In 2001, then-Senator and current King County Council member Dow Constantine and I authored the legislation to create what came to be known as the Gates Commission.
I served on the commission with Mr. William Gates, Sr., Mr. Hugh Spitzer, some noted academic economists and accountants, and three fellow legislators, including then-Rep. Jim McIntyre, who is now the state Treasurer.
I have heard it said that the Gates Commission final report has sat on the shelf, but that’s not accurate. Several measures arose from that report:
· A Constitutional Rainy Day Fund -- one of the main recommendations of the group -- was implemented successfully two years ago in a bill introduced by Gov. Gregoire and sponsored by me and Sen. Joe Zarelli.
· I believe the work of the Commission helped created the momentum behind keeping the state portion of the Washington state estate tax in 2005 and dedicating it to the Education Legacy Trust Fund – which the voters upheld when they rejected Initiative 920 in 2006.
· I also believe the Commission’s work was furthered by the efforts of Sen. Craig Pridemore last year to set up a working families tax credit for regular families to get a rebate on the sales tax they pay each year – an effort that was unfortunately put on hold this year.
· Finally, there was an extensive advisory group of organizations and individuals that were part of the Commission’s work. Participants in the advisory group have gone on to work on issues of tax fairness both in regards to policy and public education. A couple of these groups are the Washington Tax Fairness Coalition and the Economic Opportunity Institute (you can read a report on the issue from EOI here). The Spokane Alliance and the Sound Alliance have also taken on this issue.
The Washington Budget & Policy Center argues that we need new revenue to address this budget crisis and many legislators agree with them.
There’s been a lot of talk in Olympia recently about a sales tax increase, but we need a revenue proposal that makes things better and fairer for regular families in our state -- not worse.
We need to keep in mind that, in Washington, individuals in the lowest 20 percent of the tax bracket pay 17 percent of their annual income in state taxes, and individuals in the top 20 percent of the tax bracket pay less than 3 percent. For a sales tax to be fair, any increase would have to include a full working families tax credit to offset the unfair impact on those who are hardest hit by our tax structure.
I also worry that a sales tax increase would make us even more dependent on an extremely volatile revenue stream. Consider recent evidence: state revenue, more than half of which comes from the sales tax, has taken a nosedive in the current recession. The total downward adjustment of state revenues since the last legislative session is $4.9 billion – $2.3 billion in the past two months alone.
The New York Legislature is considering what I think is a fair and stable way of addressing their revenue challenges.
Should we do something similar in Washington?