The projected budget shortfall Washington is now facing presents a unique opportunity for state policymakers to write a budget that stimulates broad economic growth by making our tax system fairer and more in sync with our 21st century economy.
Steady investment in the public structures of everyday life – roads, courts, safety inspectors, schools and the like – yields huge civic dividends, including well-educated citizens, profitable businesses, safe communities and a clean and healthy environment.
But Washington’s outdated tax structure, with over 580 special tax breaks and exemptions on the books, is steadily eroding our ability to invest in education and workforce training, update our transportation infrastructure, and protect our environment.
What’s worse, existing taxes fall too heavily those least able to afford them: low- and middle-income earners. And in the next few years, demands for existing state services will likely exceed existing public revenue, even without needed improvements and expansions.
Below, Marilyn Watkins outlines three proposals that provide new tax cuts or credits to businesses and homeowners, while broadening our tax base to generate $2 billion in new revenue for investments in education, health care, and other essential services:
- Increase the B&O tax credit for small businesses, and roll back some of the 581 special interest tax breaks now on the books. Net: $269.5 million. | Read
- Expand the sales tax base to include selected goods and services while automatically reducing B&O taxes for affected businesses. Net: $784.4 million. | Read
- Cut the state portion of the property tax in half, and institute a new “high-incomes tax” that exempts the first $200,000 of family income, begins at 3 percent and jumps to 5 percent on incomes over $1 million. Net: $1.08 billion. | Read
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