Thursday, April 27, 2017

New taxes, yes or no? Differing sides laid out their cases

Advocates made a case for K-12; others called out our regressive tax structure; many (but not all) who showed up from business said no to B&O and real estate tax revamps

  • SB 5929 - Concerning investing in Washington families by improving the fairness of the state's excise tax system by narrowing or eliminating tax preferences, imposing a business and occupation tax surcharge while eliminating tax liability for small businesses, enacting an excise tax on capital gains, modifying the real estate excise tax, making administrative changes, and implementing marketplace fairness in Washington. ...(You can comment on the bill by clicking on the bill number link.)

In the first action of 2017's first special session, the Senate Ways and Means committee heard a bill Wednesday that proposes new tax revenue to pay for investments in K-12. This is the final year for the state to phase in its plan for full funding of the state's program of basic education, and neither House nor Senate has a budget that doesn't require more state taxes.

At The Arc of King County we are concerned about inadequate state funding for K-12, including special education , which is part of the state's program of basic education. We are also concerned about the state's inaction on investing in a community-based system of services for people with intellectual and developmental disabilities, and on other investments needed to build the foundation of support that enables everyone to give back and thrive.

The Senate earlier passed a proposal that requires a substantial property tax increase in King County while swapping out or reducing property taxes in other counties.

During the general session, members of the House introduced a bill that would change or implement new taxes and try to address some aspects of our regressive system, but it did not have a hearing. Wednesday's bill hearing covered those tax ideas. None of the tax proposals deal with our reliance on sales taxes for revenue.

The package would raise $770 million in 2018 and an additional $1.9 billion in 2019; in the 2019-21 biennium it would raise $4.3 billion.

Here is the opening language of SB 5929. It lays out intent:

"The legislature further finds that our tax system is the most upside down and regressive in the nation, allowing those who earn the most to pay the least in taxes. The legislature finds that as a percentage of personal income, middle-class families pay two to four times in taxes compared to top earners. Moreover, low-income Washingtonians pay seven times more in taxes than our wealthiest residents.
Further, the legislature recognizes that as a result of the state's regressive tax structure, Washington's small businesses are overburdened. Despite low profit margins, the legislature finds that small businesses are taxed at the same rate as our high profit corporations without benefiting from the special tax preferences that many of our large corporations enjoy.
The legislature finds that this imbalance is not only detrimental for these taxpayers, but that the consequences are damaging for our state budget."
The Arc of King County encourages you to learn about the proposals and weigh in with your elected leaders.


TAXES 101 - Great resources, compliments of our state's legislative staff

Taxes only make up about 43 percent of our state revenue. Other sources are federal revenue and grants (for instance, Medicaid matching funds); licenses, permits and charges for services; borrowing; and other sources

Washington is one of just seven states that does not levy a personal income tax.

Per capita, we pay less than the U.S. average in taxes. See chart, at right. (Taken from the state's budget guide.)

Following is written testimony sent to members of the Senate Ways and Means committee. The Arc of King County also testified at the April 26, 2017 hearing.

To: Senate Ways and Means
Re: PRO, SB 5929, Concerning investing in Washington families

Dear Chair Braun and committee members,

Thank you so much for the hearing today on SB 5929.

The Arc of King County advocates for the rights of people with intellectual and developmental disabilities to live, learn, work and play in the community. We want what everyone wants -- a community that supports and invests in its members, so individuals are empowered to give back.

Taxes and families are each essential to building this kind of community, and we support additional investments in services and an equitable approach to tax revenue because we believe they will reinforce families and ensure individuals thrive.

Washington can afford both a great K-12 system and a strong network of community support.

Our current tax system, however, isn’t working well, and at The Arc of King County we are interested in approaches that help stem its regressive nature. At the same time, we are concerned about over-reliance on property taxes.

Housing is expensive in King County and we see the toll. While technically home hunting is not part of Supported Living, our director for that department often personally helps clients find affordable housing. And just this year our family support team added a housing stability specialist to help families and young adults with developmental disabilities stave off homelessness.

So, proposals such as the one in your education bill that seem to rely heavily on property taxes from King County alarm us.

Many of the families we support are middle to lower income, and the individuals with intellectual and developmental disabilities we support live near or at poverty. The current tax structure hits them hard.

At the same time, we agree with the need to invest in K-12 while also maintaining and investing in human services. Cuts are not viable.

Whether a child has access to a general education in grades K-12 and remains on the path to a regular high school diploma has a significant and long-term impact on the adult lives of people with developmental disabilities. And yet special education in our state is capped and underfunded, jeopardizing access.

Meanwhile, access to employment, health care and community supports means people with developmental disabilities can work or volunteer. In contrast, a delay or cut in services, such as for positive behavior supports:

  • Places youth at higher risk of suspension or expulsion or other lost learning time in school, and higher risk for engagement in child welfare or juvenile justice systems, and
  • Places adults at higher risk of institutionalization, isolation within the community, or homelessness.
At The Arc of King County, we are engaged in issues that touch all aspects of life. It is all integrated. Across services, people in the disability community keenly feel the consequences when foundational supports are weak or missing.

Finally, families play an outsized role in the developmental disability community, providing a lifetime of care giving, emotional and financial support that far exceeds typical families. Eighty percent of the clients of our state’s Developmental Disability Administration live with family members. Most family caregivers provide more than 40 hours of care a week; and four out of 10 provide at least 80 hours of care a week.

Families rely on the community to have their back, so to speak, and help ensure work, schools and recreation are inclusive and accessible.

The great thing is, Washington can do this. Yes, we need to be thoughtful and prepared for bumps that come with change, but we have wealth and caring citizens. We can build those community foundations necessary so everyone can give back and thrive.