NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's uplifting perspective on world, national, and local politics.

Monday, February 19th, 2018

Victory! Bill to levy capital gains tax gets “do pass” recommendation from House Finance

A bill that would make Wash­ing­ton State’s upside down tax code more just and equi­table by levy­ing a cap­i­tal gains tax on the wealthy has just been report­ed out of the House Finance Com­mit­tee with a “do pass” recommendation.

SHB 2967, prime spon­sored by Com­mit­tee Chair Rep­re­sen­ta­tive Kris Lyt­ton (D‑40th Dis­trict: Belling­ham, San Juan Islands, What­com and Skag­it coun­ties) would impose a sev­en per­cent tax on long-term cap­i­tal gains. Retire­ment accounts, res­i­den­tial dwellings, fam­i­ly farms, and tim­ber­land would be exempt from the tax. Con­se­quent­ly, only about 48,000 of the state’s wealth­i­est tax­pay­ers would pay it.

A sub­stan­tial chunk of the rev­enue from the pro­posed cap­i­tal gains tax would be paid by just two indi­vid­u­als: Bill Gates and Jeff Bezos, who are among the world’s rich­est men. Gates’ father William Gates, Sr. is an ardent pro­po­nent of pro­gres­sive tax reform; he has long urged state leg­is­la­tors to make the tax code fairer.

Cur­rent­ly, low income fam­i­lies pay as much as 17% of their income in state and local tax­es, while wealthy fam­i­lies pay less than 3% of their income in taxes.

Leg­is­la­tors have known about this dis­turb­ing dis­par­i­ty for years, but haven’t done any­thing about it. But this ses­sion, by intro­duc­ing SHB 2967, House Democ­rats have sig­naled that they want to change that sad state of affairs.

Rev­enue from the cap­i­tal gains tax would be used to reduce the prop­er­ty tax increase for K‑12 pub­lic schools approved last year at the insis­tence of the Sen­ate Repub­li­cans. The cap­i­tal gains tax pro­posed in the bill thus rep­re­sents a much-need­ed new fund­ing source for pub­lic edu­ca­tion that is based on abil­i­ty to pay.

All six Demo­c­ra­t­ic mem­bers of the Finance Com­mit­tee (Kris Lyt­ton, Noel Frame, Lar­ry Springer, Lau­rie Dolan, Ger­ry Pol­let, and Sharon Wylie) vot­ed in favor of the bill. The com­mit­tee’s five Repub­li­can mem­bers (Ter­ry Nealey, Ed Orcutt, J.T. Wilcox, Cary Con­dot­ta, Drew Stokes­bary) all vot­ed nay.

NPI tes­ti­fied in favor of SHB 2967 last Fri­day, not­ing that 57% of Wash­ing­to­ni­ans sur­veyed last June sup­port a cap­i­tal gains tax. 44% of the total sur­veyed said they strong­ly sup­port­ed a cap­i­tal gains tax, while only 41% said they were opposed.

NPI has been ask­ing Wash­ing­to­ni­ans about their sup­port for a cap­i­tal gains tax on the wealthy for three con­sec­u­tive years and has found a major­i­ty of respon­dents in sup­port each year, with strong sup­port of 43% or 44% every year.

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