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.