After years of futility in targeting the wealthy, House Democrats may have divined an approach to achieve some of the political and financial dividends they’ve been seeking.<\/p>\n
The concept is simple: buyers of expensive properties would pay a tad more tax on the purchase and buyers of cheaper properties a tad less.<\/p>\n
To do that, House Democrats want to rejigger the real estate excise tax, a vital stream of money for cities, counties and the state and one that is growing in this period of booming sales of homes and commercial properties.<\/p>\n
What they propose is replacing the current flat rate of 1.28 percent imposed on each sale of property with a four-tier graduated rate that starts with a lower rate of 0.75 percent on any sale of property valued at under $250,000.<\/p>\n
The other tiers would be:<\/p>\n
• 1.28 percent on properties valued between $250,000 and $999,999;<\/p>\n
• 2.0 percent on properties valued between $1 million and $5 million;<\/p>\n
• 2.5 percent on properties valued above $5 million.<\/p>\n
Democrats predict this change will generate an additional $419.7 million in the next two-year budget for public schools, early learning, health care and social service programs for lower-income families.<\/p>\n
And they contend this will be accomplished with 97 percent of sales occurring at the existing or lower excise tax rate.<\/p>\n
In other words, they argue a lot of people will pay a little less, a few will pay more and state coffers will be enriched in the process. For Democrats, who’ve been clamoring for years for a more progressive tax system, this change seems to meet the test.<\/p>\n
Here’s how it appears to pencil out for a buyer of a $200,000 home. Today, the current tax rate results in $2,560 in real estate excise taxes. That sum would drop to $1,500, for a savings of $1,060, under the Democrats’ proposal.<\/p>\n
For buyers of an $8 million home — like one sold in Woodway last year — their tally of excise tax would climb from $102,400 to $160,000.<\/p>\n
This proposed revision is currently embedded in a package of tax changes pushed by Democrats that GOP leaders have summarily rejected. But it can be yanked out and considered separately.<\/p>\n
Conservative Republican Rep. Matt Manweller of Ellensburg on Tuesday may have signalled his interest in such a conversation when he described the proposal as “one little piece of ripe fruit on a rotten tree.” Around here that’s darn near a compliment.<\/p>\n
It’s worth recalling two years ago Senate Republicans delivered a policy touche with their call for reducing tuition for university students. House Democrats resisted until the GOP agreed to extend the savings to community college students.<\/p>\n
This time Democrats may have landed on an idea middle class families on both sides of the Cascades can embrace. Republicans are dismissive now, but their mood could change.<\/p>\n