Washington state Reps. Laurie Jinkins and Kristine Lytton want to close tax breaks for banks and out-of state shoppers. The estimated savings of $170.3 million would go toward reducing class sizes.
WASHINGTON stands at a crossroads.
Do we assume the role of victim in this worldwide recession caused by out-of-control Wall Street speculators and let them continue to profit from tax breaks?
Or do we stand up for the individuals and families who have courageously persevered through a financial crisis they had no hand in creating?
Over the past three years of the recession, the Legislature has cut about $5.1 billion in government services to keep the operating budget balanced. But revenue projections continue to be lower than expected, and we must address a $5.1 billion shortfall for the next biennium in just one legislative session.
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Many of the cuts being considered would hurt public education, undercutting our duty to prepare our next generation.
Most citizens want to preserve education. That’s why we’re fighting to keep it strong by introducing legislation to roll back two of our most egregious tax breaks. There are more than 570 tax breaks in Washington law. A huge number of them don’t create the jobs they promised or add to the economy in any way.
House Bill 2078 would close a pair of tax breaks: the tax exemption for Wall Street banks earning more than $100 million on first-time home mortgages and the sales-tax exemption for out-of-state shoppers.
Ending those two breaks would generate $170.3 million every two years and, in return, the bill calls for the savings to provide our youngest students with the teacher attention they need to become successful at reading, writing and math.
A 2007 analysis by the Washington Institute for Public Policy linked class-size reduction in the early grades with improved test scores and better outcomes. Smaller classes also help with teacher retention. The $170.3 million won’t get us nearly to the class-size levels we should be at in an ideal world, but it will certainly help.
Extending the sales tax to tourists is the fair thing to do. We are not expecting a major drop in retail sales in border counties.
The state’s exemption for banks was originally intended to help a once-fledgling Washington Mutual compete against other corporate banks.
Washington Mutual perished in the financial collapse, but the exemption remains, allowing banks to write off their interest earnings from first mortgages. No one is aware of any other state offering a similar exemption.
Removing these tax giveaways sounds like a no-brainer, right? But it’s not so easy because voters approved Initiative 1053 last fall, which gives us just two ways to remove tax breaks: through a vote of the people or a two-thirds majority vote of the Legislature.
There is no more stark choice — our young kids and their education or big Wall Street banks.
Last year, state general fund revenues were more than $1 billion lower than in the 2005 budget cycle. This year, state spending per capita is at its lowest level since 1986. Our $32.4 billion budget proposal for 2011-13 is actually $200 million less than that of the 2007-09 budget in real dollars, despite population gains, inflation and rising caseloads for state services.
We have a revenue problem that’s devastating our education system and social-service safety net. We need systemic revenue reform, but in the short term, our modest proposal is a start.
Some people say we shouldn’t bother. There’s no point. It’ll never get a two-thirds majority. These tax breaks are untouchable.
Both of us have school-age children. We want to be able to say to them that, when it mattered most, when times were toughest, when the odds were against us, we gave everything we had to stand beside our neighbors for justice and opportunity — not for some of us, but for all of us.
Let’s say “no” to Wall Street banks and “yes” to our own children.
Reps. Laurie Jinkins, D-Tacoma, left, and Kristine Lytton, D-Anacortes, are sponsoring House Bill 2078.