A capital gains tax was signed by Governor Jay Inslee, much to the ire of Republican lawmakers who believe the tax is unnecessary or an effective way to fund programs supposedly intended to aid.
Senate Bill 5096 imposes a 7 percent tax on assets such as stocks, bonds, and business interests in excess of $ 250,000 per year, although it exempts assets such as real estate, livestock, timber, and others.
The tax revenue will be used to fund the working family tax credit and the Fair Start for Children Act, which is intended to benefit early childhood education and childcare in the state.
While signing the law in Tukwila on May 4, Inslee said the law will “tax extraordinary profits that will affect a very small number of Washingtoners.” He said the benefits of the tax would help boost the state’s economy.
“If you want consumers in your society, you need someone with two dollars in their pockets, and we’re putting money in the pockets of people who will be consumers, who will go out and buy good products in Washington state,” said Inslee.
The governor said the passing of the bill fulfills a promise to the state made when the working family tax credit was passed in 2008, even though it had not yet been funded. He noted that a capital gains tax was first proposed by the Washington State Budget & Policy Center in 2011 and by the governor himself in 2014.
Locally, the tax was not popular with North County lawmakers, many of whom had raised concerns during the session.
Speaking on the floor of the house on April 24th, Ed Orcutt Rep. R-Kalama said there were “many unintended consequences” associated with the bill and mentioned that farmers could pay the tax and “not (all) Rich, “he remarked.
Orcutt also pointed out that married couples would have the same deduction as a single person, effectively cutting the $ 250,000 deduction in half.
“Because it’s unfair, I think it’s unconstitutional,” Orcutt said.
He added that the tax was unstable, pointing out that reliance on programs funded by the tax had revenues that could drop significantly during an economic downturn.
Orcutt added the tax was unpopular among Washington citizens.
“We know people have voted on it more than ten times and have been against it every time,” Orcutt said.
A common complaint of the bill is that it would impose an income tax on Washingtoners, not an excise tax as Inslee put it when the bill was signed.
“The truth is this is a new tax on some type of personal income,” Senator Lynda Wilson, R-Vancouver, said in a statement after the bill was signed.
Both she and Orcutt said no additional tax was required because of the state revenue.
Wilson pointed out that the bill already has legal problems given the argument that it is an income tax.
“If the governor had been open, he would have stated that this bill is a partisan effort to get the current state’s Supreme Court to reverse decades of precedent and pave the way for a full income tax – a tax our state never will.” had, doesn’t need and doesn’t want to. There’s nothing to celebrate, ”Wilson said in the statement.
Wilson said Legislature Democrats should have followed the example of their Republican counterparts in giving tax breaks to families in Washington with available income.
“Instead, these families will end up paying even more because the Democrats approved an energy tax and the expensive fuel standard. There’s nothing progressive about that, ”said Wilson.
“Despite record revenue for the state government, many people in Washington still struggle with governor’s restrictions,” wrote Rep. Paul Harris, R-Vancouver, in a legislative update he sent out the day before it was signed. “This is bad policy, and our operating budget uses this income for important things like early education and childcare.”
Rep. Larry Hoff, R-Vancouver, said the tax will remove one of Washington’s greatest competitive advantages. In an April 23 update, lawmakers cited data from the Pew Research Center showing continued sales growth in the state, which represented the largest two-year profit in the nation.
“That alone should be reason enough to reject new taxes at this meeting,” wrote Hoff.