Washington Taxes

Olympia Correspondent Austin Jenkins reports on the Washington State AG's appeal of a decision to stop a new proposed capital gains tax / Runtime: 50…

The lawsuit by the Opportunity for All Coalition (OFAC), which successfully fought Seattle’s high-earners income tax in 2017, was filed Thursday in Douglas County Superior Court. The plaintiffs include business owners and farmers who would potentially be subject to the new tax, as well as the Washington Farm Bureau.

Washington Gov. Jay Inslee on Tuesday signed into law a new tax on capital gains aimed at the state’s wealthiest residents. But the future of the tax is uncertain.

Just days after the Washington Legislature gave final approval to a new capital gains tax aimed at the state's wealthiest residents, the conservative Freedom Foundation has filed a lawsuit on behalf of five individuals and one couple to overturn the tax.

The Washington House has approved a bill to institute a seven percent tax on capital gains over $250,000 from the sale of such things as stocks and bonds. The 52 to 46 vote followed an hours-long debate that spanned two days.

Profits on the sale of stocks and bonds in excess of $250,000 would be subject to a new tax on capital gains under a bill narrowly approved Saturday by the Washington Senate. The measure passed on a 25-24 vote after more than four hours of debate in the Democratic-led chamber. Three members of the Democratic caucus voted no: Sens. Annette Cleveland, Steve Hobbs and Mark Mullet.

Even as the state of Washington’s revenue picture improves, majority Democrats in the Legislature appear committed to a course that will, one way or another, involve raising taxes this year. Not necessarily to balance a recession-era budget, but instead to reform a tax code they view as regressive and to address gaps and inequities exposed by the global pandemic.

Each of the proposals is different. But for many Democrats, as well as others on the political left, the goal is the same: Make the richest Washingtonians pay for COVID-19 relief programs and other services that would help people who are struggling. Democrats also say the state's current tax system is highly regressive, meaning lower-income people pay a larger share of their income in taxes than the wealthy. They are looking to correct that imbalance.

Washington state senators have teed up a mileage-based tax for electric and plug-in hybrid vehicles as the first step toward changing how the state pays for road maintenance and other transportation needs. Policymakers expect gas tax revenue to decline long term. Oregon has been experimenting with a per-mile charge for years.

Washington billionaires would pay a “wealth tax” under a proposal in the state House that will get a public hearing on Tuesday. The bill is sponsored by Democratic state Rep. Noel Frame, who chairs the House Finance Committee, and would impose a one percent tax on intangible financial property, such as stocks and bonds, futures contracts and publicly traded options. A billionaire’s first $1 billion in “taxable worldwide wealth” would be exempt.