Washington has moved one step closer to having a slightly less regressive tax system. On Saturday, the Washington State Senate passed a capital gains tax after years and years of debate on the matter.
Senate Bill 5096 calls for a 7 percent tax on the sale of stocks, bonds, certain business sales, and some other assets—but only after meeting a $250,000 threshold. In other words, your first quarter-million would be tax-free from the state's perspective, GameStop warrior. Real estate and retirement accounts would also be entirely exempt. So the legislation wouldn't affect most people's bank accounts if the Democrat-dominated House approves it soon, which is likely.
Still, it would be a significant new levy for a state that has long avoided docking people's income. A high sales tax has made up for some of that hit to the state's coffers. Annual revenue from the capital gains tax would provide a major boost, bringing in about $500 million, with $350 million earmarked for education, after it takes effect in 2022. "Our hard-working Washington families are ready for us to reform and rebuild our tax code," state senator June Robinson, the bill's primary sponsor, said Saturday. "They are asking for the wealthy few to be part of equitable investments in our state’s future."
Republicans and three Democrats opposed the bill in a 25-24 vote. A legal challenge to the tax (on the grounds it's an illegal levy on income) is a possibility if the House passes the bill and governor Jay Inslee signs it, which also seems like a formality. Inslee submitted a much broader capital gains tax in his 2021-23 budget proposal but signaled his support for the current iteration on Saturday. "SB 5096 is a good first step in helping reform our state’s outdated and unfair tax code," the governor tweeted.
Crosscut has a full rundown of other attempts to tax the wealthy at this year's legislative session.