House Democrats' budget features new capital gains tax
The House Democrats released their 2015-17 budget proposal last week with more revenue specifics than many had anticipated. House leaders said their $38.8 billion spending plan a nearly 13-percent increase over the last two-year budget would meet key requirements of the state Supreme Court’s McCleary decision that ordered the Legislature to fully fund basic education in Washington by 2018.
The House budget proposes enacting a five-percent tax on capital gains lower than the seven percent proposed by Gov. Inslee. The tax – which would exempt most sales of primary residences and retirement funds – would raise about $570 million a year.
Meanwhile the Republican chairman of the Senate Ways and Means Committee Andy Hill decried the House plan. “The House’s reliance on volatile tax increases goes against the state’s paramount constitutional duty to fund education with a reliable and stable revenue source” Hill said. “While increasing state spending by $5 billion the House still puts students last tying education funding to tax increases. I’m not sure if that’s unconstitutional or just unconscionable. With the state projected to receive an additional $3 billion in new revenue from economic growth tax increases should be the last resort not the first response. Voters have made it clear they want state government to live within its means not repeatedly ask for more money to go to Olympia.”
Another major source of revenue in the House budget comes from increasing the business and occupation tax on service businesses such as doctors lawyers and architects. An increase of 0.3 percentage points in the tax rates for those businesses coupled with an increase of the small-business credit to $100000 for those businesses would generate $532 million in new revenue in the next two years.
House Democrats also set their sights on ending seven tax breaks. Their budget would repeal a sales-tax exemption on bottled water limit sales-tax breaks for Oregon residents who purchase small items in Washington and get rid of tax breaks for travel agents tour operators and resellers of prescription drugs among others. Together those tax adjustments would raise $384 million.
The House budget proposes enacting a five-percent tax on capital gains lower than the seven percent proposed by Gov. Inslee. The tax – which would exempt most sales of primary residences and retirement funds – would raise about $570 million a year.
Meanwhile the Republican chairman of the Senate Ways and Means Committee Andy Hill decried the House plan. “The House’s reliance on volatile tax increases goes against the state’s paramount constitutional duty to fund education with a reliable and stable revenue source” Hill said. “While increasing state spending by $5 billion the House still puts students last tying education funding to tax increases. I’m not sure if that’s unconstitutional or just unconscionable. With the state projected to receive an additional $3 billion in new revenue from economic growth tax increases should be the last resort not the first response. Voters have made it clear they want state government to live within its means not repeatedly ask for more money to go to Olympia.”
Another major source of revenue in the House budget comes from increasing the business and occupation tax on service businesses such as doctors lawyers and architects. An increase of 0.3 percentage points in the tax rates for those businesses coupled with an increase of the small-business credit to $100000 for those businesses would generate $532 million in new revenue in the next two years.
House Democrats also set their sights on ending seven tax breaks. Their budget would repeal a sales-tax exemption on bottled water limit sales-tax breaks for Oregon residents who purchase small items in Washington and get rid of tax breaks for travel agents tour operators and resellers of prescription drugs among others. Together those tax adjustments would raise $384 million.