People who are against a statewide initiative to get rid of Washington state’s capital gains tax are pointing to a new study from the Washington State Budget & Policy Center that says if Initiative 2109 passes this November, more than 10,000 jobs will be lost.
If people vote for I-2109, the capital gains tax will no longer apply. This tax charges a 7% fee on the sale or trade of long-term assets like stocks, bonds, and business interests. The tax doesn’t apply to purchases of real estate and only to gains over $262,000. This is more than the $250,000 limit for the 2022 tax year, which was tied to inflation.
The law was made when Senate Bill 5096 was passed in 2021, even though many business and retail supporters were against it. They were worried that the tax would change a lot and that rich Washingtonians might leave the state.
During a hearing in January 2021, Jason Mercier, vice president and head of research at the Mountain States Policy Center think tank, spoke out against the bill.
Mercier, who at the time worked for the Washington Policy Center, said, “This is an income tax; it’s a tax on the federal net long-term gain reported to the IRS for the federal income tax.”
Andy Nicholas from the Washington State Budget & Policy Center spoke in favor of the bill that would create a capital gains tax.
As a result of the long-lasting effects of institutional racism, he said, most of the capital assets are still held by a small group of very rich, mostly white households. “The growing gaps in wealth and opportunities between black and white people in our state could be fixed by taxing the money made from their sales and putting it into things like education, healthcare, child care, and other community needs.”
Treasure Mackley, who runs Invest in Washington Now as executive director, also wants to beat I-2109.
Mackley told The Center Square, “The first year it [capital gains tax] brought in $896 million, which was more than what was expected.” “That goes to show how much wealth we have here in Washington state.”
Rep. Chris Corry, R-Yakima, told The Center Square that the capital gains tax changes too often to be used for planning.
“You should never put unstable taxes ahead of core government functions,” he said, which is what he thought was happening.
Corry then said, “If these are important ideas and goals for the government, then they shouldn’t get new money and programs to support them.”
Corry says that it’s all part of the plan.
He said, “When they want new money, they tie it to programs that make people feel bad, like schools, police, and fire.” “You don’t need a capital gains tax to pay for these programs; you just need to decide which ones are most important.”
The campaign to “No on 2109” sent The Center Square an email on Monday saying, “Initiative 2109 cuts billions of dollars in dedicated funding for K–12 education, higher education, school construction, early learning, and childcare.” Most voters are against a tax cut for only 4,000 people in Washington, D.C., which would put the burden of paying for it on middle-class families.
Corry said that setting educational goals is the state government’s most important job, but that the money that comes in from other taxes is enough.
“Without this capital gains tax, our budget has grown at an all-time high, and we have enough current revenue to pay for these programs if they are important to the majority party in Olympia,” he said. “If it’s important to the government, it should be paid for by stable, long-standing sources of income, not a new, unstable tax.”
