In my previous post, I challenged members of the state senate Democratic caucus to rally around Majority Leader Lisa Brown, and join her in openly debating the merits of a high-earners income tax. Little did I know that such support was already in the works.
As first reported by the TNT’s Joe Turner, Sen. Jeanne Kohl-Welles (D-36) introduced legislation today that would levy a one-percent tax on household incomes over $1 million, and individual incomes over $500,000. All revenue generated from this tax would apparently be dedicated toward an “education enrichment account.”
Expenditures from the account may be used for the support of the common schools and for the support of the state’s institutions of higher education. Revenues provided under this section shall not be used to supplant levels of funding existing on the effective date of this act.
All in all I’d say this is an interesting and encouraging proposal, especially considering that Sen. Kohl-Welles has managed to secure the support of five additional co-sponsers, Senators Regala, McDermott, Murray, Kline, and Fraser. That makes seven state senators, including the Majority Leader, who are at least willing to touch the reputed third rail of WA politics by publicly discussing an income tax.
As for the proposal itself, it’s a good start, though hardly a panacea even for those in the education community. Extrapolating from an April 2008 report from the Economic Opportunity Institute, such a one-percent “millionaires tax” would only generate about $260 million per biennium. And while supplementing education spending, it would do absolutely nothing to soften the blow in other desperately underfunded areas of the state budget.
The Seattle Times’ Andrew Garber describes the bill as constitutional amendment, but it is clearly not written as such. Having not had a chance to talk with the sponsors, I’m guessing the one-percent rate is intended fit within the confines of Article VII, Section 2 of the state constitution, which limits the aggregate tax levy on real and personal property to not more than one-percent per year, yet oddly enough, by implementing a standard deduction of between $500,000 and $1 million, the bill appears to run afoul of Article VII, Section 1, which limits the personal property exemption to not more than $15,000 per head of household.
Don’t get me wrong, I’m all for running afoul of the constitution, as I’m confident that the 1933 decision classifying income as property would likely be overturned upon challenge, but the Kohl-Welles bill runs afoul of the wrong provision. Instead, I would much prefer a more substantial 5% rate that would raise as much as $1.3 billion per biennium, yet only be levied on the top 0.1 percent of Washington households… the same households who have seen their incomes increase tenfold in recent years, while real incomes for most Washingtonians of declined or remained flat.
And while dedicating the tax to education is likely smart politics if your goal is building public support, a broader, more substantial, less dedicated tax on the top four percent of incomes could provide substantially more budget relief even while leaving room for a half-cent reduction in the state sales tax.
Still, I don’t want to quibble about details when the real news is that senate Democrats are willing to discuss an income tax at all, and that they’re apparently willing to consider putting it on the ballot without resorting to the nearly impossible (and most likely unnecessary) task of running a constitutional amendment.
All I’ve ever been asking for is an honest debate and vote of the people. Isn’t that the way democracy is supposed to work?