Washington State’s ongoing tax reform took a long-awaited and much-needed step forward this afternoon with the signing of two fiscally responsible bills that will strengthen our collective wealth: ESSB 5096, which imposes a state capital gains tax on the rich, and ESHB 1297, which updates the law approving a working family tax credit for Washington’s poorest families.
“This important step in rebuilding our unfair tax law was taken after years of work, years of dialogue and thousands of votes calling for this policy,” said Senator June Robinson (D-38th Borough: Everett and Snohomish Counties), the main sponsor of the legislation. “We heard that people from all over our state are ready to work together for a healthier and stronger future, and it is time for the richest of us to pay their fair share for that future.”
“This excise tax on capital gains, along with the working family tax rebate we approved earlier in this session, will help support working families in every corner of our state,” said Representative Noel Frame (D-36th District; Seattle). NPI board member Gael Tarleton’s successor as chairman of the House Finance Committee.
“By asking the richest among us to share the responsibility of funding the needs of our communities and putting money in the pockets of low-income families through a sales tax discount, these measures are the first steps towards balancing our tax code. We will continue on this path of tax reform with the ongoing work of the Tax Structure Working Group. “
ESSB 5096 was the top priority for the NPI for the 2021 legislature. It was also the top legislative priority for the Balance Our Tax Code coalition and the Washington State Democratic Party. Since the bill contains a provision stating that it is necessary for the support of the state government, it is not subject to a referendum.
Disgraced Initiator Tim Eyman (who owes Washington taxpayers millions of dollars for repeated and willful violations of the FCPA) tried to test whether the Secretary of State would allow referendums to be called on the bill last week. He received his response when election officials rejected his application.
Prior to the final passage of ESSB 5096, Eyman had tried to convince potential donors and supporters to support an initiative to repeal the bill instead of a referendum, calling the previous iteration of the bill (which did not ban a referendum) a “trap” ”Established by Democrats.
Although the ESSB 5096 does not face a potential referendum, it faces the legal challenges of several right-wing groups. These challenges will begin at the trial level and will almost certainly end in the Washington State Supreme Court over the next year and a half.
There could also be an election challenge in the form of an initiative, most likely in 2022, as the window to qualify an action for the November 2021 election is rapidly closing. (The signature period is only two months.)
Research by NPI found that public support for a state capital gains tax on the rich has been strong for six years. Our most recent finding is summarized below:
Withholding Tax Survey Results (May 2020)
QUESTION: Do you support, support, or strongly support the capital gains taxation of wealthy individuals to help pay public schools, colleges and universities?
- Support: 59%
- Strong support: 42%
- Some support: 17%
- Opposition: 32%
- Something against it: 11%
- Strongly against: 21%
- Not sure: 9%
Note that more respondents said they strongly supported a capital gains tax on the rich than the total number of those who opposed it.
In the same poll, we also found that an almost identical percentage of voters believe that Washington schools are still underfunded despite the work of lawmakers to respond to the Supreme Court’s McCleary ruling. The implementation of the ESSB 5096 will help meet these funding needs.
Our May 2020 poll of 1,070 prospective Washington State voters in 2020 was held from Tuesday, May 19 through Wednesday, May 20, 2020.
It uses a combined method of automated phone calls to landlines and SMS replies from respondents who only have cell phones.
The survey was conducted by Public Policy Polling for the Northwest Progressive Institute and has an error rate of +/- 3.0% with a confidence level of 95%.
NPI congratulates everyone who took part in the effort to get ESSB 5096 passed, especially the democratic legislators who sponsored the bill, led its review in committee, and voted for it on the ground.
This is a great day for Washington State and the Pacific Northwest.