UPDATE - Democrat Jinkins adds capital gains tax to agenda

Jinkins’ proposal, which is co-sponsored by 25 other Democrats, is described in House Bill 2563. The second-year lawmaker said she is not earmarking the potential revenue for any one cause, or proposing a ballot measure – although she said one is possible in the spring or November.

Democrats like Rep. Reuven Carlyle of Seattle have talked about a capital gains tax as one solution to raising funds for state higher education programs. So has the left-of-center Washington State Budget and Policy Center, which has suggested putting aside portions of a capital gains tax for higher education.

Republicans as a rule have said tax increases are off the table, although some say new revenues could be considered if certain reforms are made.

UPDATE: The GOP may not be a factor in deciding what happens. Democrats control both the House and Senate, and their leaders say any solution to the $1.5 billion budget gap needs to have revenue as part of the equation. They don't need Republican votes to put a tax measure on the ballot.

With that in mind, Gov. Chris Gregoire has proposed a temporary, half-cent per dollar increase in the sales tax to raise nearly one-half-billion-dollars a year for three years. [UPDATE: Details on Gregoire’s tax proposals are here.] Critics say a sales tax makes state tax system even less fair [i.e., the poor pay a higher share of their available resources in taxes than do the wealthy], and some want the state to look at other options.

Jinkins’ bill was referred today to the House Ways and Means Committee for hearings.

Over the past 10 years, Jinkins said staffers have calculated the tax would have brought in about $480 million a year. CLARIFICATION: But revenue varies, like many taxes, with the economy and would have generated as much as $650 million before the 2008 recession and as little as $215 million recently, Jinkins said. That is why she thinks some of it would need to be accumulated or set aside as a hedge or perhaps earmarked for programs, like State Need Grants, that can be turned on or off quickly.

“Right now the bill doesn’t earmark it. Over the course of the hearings this bill has [coming up], that may happen,” Jinkins said this morning in an interview. “But right now we’re in such a challenging fiscal situation with underfunding of K-12, the safety net and higher ed those are all places where it is going to go.’’

“There’s a lot of discussion to be had about it. Part of it is for people to understand the fluctuating nature of this,” Jinkins said. “I don’t know if this is possible … but I would hope we would be able to implement this in 2013. I may be a year too hopeful … If you look at the bill it’s not complicated; it’s all based on people’s federal income tax return.’’

Jinkins said her proposal fits with that of other lawmakers in seeking to make the tax system less regressive, meaning it has less of a relative burden on those of fewer means. Democratic Rep. Chris Reykdal of Tumwater and Sen. David Frockt of Seattle have proposed legislation that would impose an income tax, end the business-occupations tax, and reduce the state’s 6.5-cent share of the sales tax.

“I’ve gotten a really good read from leadership and from the chairman of Ways and Means on this bill,” Reykdal said. “Does that mean it’s going on the ballot? I’m certainly not going to say that. There is too much in play … But I think we do need to start narrowing (options) down quickly.’’ She’s not alone in that thinking. Rep. Carlyle and House Majority Leader Pat Sullivan are expected to hold a media event soon to talk about other tax proposals in the offing. The House Democratic Caucus had said in an announcement that the following are in the works: