keeps pace neither with economic growth nor the cost of educating our children, whereas an income tax, over time, would reliably grow revenues commensurate with our needs.

Of course, under ideal circumstances we wouldn't need to rely on gimmicks like dedicated taxes. But these aren't ideal circumstances. So anything that can get the conversation rolling on revenue is worth putting out there.


Comments (22) RSS

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Will in Seattle 1

Or we could end the tax exemptions.
Posted by Will in Seattle on May 3, 2012 at 2:30 PM · Report this
"And by walling off both K-12 spending and the income tax that supports it from the rest of the budget, it eliminates the possibility of budgetary tricks through the usual fungibility of funds."

This is exactly why I cannot support it.
Because I do not believe that the "budgetary tricks" will end.
Once our government gets an additional revenue stream it will spend it.

Drop the sales tax completely and go with an income/asset tax.
Or tack on another percentage to the sales tax.
But having both will lead to our government spending both and trying to increase both later.
Posted by fairly.unbalanced on May 3, 2012 at 2:36 PM · Report this
Goldy 3
@2: Every substantive tax increase will ultimately come before voters regardless of the constitutional status of Eyman's bogus 2/3s initiatives. Either lawmakers will refer it to the ballot, or the signatures will be gathered to challenge it via initiative or referendum.

That's just the way things work in WA state. So to say that you don't trust government is bullshit. The people will always have yay or nay.

(And by the way, the whole purpose of this is in fact to spend more money. Billions more. On Education.)
Posted by Goldy on May 3, 2012 at 2:46 PM · Report this
keshmeshi 4

You've railed before about the legislature taking money intended for other things (decided by initiative) and spending it elsewhere. You specifically decried it as subverting the will of the people. What makes you think the legislature won't divert these new funds for education to something else?
Posted by keshmeshi on May 3, 2012 at 3:00 PM · Report this
"as our tax structure is substantially flattened"
--> Don't say "flattened" when you mean "steepened". Your goal is to make it progressive instead of flat.

"a tax that keeps pace neither with economic growth"
--> You're saying that sales tax revenues don't track GDP?

"nor the cost of educating our children"
--> Why should education costs grow faster than GDP?
Posted by hrmmm on May 3, 2012 at 3:14 PM · Report this
It's a good idea, but I agree with @2. This was how the state sold us the Lottery, which now goes into the general fund. Short of enshrining the education only status of an income tax as an amendment to the state constitution, I don't see how you could make it stickā€”and good luck with getting that done.
Posted by Westside forever on May 3, 2012 at 3:16 PM · Report this
@5 "a tax that keeps pace neither with economic growth"
--> You're saying that sales tax revenues don't track GDP?

Actually, No - sales tax revenue absolutely does not track GDP.

The portion of our GDP subject to state sales tax (represented by the sale of consumer products) is shrinking, while the portion of GDP exempt from sales tax (professional services) is growing.

That's exactly why the state has been having trouble balancing our budget - it's not a spending problem, it's a revenue problem.
Posted by SuperSteve on May 3, 2012 at 3:31 PM · Report this
The state should either create another lottery to pay for K-12 or put it on the ballot and run ads using good looking fresh faced white children to promote the K-12 education tax. No blacks or latinos are to be used in the ads otherwise many citizens will say to themselves or their friends "I'm not paying for some S**c or N*****'s education". You don't want to tap into that latent WA state racism. It will suceed if they think they're paying for their own kind.
Posted by neo-realist on May 3, 2012 at 3:41 PM · Report this
@7 sounds great in theory, but look at the numbers. Both GDP and sales tax revenues are matched pretty closely over the past 2 decades.
Posted by hrmmm on May 3, 2012 at 4:02 PM · Report this
A $30 per ton tax on CO2 emissions -- the same carbon tax rate British Columbia has -- would yield $3.8 billion per biennium.
Posted by Eric de Place on May 3, 2012 at 4:24 PM · Report this
Will in Seattle 11
@10 for the Global Warming Means Education win!
Posted by Will in Seattle on May 3, 2012 at 4:42 PM · Report this

This insane witch will not disappear!

Posted by Supreme Ruler Of The Universe http://_ on May 3, 2012 at 4:52 PM · Report this
Zotz 14
@1, Will FTW. It really is that simple.

Sunset everything staggered over the next biennium or so and reauthorize those tax expenditures that make sense (very few, IMO).
Posted by Zotz on May 3, 2012 at 7:17 PM · Report this
Zotz 15
Oh, and fuck levy equalization. I'm tired of subsidizing rural glibertarian retards.
Posted by Zotz on May 3, 2012 at 7:19 PM · Report this
Max Solomon 17
very easy to call for tax increases you know will never happen when you're a lame duck gunning for a job in the 2nd obama admin.

Posted by Max Solomon on May 3, 2012 at 8:53 PM · Report this
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Posted by on May 3, 2012 at 10:50 PM · Report this
Once Steve Ballmer, Theiline Sheumann, Joe Barer, Jeff Bezos, George Bartell, Paul Allen, and the Blethens get their PR, advertising, editorial, and legislative minions on the issue, the only "politically viable" solution will be a surtax on fast food, bus fare, and second-hand clothing.

But seriously, the reason ~63% of voters voted against their own interests in defeating I-1098 (income tax on the rich, property tax reduction for everyone, higher B&O tax exemption for small business) is because our local Leona Helmsleys funded an advertising blitz that scared low-information, brass-ring-fantasizing Washingtonians into believing that the legislature would extend an income tax to *everyone* in the near future and that their aggregate tax burden would go up. I'm not sure how declaring upfront that the income tax would be broad-based will be more immune to this kind of propaganda.

@5 (hrmmm): No, "flattening the tax structure" is accurate. Only Vermont has a roughly flat effective state and local tax rate. In all other states, the effective rate is regressive, and Washington's is the most regressive of all. Currently, Washington's poor pay over 17% of their income in state and local tax and its rich pay less than 3%, with a roughly linear decline in the effective tax rate between the two extremes. Income tax would be only one component in a system that includes property tax, sales tax, and various excise taxes. Accordingly, a progressive income tax would flatten our otherwise very regressive tax structure. (Nice try though. It reminds of the flacks at Fox News, dutifully executing their orders to rant about how half of Americans "pay no tax" -- meaning federal income tax -- while conveniently omitting any mention payroll tax and state and local tax.)
Posted by PCM on May 4, 2012 at 1:23 AM · Report this
You mean the solution to the budgetary crisis may ultimately mean that you have to somehow raise revenue?

huh, guess we have to do irreparable harm before we think of obvious things like this.
Posted by Agrippa on May 4, 2012 at 5:28 AM · Report this
oh, and go ahead and put the burden on the poor and working people of Washington. The more the downward pressure, the closer the Capitalists get to paying us starvation wages, the more it sharpens the anger and outrage. No better way for more people to start understanding that government is an agent for capitalist interests. In the end this will equal more rebels taking to the streets. Acceleration for the win : )
Posted by Agrippa on May 4, 2012 at 5:35 AM · Report this
@22: so call it "a progressive tax on income designed to right the terrible wrong that the rich spend less of their income on consumption". whatevs.
Posted by hrmmm on May 4, 2012 at 9:50 AM · Report this
Goldy, you are familiar with these articles, right? ? ?………

(These three articles and the op-ed by douchebagger Micro$oft Brad pretty much says it all....)
Posted by sgt_doom on May 4, 2012 at 10:50 AM · Report this
There are several reasons state income taxes are unpopular. First for most is the hassle and cost of filing every year, even if it is piggy backed on the Federal Tax. The bureaucratic cost to administer an additional form of taxation somewhat negates it effectiveness as well. Many living or working in states with income taxes come to dislike them, but they are extremely difficult to abolish once passed. Having read a few ideas on how to address the perception of "regressive" taxes, I like the idea of a flat rebate best. Have the overall rate higher, then periodically rebate an equal amount to all taxpayers. While say $1000 to someone with $10K in income would be significant, it might mean little to a person earning $100K. I would like to see more discussion of this idea.because it seems to fairly address the regressive nature of "flat" taxes without exorbitant administrative cost.
Posted by broke on May 5, 2012 at 12:03 AM · Report this

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