Tax policy changes, burdens considered as lawmakers approach 2016 legislative session

Washington state tax policy remains at the top of political discussions. As Lauren Drake reports in the Columbian, successfully addressing the state Supreme Court’s mandate to increase K-12 funding has spurred interest in structural reform. A host of issues are involved: the role of local levies in school funding, disparities among school districts in property wealth, the proper allocation of tax burdens among various classes of taxpayer (business and individual), and more. Drake writes,

Gov. Jay Inslee has called fixing the inequity in the state’s public school system a $3 billion problem. Others have estimated it could be as much as a $6 billion problem…

Recently, Inslee proposed two ways to boost school funding: a cap-and-trade proposal and a carbon tax. Revenue from both, the Democratic governor argued, could be poured into schools districts’ coffers. In the Republican-controlled state Senate, the proposal was a nonstarter.

Economic growth has eased the pressure for new or increased taxes, but there’s still no agreement on the extent of the problem or the need for a fix. 

A profile of the new House Appropriations chair, Hans Dunshee, by Melissa Santos of The News Tribune suggests the 2016 session won’t see major changes.

Dunshee said he’d be happy if lawmakers can simply agree on what fixing the problem will cost.

“Talking about the solutions freezes everybody up around here,” he said. “We need to figure out what the size of the problem is first.”

Yet Dunshee’s estimate — that the state needs to come up with an additional $4 billion every two years — is unlikely to be embraced by Republicans who control the state Senate.


While tweaking may be all that happens next session, there’s still plenty of discussion of more sweeping changes. The Spokesman-Review editorial board weighed in Sunday, calling an income tax proposal advocated by State Treasurer Jm McIntire better than the current system.

[McIntire] has proposed an amendment to the state constitution that will cut the business and occupation tax, eliminate the state property tax, roll back the sales tax, and institute a 5 percent income tax dedicated to funding education. A $15,000 exemption would apply to individuals; $30,000 to couples…

McIntire wants his reforms placed on next November’s ballot. There is little chance legislators will vote for a plan that includes an income tax, which voters have repeatedly rejected, although not as part of a tax reform package as comprehensive as McIntire’s.

That said, his plan deserves hearings in which the pluses and minuses can be discussed. The present system damages our economy by punishing business, especially small business, and does not fully fund education.

We wrote about McIntire’s plan last spring

The business tax burden, as we’ve noted here, The Washington Research Council provides additional perspective in this podcast

In the short election-year legislative session, it’s unlikely that there will be any significant change in tax policy. On the other hand, the current discussions make it quite likely that the tax policy debate will extend through the 2016 campaign season. A good background on how the state tax structure works can be found in our foundation report, beginning at page 25.