Democrat Ed Murray proposes capital-gains tax for education
Sen. Ed Murray, D-Seattle, favors a new capital-gains tax to help pay for education. He suggests putting the proposal on the ballot along with a temporary sales-tax increase.
The Associated Press
OLYMPIA — The Senate's chief budget writer on Monday proposed a plan that would have voters decide not only on a temporary sales-tax increase this year but also on a permanent capital-gains tax that would be dedicated to paying for education for the long term.
Sen. Ed Murray, D-Seattle, told The Associated Press that he doesn't want the bulk of education cuts or cuts to critical-care hospitals to be decided by voters, as proposed by Gov. Chris Gregoire in November.
Instead, Murray said that he wants to see Republicans and Democrats work together to maintain those programs, by increasing some business-and-occupation preferential rates, increasing the cigarette tax, extending the beer tax and reducing the sales-tax break for cars purchased from auto dealers, among other things. The sales-tax proposal that would go to voters would help backfill other cuts lawmakers might make, and the capital-gains tax would address education.
But the revenue votes that Murray wants to take up in the Legislature to prevent putting education cuts on the ballot require a two-thirds vote, which means majority Democrats would need Republican votes, which Murray says he is hopeful of getting.
Murray said putting education and critical health care on the ballot is a "win or lose scenario."
"We shouldn't take that risk," he said. "We should take care of that problem here."
Murray said he hadn't talked to Republicans about his proposal but believes they will want to work to reduce cuts directly affecting their districts, such as money for rural hospitals, instead of leaving it to voters. Murray said that while he's talked to the Democratic caucus, there wasn't yet consensus.
Republican Sen. Joe Zarelli, the Senate GOP's lead on budget issues, expressed skepticism toward Murray's plan.
"I would say it's highly unlikely they would muster two-thirds to do all of the above," he said. "It's solving a problem by raising a bunch of taxes."
Zarelli said that while a legitimate discussion could be had on reviewing tax preferences, or eliminating a first-mortgage tax deduction for large national banks as Murray suggests, Republicans want to focus on reforming government before talking about taxes.
But Murray stressed that those actions alone wouldn't solve the state's nearly $1 billion budget crisis, so in addition to sending voters a temporary sales-tax increase, as proposed by Gregoire, Murray wants voters to decide on a capital-gains tax.
Capital-gains taxes are applied when someone makes a profit from the sale off something, such as stocks or real estate.
Under Murray's referendum proposal, a half-cent sales-tax increase would take effect July 1, bringing in nearly $500 million to help the current budget. In 2014, the sales tax would decrease to three-tenths of one cent. In 2015, it would decrease again to two-tenths of one cent, and in 2016, it would go away completely. The capital-gains tax would be permanent, and dedicated to paying for basic education.
Lawmakers returned to the Capitol Jan. 9 for the 60-day legislative session, tasked with addressing the budget deficit through June 2013.
Gregoire wants a buffer of several hundred million dollars in case the economy underperforms, meaning legislators will have to make about $1.5 billion in cuts or find new revenue. She has also asked the Legislature to send a temporary sales tax to the November ballot to help offset those pending cuts.
Senate Democrats have said they would have a budget proposal ready shortly after the next revenue forecast, which is scheduled for Feb. 16.