Representative Chris Reykdal (D-Tumwater) and Senator David Frockt (D-North Seattle) will introduce a bill early next week that will bring equity to our tax code, while opening the doors to higher education for lower and middle class families.
“Just this morning the Supreme Court ruled that we aren’t meeting our constitutional requirements to basic education, and we know that access to higher education is diminishing for citizens across our state,” said Reykdal. “These facts alone should compel us to discuss reforming a tax system that is the most unstable and regressive in our country.”
The Higher Opportunity Promise for Education (HOPE) Act would eliminate the Business and Occupation tax completely, while lowering the sales and use tax from 6.5% to 5%- a 23% reduction. This lower tax rate will apply to all personal and professional services.
The loss in revenue would be offset by a constitutionally-capped one percent tax on personal income and corporate gross profits. Washington would be the 46th state in the country to stabilize its revenue stream through both an income tax and a sales tax.
These fixes would generate an estimated $500 million in new revenue each year, all of which would be dedicated to the Education Legacy Trust Account.
“What we propose is the single most comprehensive overhaul of our tax system in the state’s history, but more importantly, what we propose is common sense,” said Reykdal “I look forward to working with legislators on both sides of the aisle on this foundational issue.”
Under the legislation, tax reform would not occur until 2015 and this bill is not a proposal to fix the current budget crisis. Instead, Frockt envisions a long-term plan to prevent a similar crisis from occurring in the future.
“This proposal is intended to transcend the current crisis. Our goal is tax reform with the idea of creating a sustainable funding base for vital public investments.” said Frockt. “This provides lower, simplified, rates and a broader base combined with stability and fairness in order to better support a key driver of economic growth – a robust education system for all our citizens.”
The bill does include a referendum clause, which will ensure that voters have a chance to weigh in on the proposal.
Read a detailed letter from Reykdal and Frockt here, and learn more about the HOPE Act here.