Passions ran high on both sides of Senate Bill 5769 at a Tuesday morning public hearing before the Washington State Senate Committee on Business, Financial Services and Trade.
SB 5769 is four-part tax relief bill that would exempt the first $250,000 of a primary residence from the state property tax, eliminate the business and occupation tax, repeal the new capital gains income tax, and get rid of the new long-term care program and the tax that pays for it.
The so-called homestead tax exemption would be contingent upon passage of a constitutional amendment providing for such an exemption.
“We have about – a little over – $10 billion of revenue available to us this year, and I think that now of all time – being in such good shape with the budget – it is the opportunity for us to be able to give back to our taxpayers,” said Sen. Lynda Wilson, R-Vancouver, prime sponsor of SB 5769.
The state budget has nearly doubled over the last 10 years, she pointed out, with wage growth for public employees significantly outpacing that of residents. Inflation, which is at a 40-year high, is also putting a strain on people, she said.
On a per capita basis, Washington state residents pay a higher tax burden – $750 more – than the national average, she said, citing the most recent comparative tax burden report by the state Department of Revenue.
“So, that is my appeal,” she said. “Thank you.”
Her pitch was mirrored in what supporters of the legislation had to say.
“I am in favor of SB 5769 because I agree it’s time for some tax relief for the average citizen,” said Val Mullen, a retiree who lives near Sedro-Woolley.
She noted the state’s coffers are full in spite of COVID-19 lockdowns, mandates, and business closures, while regular folks pay for the higher cost of living.
Mullen made her point with the increased price tag of a popular condiment.
“A jar of mayonnaise that I bought for $4 a few months ago now costs more than $8,” she said. “Our tax burden is off the charts.”
Tommy Gantz, director of government affairs for the Association of Washington Business, focused most of her ire on the new capital gains income tax.
“With the budget outlook and revenue forecast, there is no justification for any operating tax increase, including the capital gains tax,” she said.
Jason Mercier, director of the Center for Government Reform with the Washington Policy Center, was all-in for SB 5769.
“I’ve been monitoring the state’s balance sheet for 20 years, and I’ve never seen a better opportunity for lawmakers to provide broad-based tax relief for Washingtonians,” he said.
Mercier went on to note, “And since the legislature adopted the budget, the revenue forecast has increased in ongoing funds $8 billion – $8 billion in revenue growth since the budget was adopted. And since November, that’s another $350 million of more tax collections.”
He concluded, “The opportunity is now. The revenues are there. Every other state has been enacting record tax cuts. It’s time for Washington to join those and provide that tax relief for inflation increasing the cost of living for Washingtonians.”
Others were concerned the proposed tax cuts would blow a hole in the state budget and the services it pays for.
“Our coalition asks that the legislature pass no tax cuts this session that do not directly benefit the low-income people of Washington state who are most suffering right now,” said Emily Parzybok, executive director of Balance Our Tax Code.
Carolyn Brotherton, policy associate with the Economic Opportunity Institute, echoed those sentiments.
“This bill will largely benefit the wealthy who have seen their wealth grow this year,” she said. “Cutting state revenues will only fuel more underinvestment.”
Charles Mayer, a family doctor who serves as co-chair of the Economic Inequity Task Force for Washington Physicians for Social Responsibility, indicated his strong opposition to SB 5769 and its provision for getting rid of the new capital gains income tax.
“This bill is filled with creating community illness,” he told the committee. “It will carve out a devastating $1.75 billion chunk from early learning and basic education programs for our kids. It will remove the most equitable change to our tax code in the last 80 years.”
