A new personal income tax, slashed business taxes and elimination of the state property tax: State Treasurer Jim McIntire calls for a revenue overhaul to fund K-12 education.
OLYMPIA — State Treasurer Jim McIntire has a “grand bargain” in mind on tax reform and he wants to bend your ear.
McIntire on Monday released a plan to overhaul the state’s tax system and also help fund a proposal released by state schools Superintendent Randy Dorn aimed at meeting the state’s court-mandated K-12 education obligations.
Among other things, the McIntire plan would institute a 5 percent personal-income tax with some exemptions, eliminate the state property tax and reduce business taxes. The plan would raise billions of dollars, some of which would go toward funding education under the state Supreme Court’s mandate known as the McCleary decision.
The proposal also would lower the state sales tax to 5.5 percent from 6.5 percent.
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McIntire argued that an overhaul is necessary because the state’s current tax structure has caused the tax base to shrink over the past few decades.
“It is mathematically impossible for us to sustain an adequate investment in education on a shrinking tax base,” he said.
That problem, in turn, has caused school districts to rely too heavily on local property-tax levies to pay for teacher salaries and other education needs — which the state Supreme Court found unconstitutional in the McCleary decision.
McIntire, a Democrat and former state lawmaker, would make many of those changes via a proposed amendment to the state Constitution he wants on the 2016 ballot.
The amendment would also establish a three-fifths majority-vote requirement in the Legislature to change taxes.
As drafted, the plan would raise $7 billion in state revenue but would lower local levies by $3 billion, for an overall increase of about $4 billion.
McIntire called his plan a conversation starter to move the discussion toward finding a long-term solution. He says he plans to travel around the state to talk about it.
“We need to have less of an ideological conversation about this,” he said in a news conference.
The tax overhaul would help fund the proposal Dorn released last week. That plan would go further than lawmakers’ current plans to lower class sizes, but not quite as far as Initiative 1351, the measure voters passed in November to lower K-12 class sizes.
Lawmakers and Gov. Jay Inslee have proposed to lower only K-3 class sizes; Dorn’s plan would do that, plus lower class sizes in grades 4-12, but to a lesser extent than called for in I-1351.
Dorn’s plan would also set teacher salaries in statewide bargaining — shifting some of those costs from local school levies to the state — rather than district by district.
The concept of a tax overhaul comes as lawmakers and state officials have been issuing budget proposals and local property-tax reform plans to generate the billions of dollars necessary to fund education.
Rep. Chad Magendanz, R-Issaquah, said he appreciated McIntire putting forth a plan. But he took issue with McIntire’s argument that an ambitious overhaul is necessary, saying more can be done within existing tax structures.
Regardless, “I just don’t see it happening on the timeline we’re required to fulfill for McCleary,” said Magendanz, the ranking Republican on the House Education Committee.
Voters may not welcome McIntire’s argument, either. In 2010, a proposed income tax on high earners failed by a nearly 30-point margin.
And the plan may not find much enthusiasm among lawmakers, who have yet to agree on a 2015-17 state budget and the other proposals to reform local school levies.
The Association of Washington Business declined Monday to comment on McIntire’s proposal.
A larger conversation needs to be had about taxes, said Sen. David Frockt, D-Seattle, who worries that the state Supreme Court won’t be satisfied with a short-term fix on education spending.
“I worry that we’re going to come out of this session with perhaps some additional revenue on the existing base,” said Frockt, who attended Monday’s news conference. “But it’s not going to be enough.”
On whether such an overhaul is politically feasible, Frockt cited the relatively quick change that occurred over whether to hike the minimum wage in Seattle.
“There was no minimum-wage discussion until a few years ago, and it’s now percolated up,” he said.