The 11 newest Democratic Washington State Representatives — including the 1st District’s Luis Moscosco and Derek Stanford — Monday morning rolled out their plan to cut more than $170 million worth of tax exemptions and thus bring in more school money. The funds would then go to pay for smaller K-3 class sizes as a way to provide more individual attention for these youngest students.
The legislation would close a pair of tax exemptions – a B&O exemption for corporate banks and the sales-tax exemption for out-of-state shoppers. Ending those two exemptions would generate $170.3 million for K-3 classrooms in 2011-13, an investment linked to basic education reforms that have stalled due to a $5.1 billion shortfall in the state’s budget.
“I’ve heard loud and clear from constituents in my district to do something about funding our eroding education system, which, according to our constitution, is the state’s paramount duty,” said Moscoso (D-Mountlake Terrace.) “The federal government has bailed out financial institutions to help them survive this Great Recession; it is now the Legislature’s turn to end tax breaks for corporate banks and carry out its main duty to restore much needed education funding for our children.”
The B&O exemption for banks, worth $86.6 million over the next two years, will be limited in scope to protect community banks while ensuring that the much larger Wall Street banks pay their fair share. The state Department of Revenue has no knowledge of any other state offering a similar exemption.
Rep. Laurie Jinkins (D-Tacoma), the bill’s prime sponsor, pointed out that it’s an easy choice to pick education funding over continuing tax exemptions for Wall Street banks that can afford million-dollar bonuses for their CEOs. She said that “if JPMorgan Chase can afford to give Jamie Dimon a $19 million raise, they can afford to give up this tax break. This is about making banks pay their fair share, just like they have to do in every other state.”
The freshman Democrats, who have dubbed themselves the “11 in 2011,” said they were inspired by the thousands of people who rallied in Olympia last week protesting budget cuts and asking to abolish certain tax exemptions as a way to help protect funding for education and vital human services. They said the two-thirds vote requirement to close loopholes that was enacted by voters last fall isn’t a deterrent.
“Working families have sacrificed over and over to balance our budget, and now it’s time for out-of-state Wall Street banks and nonresidents to pay their fair share,” said Stanford (D-Bothell). “These tax loopholes aren’t serving our economy, and eliminating them will keep class sizes low in our elementary schools.”
With 38 other members joining the mission undertaken by these “11 in 2011,” House Bill 2078 has the sponsorship of 90 percent of the House Democratic Caucus.
(Source: House Democratic Caucus news release)