Tuesday, April 21, 2015

State Treasurer McIntire Makes Bold Play - Offers Comprehensive Tax Reform to Fully Fund McCleary and Higher Education.

Concerned about the effects of McCleary on our long term budget outlook and reacting to concerns from the bond market, the State Treasurer’s office offered a revenue reform package earlier this week.  State Treasurer Jim McIntire upped the stakes in the dueling budget wars by offering a bold, comprehensive state revenue reform program that would increase the state’s competitiveness, reduce the tax burden on low and middle income residents, and fully fund basic and higher education.  

The proposal centers on a 5% flat income tax and stabilization of the B&O tax for retail, wholesaling, and manufacturing (RWM).  B&O rates for the service sector would be reduced by 1/3rd and RWM would be shifted to the current tax rate enjoyed by Boeing at .29%.  The revenue would also replace the current  portion of the state property tax, cap local levies, and reduce the sales tax from a statewide 6.5%  to 5.5%.  Unlike previous attempts to create an income tax – this one would have a voter approved constitutional amendment that locks in the rates, requiring a legislative super-majority to change them.

According to McIntire, the bond market has been growing more and more concerned with the state’s judicial mandate of McCleary and the shrinking tax base in Washington.  Since our schools rely on bond sales to fund capital improvements to our schools, this is a concern that affects every family in our state.  The new proposal would increase the tax base, allow for steady revenue growth, and add some predictability to future state revenue projections.  For more information, click here.

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