Freshman Democrats propose ending tax breaks to fund education

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OLYMPIA – With support from 48 Democratic sponsors, the 11 newest members of the House Democratic Caucus today introduced a bill that would end more than $170 million worth of tax exemptions. The money would be redirected for smaller class sizes in K-3 to provide young children with more individualized attention.

House Bill 2078 would close a pair of tax exemptions – a B&O exemption for corporate banks and the sales tax exemption for out-of-state shoppers. Ending those two exemptions would generate $170.3 million for K-3 classrooms in 2011-13, an investment linked to basic education reforms that have stalled due to a $5.1 billion shortfall in the state’s budget.

“Smaller class size is one of the best investments we can make in the future of our state,” said Rep. Andy Billig (D-Spokane), a member of the House of Education Committee. “We need to prioritize our children and their academic achievement over the continuation of special tax breaks.”

The B&O exemption for banks, worth $86.6 million over the next two years, will be limited in scope to protect community banks while ensuring that Wall Street banks pay their fair share. The state Department of Revenue has no knowledge of any other state offering a similar exemption.

“When we’re faced with a choice to cut education funding or cut tax breaks for tourists and big Wall Street banks that can afford million-dollar bonuses for their CEO’s, it’s an easy choice,” says Rep. Laurie Jinkins (D-Tacoma). “If JPMorgan Chase can afford to give Jamie Dimon a $19 million raise, they can afford to give up this tax break. This is about making banks pay their fair share, just like they have to do in every other state.”

“As a former school board member, I’ve seen the impact of dwindling resources on our students and classrooms,” said Rep. Kristine Lytton (D-Anacortes). “Now, as a state representative, I hear from concerned parents and teachers in our community every day, urging us to find any possible way to fund our state’s paramount duty. This bill does just that. I came to Olympia to do what’s best for all of us in Washington, not just those who benefit from an outdated tax code.”

The freshman Democrats, who have dubbed themselves the “11 in 2011,” said they were inspired by the thousands of people who have been rallying and protesting in Olympia to end certain tax breaks to help protect funding for education and human services. They said the two-thirds vote requirement to close loopholes that was enacted by voters last fall isn’t a deterrent.

“Tax exemptions deserve the same level of scrutiny as any other kind of state spending,” said Rep. David Frockt (D-Seattle). “Our paramount duty is to fund education, not preferences that disproportionately benefit the bailed out financial institutions whose business practices got us into this mess. We hope two-thirds of our colleagues will agree and will support this bill.”

The other freshman sponsors include Reps. Joe Fitzgibbon (D-Burien), Connie Ladenburg (D-Tacoma), Luis Moscoso (D-Mount Lake Terrace), Chris Reykdal (D-Tumwater), Cindy Ryu (D-Shoreline), Derek Stanford (D-Bothell) and Steve Tharinger (D-Sequim).

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