Gov. Inslee: Proposed capital gains tax is ‘a very reasonable proposal’

Apr 23, 2021, 5:31 AM | Updated: 9:49 am

With a controversial capital gains tax continuing to be debated in the state Legislature, Gov. Jay Inslee threw his support behind the measure this week.

Capital gains tax inches closer to passage in Washington

The proposal would levy a 7% tax on the sale of things like stocks, bonds, and other assets above $250,000 for individual and joint filers, excluding the sale of all real estate and carving out an exception for “qualified family-owned small businesses.”

The bill has been met with razor thin margins of support at each stop in the Legislature, passing the state Senate by a single vote, and advancing in the state House on Wednesday 52-46.

For Inslee, he sees the tax as a means to bring “basic fairness” to Washington’s often-criticized tax code.

“We know that our revenue system has been very unfair to working people,” he said during a Thursday press conference. “They sometimes pay four and five times more at the bottom of the pyramid as a percentage of their income. At the top, it very modestly makes it a more fair system.”

On the other side of the aisle, Republicans argue that it’s an income tax in disguise, citing the fact that numerous other income tax proposals have frequently failed at the ballot box and been struck down in state courts as unconstitutional.

Opinion: History of Washington’s income tax shows why we need it

Despite those concerns, it’s estimated that the tax would only apply to roughly 8,000 households, while bringing in upwards of $450 million in revenue for the state annually.

“It’s a very reasonable proposal — very limited,” Inslee noted.

The bill still has a significant hurdle to clear, though. When it passed through the Senate in March, Democratic Sen. Steve Hobbs stripped out an emergency clause that would have prevented the tax from being repealed through a voter referendum.

The House re-added that clause when it approved its version of the bill Wednesday. On Thursday, it proved to be a sticking point for lawmakers, after the Senate declined to concur with the House’s changes, sending it to conference with less than three days left in the legislative session.

If the two chambers fail to reach an agreement in a conference committee before the end of the weekend, the bill will fail to pass.

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Gov. Inslee: Proposed capital gains tax is ‘a very reasonable proposal’