Senate Bill 5150, sponsored by Sen. Rosa Franklin, D-Tacoma

Let’s face it: No one wants to or likes to pay taxes. But we all benefit from the government services paid for by our tax dollars.

But I believe in tax fairness for our citizens and it’s time to start an intelligent discussion about this issue. Progressive tax reform is a bold step in the right direction, and levels the playing field.

Opponents would say that it’s not a good time to reform our tax system. Income tax reform would add stability, structure and fairness to our tax system.

Q: What’s our current tax structure look like?

A: Washington’s basic tax structure includes:

• a property tax on real estate;
• a Business & Occupation tax on business receipts; and
• a sales tax.

Q: What do our state taxes pay for?

A: Taxes pay for a wide variety of government services, including schools, state parks, health care, children’s programs, and law enforcement. These services benefit each and every Washington resident. For an illustration of the benefits received from your tax dollars in the 29th District, click here.

Q: How long has the current tax structure been in place?

A: Our current tax structure was created at the early part of the 20th century. It was designed to work well in an economy based on commercial agriculture, manufacturing and locally based commerce. Times have changed and this has become an outdated tax structure especially when compared to other states.

Q: Everyone keeps saying that our tax system is ‘regressive.’ What does that mean?

A: Because our tax structure relies heavily on sales taxes, our revenues take a downturn when the economy is in a recession. Fairness is the other issue. It also impacts lower incomes the most. The sales tax rate is the same for everyone, and bears no relation to your income or what you can or cannot afford.

For example:

• Those who make less than $20,000 per year pay nearly 16 percent of their income in state and local taxes.
• And those who make more than $150,000 pay roughly 4 percent.

Clearly, those who can least afford it, pay most of their income in state and local taxes. By continuing to use this system, we are asking low-income families to pay four times as much in taxes than the wealthy. This is wrong!

Q: Sen. Franklin, why are you pushing for reform now? What’s changed?

A: Actually, this is not a new issue for me. The Washington State Tax Structure Study Committee studied our tax structure and came up with legislative recommendations in 2002. In 2003, I introduced a bill on income tax reform and have done so every year since.

Q: What would your bill do?

A: Senate Bill 5150 would:

• Lower the state sales tax to 3.5 percent. Local sales taxes are not affected.
• Eliminate the state’s share of the property tax.
• Impose a graduated income tax on personal income of individuals, estates and trusts.
• Cap regular property tax rates at 0.64 percent reducing the current 1 percent lid by the amount of the reduced state levy. Currently, regular property taxes (as opposed to “special,” which are voter approved) are “capped” at a maximum of 1 percent of value. Because the proposal would eliminate the state’s share of the property tax, the cap would be lowered so that overall property tax rates wouldn’t increase.
• Set aside a portion of the income tax receipts to be deposited into the Student Achievement Account, which was established when Initiative -728 (to reduce class sizes) was passed in 2000. The Student Achievement Account funds K-12 class size reductions and other educational improvements. The amount is based on student full-time equivalents. Additionally, the amount per student would increase every year.

Q: Any other bills?

A: Yes.

SJR 8209 (sponsored by Sens. Rosa Franklin and Jeanne Kohl-Welles, D-Seattle)

• The constitutional amendment authorizing the restructuring in SB 5150 also requires future tax rate changes to garner a 60 percent vote of the people. Future tax decreases, such as exemptions, credits, preferential rates and exclusions would have to receive a 60 percent majority vote of the Legislature to pass.
• If approved by the voters, the restructure would take effect Jan. 1, 2009.

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